AlixPartners Study Indicates Greater Negative Effect of Car Sharing on Vehicle Purchases
NEW YORK--Feb. 5, 2014: Though the auto industry in America is enjoying much better times of late, the global business advisory firm AlixPartners today released a sobering study suggesting that car-sharing services, in which drivers rent vehicles commercially or through peer-to-peer networks without going to a traditional car-rental location, are having-- and will increasingly have -- a greater impact than previously thought on the vehicle market.
“Car sharing could really get traction as smartphone and automated-vehicle technologies pave the way for new mobility systems throughout America and much of the world”
According to the study, which surveyed 1,000 licensed drivers in 10 developed metropolitan car-sharing markets in the U.S. and 1,000 drivers nationally as a control sample, car sharing in the 10 key markets appears to be displacing vehicle purchases at a rate of 32 to 1 (one car-sharing fleet vehicle displacing 32 vehicles that would have otherwise been purchased). That’s more than double the rate of many studies that have focused only on national averages. To date, according to the AlixPartners study, approximately 500,000 vehicle purchases nationally have been avoided due to car sharing. In addition, the study suggests that as car sharing grows in popularity, it could account for approximately 1.2 million more purchases avoided through 2020.
The 10 key car-sharing markets covered in the first part of the AlixPartners survey were Austin, Texas; Boston; Chicago; Miami; New York; Portland, Ore.; San Diego; San Francisco-Oakland; Seattle; and Washington, D.C.
“We focused on the markets where car-sharing services have achieved a degree of scale,” said Mark Wakefield, managing director at AlixPartners and leader of the firm’s Automotive Practice in North America. “Our study suggests that Americans’ willingness to avoid vehicle purchases due to growing car-sharing options is higher than many have thought, further suggesting that the auto industry ignores or minimizes this trend at its peril.
“While the approximately 500,000 vehicle purchases avoided to date is itself a large number,” continued Wakefield, “this study suggests that car sharing nationally could scale up as these 10 markets have, and if that happens, the impact on the traditional automotive market could be explosive.”
Respondents in the 10 key markets picked ease of access, convenience and economics as key reasons for car sharing. Environmentalism, often regarded as a chief motivator for car sharing, was last among reasons selected (out of five possibilities). Meanwhile, 51 percent said they have avoided vehicle purchases due to car sharing and 45 percent indicated that they expect to avoid a future purchase. The survey also revealed that avoidance of personal-vehicle purchase is highest among younger consumers and, perhaps somewhat surprisingly, households with children – both possible harbingers for the auto industry.
The merger of Zipcar and Flexcar in 2007 is thought by many to have ratcheted up the commercialization of car sharing in North America. The recent advance by larger corporations -- including Avis (which bought Zipcar), Daimler, BMW and Enterprise -- into car sharing suggests that the industry is accelerating up an adoption S-curve, according to the study.
According to Wakefield, while smartphones and increasing urban density have driven adoption thus far, automated and driverless cars could be key enabling technologies for car sharing to grow well beyond the current early-adopters.
“Car sharing could really get traction as smartphone and automated-vehicle technologies pave the way for new mobility systems throughout America and much of the world,” said Wakefield. “In the future, automated and, especially, driverless cars could be the killer apps for car sharing.”
He continued: “The auto industry can be bypassed by these trends or can seize the opportunity to get out in front of them. It can do that by addressing the dissatisfaction with car ownership that many people, especially urbanites, have today, but also by leveraging the new technologies underpinning car sharing, being relevant in auxiliary services and adapting to what some are calling the new ‘sharing economy,’ where pay-by-use is often preferred over ownership for many types of products.”
About the Study
The AlixPartners Car Sharing Outlook surveyed 1,000 adults (18 and older) with driver’s licenses in 10 key metropolitan car-sharing markets in the U.S. (Austin, Boston, Chicago, Miami, New York, Portland, San Diego, San Francisco-Oakland, Seattle and Washington, D.C.) and 1,000 adults (18 and older) with driver’s licenses nationally as a baseline. Respondents were representative of the U.S. population across key demographics and income ranges. The 10 key markets were chosen based on car-sharing fleet size, number of car-sharing competitors, population, affluence, urban density and university population.