Ridesharing may not replace personal vehicle sales, but supplement them, says report
19 June 2017
19 June 2017 OEMs have been concerned for some time that the rapid rise of mobility services such as Uber and Lyft will lead to a fall in the number of vehicles purchased by consumers. However, a new report surveying all three major markets of Europe, the US and China has found that, for current vehicle owners, this assumption may simply not be true â€“ in fact it shows quite the opposite. Strategy Analytics’ new report â€²Impact of Ride Sharing Frequency on Vehicle Purchase Intention’ discovered that, for current vehicle owners, increasing ridesharing usage actually raises the likelihood they will purchase another vehicle within the next five years. This is in part because current frequent rideshare users, who also own their own vehicle, have greater transportation needs than those that do not. The ridesharing service therefore fills a niche of convenience, but does not supplant the user’s need for their own personal vehicle. This may be due to mindset â€“ for example, with a user used to the comfort of cars preferring to use a service like Uber rather than public transport in situations when using their own car is not possible (such as due to a lack of parking or when intoxicated). However, the report does follow consensus evidence that desire for car ownership is weakening at the lower, younger end of the market, with millennials with no children that use ridesharing at least once a week being much less likely to purchase another vehicle within the next five years, compared to all respondents that had children. Report author and director of syndicated research at Strategy Analytics’ UXIP (User Experience Innovation Practice) Chris Schreiner said: â€²The question of how emerging transportation options like ridesharing and car-sharing will impact vehicle sales is a very complex one to answer. Issues of cost, convenience, usability, privacy, type of journey, and length of journey all impact transportation choices. â€²Frequent ridesharing users do not seem likely to delay their next vehicle purchase, but it is still possible that they might choose a less expensive or lower class vehicle.’ This could lower the residual values of more premium vehicles, and raise demand in the volume segment. This is because private consumers tend to buy used cars (with fleets buying new). However, Schreiner also added: â€²Alternatively, [frequent ridesharers] may choose to downsize their fleet from three vehicles to two,’ which would lower residual values overall. UXIP vice president Kevin Nolan added: â€²However, it is prudent to note that external factors such as ridesharing competition reducing end user costs, expanded availability and autonomous taxis, all have the ability to negatively affect consumers’ future purchase decisions.’ This research will make reassuring reading for sales managers that the current rapid rise in ridesharing being experienced (250% annual growth in the US) is not suddenly going to hit their sales figures. However, it does not reassure against the growing evidence of weakening car ownership desire in the upcoming generations, with many millennials choosing to forego car ownership altogether. In addition, with mobility solutions only currently catering to 30% of their potential market, at least in the US, there is no guarantee that these current trends will continue, when ride sharing solutions are developed for key untapped growth areas such as for families and commuters. Once mobility services tap into such core car-buying markets such as these, and encourage these consumers to use their services on a regular basis, it seems unlikely that no negative impact on the private car market will be perceived.