Finding a strategy to tap into growing car sharing market is important, especially for dealerships

Argues Paul Smith, Director, Traka Automotive

The demand for car sharing mobility services, sometimes called car clubs here in the UK, is on the rise, especially in urban areas. Global industry analyst house, Frost & Sullivan, expects the global car sharing market will grow from 7.9 million users, using 112,000 vehicles (across more than 40 countries) to some 36.7 million users. It will create a demand for 427,000 car share vehicles within the next 10 years, the analyst predicts.

That’s more than 16% year-on-year growth over that period, with no sign of slowdown beyond it. So, it has become a market that is worth taking seriously, now that claimed market leader Car2go boasts more than 2 million users. Frost & Sullivan says adoption will accelerate as mobile networks upgrade to faster technologies, use of smartphones/mobility apps increases, and more people move into cities where car sharing makes most sense.

Automakers, convinced that the sharing market is worth getting in on, are partnering with, or investing in, car share service providers. They’re also investing in the development of technologies designed to make ‘free-floating’ car hire-as-you-go offerings a workable, scalable business.

Ford’s GoDrive completed its trial last year, and even reset its corporate goal from wanting to be the largest car manufacturer in the world to setting their sights on being ‘the leader in provision of mobility solutions’. Volkswagen partners with Zipcar for its Zipwagen service. BMW/Mini has ReachNow. Daimler has an interest in Car2Go, while Toyota has partnered with Getaround. Everyone, it seems, is grabbing a stake in the burgeoning market.

Automotive dealerships’ view of these market developments must be tinged with concern: Boston Consulting Group predicts that by 2021 car sharing will reduce worldwide new car sales to individual buyers by around 550,000 units, and thus cause a net revenue loss to manufacturers of €7.4 billion. Some of these lost sales will be offset by new sales into car sharing fleets; but even then, buyers will look for discounts that would not have applied to individual vehicle purchases.

Large, city-based dealers are likely to face this sales volumes threat first, and are naturally anxious to discover if they’ll be disintermediated as mobility service providers strike direct relationships with automakers. The fact that car sharing club members arrange everything through digital channels, and have no need of local support (with a human face) from the point at which they collect a vehicle through to drop-off, appears to cut dealerships out of the loop. So how can dealerships join the car sharing party? What value can they add to prevent them missing out entirely?

One way is for dealerships to get in as potential service, support and provisioning hubs for car sharing operations. They could help with prepping, cleaning, servicing, and even upgrading cars on behalf of the manufacturer, for example.

Showroom parking spaces and overflow car pounds could also double as distribution centres – car sharers need well-located pick-up and drop-off points. Between-booking car washing and valeting is another area where dealerships already have proven expertise – i.e., staff adept at putting cars in pristine condition and running maintenance checks: it’s noticeable that many dealers are investing in automated car washes and tyre tread depth checkers– in anticipation of this trend, perhaps?

Vehicle presentation should not be underestimated; as shared fleets scale-up, users who find themselves getting into mucky, smelly vehicles will air their discontent on social media, and switch to another share provider as the sector becomes more competitive.

Sharing is also likely to accelerate deployment of smart ‘digital keys’ in new cars, to gain access to shared cars via an app on your mobile phone that will tell you where the car is, and then provide a digital token to open it once the booking has started.  It’s possible that dealers could monitor and maintain these sorts of systems, just as they hold back-up physical keys to cars sold by them today.

Facilitation of temporary ownership of a vehicle, leaving it safe and secure for the next ‘temporary owner’, requires pretty advanced key technology. The free-floating model does not work nearly as well if sharer-drivers have to hand over and collect keys.

Some smart key technology has been developed to enable owned vehicles to be shared between family members, and these might be adapted to meet challenges presented by the mobility services sector. Volvo’s ‘digital key’ app already places key functionality onto a device most motorists already own - a smartphone. Using Bluetooth, the Volvo app will let drivers open the door and start the car without necessarily touching the phone. The digital key also means that, in theory, key codes can be exchanged between phones – so cars can be more easily shared.

Traka itself has developed a secure key management solution for Zipcar which solves a vital piece of the security puzzle for the car sharing market, answering the question ‘how do you leave car keys for the next person in the car itself, without compromising its security?’. Essentially there are three pieces of technology at work here. All Zipcar club members gain access to a mobile app which enables them to book rentals and then tells the user where the car they’ve hired is parked and shows them how to walk there from where they are. They also get a physical ‘Zipcard’ which transmits a unique dynamic code, which must match the code held on the card reader inside the windscreen of the right hire vehicle, to open (and close) the car.

The car key itself is tucked away in the glove compartment attached to a Traka iFob in a socket. The advantage of this approach is that as soon as the iFob is disengaged from its housing, the clock starts ticking on that hire session, only stopping when it’s returned - offering Zipcar members the advantage of only paying for the time they are actually using the car (rather than the time that they have booked it for).

Daimler has developed a similar system for fleet sharing, where an RFID chip attached to an employee-sharer’s driving licence is read by a windshield-based scanner, before opening the door. The ignition key is in the glove compartment. The employee releases the key with a mobile app-provided dynamic PIN code. At the end of the trip, the sharer locks the ignition key back in the glove compartment, and then locks the car door with the RFID-enabled licence.

Automaker LYNK & Co takes the ‘share-and-share alike’ concept further by integrating shareable locks. These enable drivers to start their own car-sharing schemes, rather than submit their cars to a third-party service: the cars are ready to share from the moment of purchase. Mercedes-Benz’s Croove pilot is set-up along similar lines.

It’s clear that the march of smart phone-based apps and associated technology platforms, together with improved network coverage and battery life, and the appetite of the millennial generation for subscription-based consumption or rental models (rather than out-and-out ‘owning’), all come together to facilitate a natural demand for car sharing, particularly in urban areas.