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Demise Of The Personal Car In Favor Of Sharing Was A Myth

Demise Of The Personal Car In Favor Of Sharing Was A Myth.

“The number of cars and car density has increased each year. So there was no sign of a trend reversal. Rather, the opposite was the case”

It has become a staple cliché of the automotive conference. Car ownership is history. Mobility is the key. Manufacturers will have to turn themselves into “mobility providers”. Cue serious expressions and sage nodding of heads.

A study by the University of Duisberg-Essen’s Center for Automotive Research (CAR) tells a different story though, while news from BMW and Mercedes that they are pulling car-sharing out of North America, London, Brussels and Florence because of weak demand, suggests “mobility solutions” are either ahead of their time, or a bark up the wrong tree.

And it seemed to make so much sense, in theory. Young people, we were told, now had little interest in owning cars. They would prefer to rent when they needed one, or take public transport. But that turned out to be wrong, and was a function of the long economic recession which hit young people hard. They couldn’t afford to buy their own cars, but rationalized this into a virtue. Investment bank Morgan Stanley famously remarked some years ago that car ownership makes little economic sense. They cost a lot of money and are parked on our driveways 94% of the time. That makes a lot of economic sense, but has little emotional pull. Is anyone, seriously, if they can afford it, willing to give up the luxury of car ownership and the independence and privacy it provides?

The idea was that in the 2020s, we would eschew the advantages of car ownership and defer to economics. Autonomous car-hailing would also loom large. That might be a bit closer, but technical and legal problems have delayed its advent. By now, technology for ride-hailing computerized cars should have made such progress that about 10 seconds after you’ve summoned a vehicle, it will appear at your door. This would make owning your own car pointless. Parking facilities would become redundant. Traffic jams would disappear. It might even solve the housing crisis, as garages become redundant and are converted into extra rooms. The world’s biggest auto manufacturers continue to invest huge sums to make these technologies work; many a slip twixt cup and lip.

Forget prime time
As for mobility providers, a 10-year study by CAR in Germany shows the idea of sharing cars never looked like breaking into prime time. In 2009 there were 504 cars per 1,000 citizens in Germany, but this increased to 567 by 2019. In 2019, only 202,200 vehicles were available for car-sharing, that’s 0.04% of all cars and SUVs in Germany.

“Both the number of cars and the car density has increased each year. So there was no sign of a trend reversal. Rather, the opposite was the case. The trend for personal cars is very stable. This is in clear contradiction to the claims that the German population is “car-tired. The opposite is true, as this long-term study shows,” CAR director Professor Ferdinand Dudenhoeffer said.

Germans have been famously “car-mad” over the years, but so have Europeans in general and Americans too.

Dudenhoeffer said according to conventional wisdom, car ownership in cities was bound to decline.

“Again, the data shows that this does not match reality,” Dudenhoeffer said.

Consultancy Capgemini expects car sharing to be big business one day, but not quite yet.

“I still see car ownership dominating for the time being, but there will be many experiments to find new ways to do this. There are cities in Europe which seek to curb cars’ access to town centers. This might even include restrictions on electric cars if congestion was a big problem,”  said Capgemini Global Automotive Lead Markus Winkler.

“The evolution of ownership models and autonomous cars is still a dream that will take the automotive industry a long time to manifest. While MaaS (mobility as a service) is developing and cars are becoming mobility platforms underpinned by data, the market isn’t going to be able to deliver on these promises of a revolutionized vehicle and driving experience in the near-term,” Winkler said.

Fully autonomous? Not yet
As for fully autonomous vehicles, Winkler said it will take perhaps 3 to 5 years for taxi type services to appear, while these vehicles won’t be available to the general public for another 5 years. That projection is probably in the bullish category. Many analysts expect fully autonomous vehicles for the public to be available closer to 2040 than 2030.

Meanwhile BMW and Mercedes’ were said to be pulling out of the mobility business to spend more scarce resources on electric cars. The two companies got together earlier this year, saying they would invest 1 billion euros ($1.1 billion) which amalgamated Mercedes’ Car2Go and BMW’s DriveNow into Share Now. This business allowed subscribers to rent cars by the minute using mobile phone apps. Drivers could park their vehicles anywhere in a designated city zone. When announcing the venture, BMW and Mercedes had said they would launch services in almost 100 cities in 2019, and expand 10 times in the future.

BMW and Mercedes were not alone. Earlier this year, General Motors withdrew its Maven car-sharing business from several cities.

Investment researcher Evercore ISI said this raised serious questions about the future of car-sharing.

“If you can’t make the car-sharing model work in dense urban areas like New York City and London, where car ownership is low and cost per mile high, this begs the question of how the longer term unit economics of car-sharing versus ride-sharing will pan out,” Evercore ISI said.

CAR’s Dudenhoeffer said those predicting the demise of the personal car in favor of sharing were wrong.

“The desire for a personal car will remain pronounced in the future. The success stories of car sharing and rejection of the personal car, which are repeatedly expressed by traffic and mobility researchers, are incomprehensible. The opposite seems to be the case, as our analysis shows,” Dudenhoeffer said. 



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