My car is your car!

Friday, 18 august 2017 | Redacción CEU

Car sharing companies circulate with more strength in Spanish cities. Automobile firms are increasingly aware of the shared transport importance in big metropolis and drive their own projects. The automotive industry is forced to redefine its business model because millennials do not like buying cars as much as their predecessor generation. Will we have cars in the future or will we just share them?

 

The Spanish adaptation of the 'American dream' would include a flat and a car in property. The post-crisis environment and the emergence of the millennial culture have disrupted the old criteria. Even so, these two pillars of our country investment model are hard to break down overnight –and they should not disappear either–. The Spaniards continue keep trying to fulfill own dreams while other alternatives are placed on the table.

What is car sharing?

The population concentration in urban areas, the slow progress towards the 'green cities' model, hyperconnectivity, transport policies, the lack of purchasing power and the desire to enjoy different experiences have contributed to car sharing appearing with strength in the main Spanish cities. The new mobility services opened the way. Now, Cabify and Uber are fully installed in the inner workings of the big cities like Madrid or Barcelona. But, what do the new experiences of shared driving consist on?

We should not confuse car sharing with carpooling which is a contemporary practice, but very different. This last one is a modality that has been practiced for years in which several people, commonly through some type of digital platform, agree to share expenses in a trip with a private car. Nevertheless, car sharing is based on renting a shared automobile in a short and limited time period.

There are two types of car sharing. The first one involves the return of the vehicle that the customer rents to a permanent base. There is a second option that is known as free-floating and that firms  like Car2go provide. These companies offer the possibility to move with the car and drop it off in a different position from the pick-up place. The system is very similar to the one that big European cities use with rental bikes. This type of car renting services are usually characterized by their time flexibility and accessibility. Two requirements that make it very attractive in the eyes of the younger generations.

My car is your car!

Millennials prefer to share

From its invention to our days, the car has always meant a status symbol. Like José Manuel Garaña, Director of the Executive Master in Automotive Business Management,  explained in a recent interview: <<for the Spanish buyer, the feeling of "possession" of a vehicle remains important, in fact, after housing, it is still the most important purchase in the family and personal environment of the individual>>. However, there is a sighting of a change in the younger generations and the car industry does not ignore it.

Young people are accustomed to the daily use of digital information systems where everything is at their fingertips with tools like cell phones, tablets, laptops and through the use of platforms like Netflix or HBO. Furthermore, everything advances towards the interconnection of everyday objects, known as the Internet of Things (IoT). The Professor of Management and Organization of Companies at the San Pablo CEU University also points out: <<not only they know how to use it and see it as absolutely essential, but they no longer contemplate another way of managing their time and their leisure demand and life in general>>. This new reality permeates all the parameters of the society. Young people as potential automotive sector customers demand the attention to their interests, a transformation of the business.

Car manufacturers have taken action. A new paradigm of the car that is not focused on property emerges. The industry does not resist to the penetration of car sharing, contrary to that, it embraces and expands its investment in this type of service development. Companies are well aware of the change in mentality. In fact, 59% of executives predict that half of drivers will not want to own a car by 2025 –over a third of consumers believe the same–. Young people no longer have the same interest in owning a car and, therefore, the interest of buying vehicles descends facing their previous generations. For them, issues like the desire to travel and to have new experiences are more important in their decision making than the wish of owning a car.

How does the car sharing horizon look like?

The wind blows in favor of the shared mobility development. The environment care and the main European cities means of transport policies impel its growth. Car sharing is a reality in interurban areas. But there is still a very large 'rural gap'. However, companies are starting to work on the development of these shared-vehicle experiences away from the usual urban environments. An example of this, is the Nissan initiative in places like Reus, Soria and the Vi highway.

The authorized dealers want to move from simple vehicle sellers to becoming mobility services providers. For example, the Mercedes and Smart manufacturers, Daimler AG with Car2go in Madrid; Ford that created GoDrive and already works in England and the United States; or the project 'Cité Lib by Ha: mo' Toyota. This interest in the collaborative mobility of car manufacturers is shared by car rental companies that do not want to be left behind: they develop new strategic plans, buy subsidiaries and renew their car fleets.

Car sharing has a promising future and it is linked to the electric car development. Both are moving in the same direction: emission reductions, modernization and transport improvement, integration in environmental policies,... They also face the same obstacles along the way like lowering costs, developing infrastructure and becoming profitable businesses. Still and despite these pot-holds, the car sharing horizon is clear and promises miles of road ahead.