Nancy in my office forwarded me an issue from “Drive In Newsletter” that documents ways the auto industry is embracing the ride sharing economy. What struck me is how Ford and General Motors are experimenting with selling cars to groups of people, which will obviously hurt individual car sales.
General Motors announced Maven in January. It’s a car sharing service that rents vehicles for $6 an hour. Unlike Car2Go, ZipCar, etc, there are no membership fees. Maven is currently available in Ann Arbor, Michigan as a pilot test. It sounds like GM plans to roll Maven out to more cities by the end of the year.
Ford announced Ford Credit Link in February. It’s a new car ownership program that allows three to six people to split a lease on a car as a group. It’s kind of like the family plans many cell phone carriers offer. At the heart of the program is an app that allows the group to coordinate when they’ll each use the car, payments, and maintenance. Credit Link is currently available through dealerships in Austin, Texas.
I think these are just two more data points that prove there is significant experimentation happening with car ownership and the sharing economy. The big auto manufacturers are trying to figure out how to keep their piece of the pie, even as the size of the pie may be shrinking.
The takeaway for our industry, or actually a question, how are we preparing for a reduction in vehicles and just maybe a long term decline in vehicle miles traveled?
Hey Mike,
See: https://www.fhwa.dot.gov/policyinformation/travel_monitoring/16febtvt/16febtvt.pdf
Also: http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_36.html
VMT is still reaching all-time highs. And if anything, we are seeing less Rural VMT and MORE Urban VMT. I think we as an industry need to tread carefully in watching these trends. While ‘smart’, ‘connected’, and ‘ride-sharing’ may be en vogue in our TE circles I don’t think that’s what is actually going to happen. As vehicles become smarter and more fuel efficient the recurring (operational) cost of ownership will plummet. Basic economic theory would say that as price goes down, quantity demanded goes up.
If anything, I think the pressing issue facing TE is how fast can we transition funding sources away from fuel (gas) and toward something which reflect this surge in VMT more closely.
Hi Adam – We are definitely at an interesting point in traffic forecasting. There was a dip in VMT during the recession and we are back to traffic growth the last few years. Time will tell, but I don’t think higher urban VMT means more auto ownership. Nor does better fuel efficiency or technologically advanced vehicles mean more auto ownership. That matters more to the rural and suburban environment. With the densification of urban areas, I think the phase shift is to the things I write about in this blog post. I think Car2Go, Lyft/Uber, etc actually supports more VMT, but less vehicles sold per year. It’s a utilization effect. It’s reasonable to think the average vehicle goes from being driven about an hour per day to several hours per day. The future could actually look like a fleet of autonomous vehicles (taxis/Uber) that are moving the majority of the day. My conclusion is the cost of vehicles will plummet because more folks will choose to purchase travel by the hour (the service) than purchase the vehicle itself (the thing). But our conclusions converge – it is reasonable to think VMT will continue to increase. Mike