Transport options have never been so plentiful, or so convenient. Whether someone needs a van to move furniture over the weekend, a scooter to reach the train station or simply a ride home from a restaurant, there’s a service out there catering just for them. The emerging Mobility as a Service (MaaS) industry has attracted both newcomers and industry incumbents, each with their own priorities.
For traditional vehicle manufacturers, operating in this space offers a way of advertising their vehicles, and selling them. New revenue streams like this could become increasingly important as ideas on ownership evolve: suddenly, not everyone aspires to own a car. At the same time, MaaS schemes offer a tremendous opportunity for collecting and monetising data. Shared vehicles tend to spend much more time on the road, therefore providing more information about specific locations and use patterns.
However, this trend does raise concerns for established automotive manufacturers, particularly in terms of brand loyalty. “We have found that mobility users are less attached to automaker brands,” commented Mo Al-Bodour, Senior Connected Car Specialist at automotive technology consultants SBD Automotive. Chairing a panel debate among service platform providers at this year’s M:bility | Detroit, a two-day event hosted by Automotive World, Al-Bodour shared some insights from SBD’s own research. Respondents in general showed overall indifference when asked if they were more or less likely to use a shared mobility service depending on the brand of vehicles. “People don’t care about the brand when they are looking at convenience, or saving money, or just getting from point A to B,” he clarified.
MaaS schemes offer a tremendous opportunity for collecting and monetising data. Shared vehicles tend to spend much more time on the road, therefore providing more information about specific locations and use patterns
This could mean a change in roles for some industry players, as well as new partnerships. “Companies need to decide what their future role will be,” Al-Bodour said. “Will they just manufacture and sell cars? Will they enable mobility platforms or sell the mobility services and be customer facing? A decision has to be made.”
Business model evolution
MaaS is closely associated with multi-modal journeys, but even within the car-share segment alone there are various business models in play. The original model pioneered by Zipcar required users to pick up a car from a set location and later return it there. Then the one-way model emerged, allowing for the user to drop off the vehicle in a different location if they wanted to. “With one-way trips, the disadvantage is that you can’t reserve the car,” said Mark Thomas, Vice President of Marketing at Ridecell, a company that provides fleet platforms for new mobility services. “However, if the provider has a critical mass of vehicles that free float within a city, users can simply look to see what car is available and reserve it for the time it will take them to walk there and pick it up.”
Understanding the specifics of a given city is pivotal. “Every city is different,” observed Johannes Gruenenberg, Business Development Manager at INVERS, a MaaS operating system provider. “You can’t just cut and paste your business model like a McDonalds restaurant.”
When Ridecell is working with a client on a specific city, they often look to pinpoint the ‘hot’ and ‘cold’ zones for usage and then deploy a predictive model harnessing artificial intelligence (AI). “Every vehicle on the customer’s network has an estimated time before it will be rented again. This AI model allows for some pretty cool applications,” Thomas explained. For instance, if it predicts that a vehicle in a ‘cold’ location will not be rented for a day, the provider can pay to have someone move that vehicle to a ‘hot’ zone downtown where it will very likely be rented within 20 minutes. “Local knowledge is important to allow companies to effectively run a service,” he added.
Making the most of it
Creative and flexible approaches like this may be needed to secure a profit, which is no easy feat. Uber, which doesn’t even have to invest in buying cars, still manages to rake in hefty losses every quarter. “Imagine if Uber had to buy all those vehicles itself,” observed Thomas. “It would be a completely different game. Companies entering the car-share segment generally own their own fleets, which means they have to get as much use out of them as possible.”
Each business model has a peak demand and utilisation curve. With typical car-share, demand is highest during the day, when people can easily find parking. During the morning commute and in the evening, when users may be going out for dinner, they tend to prefer ride-hailing. The savvy operator will put two and two together and repurpose his car-share vehicles for ride-hailing during certain times.
BMW has done just that through its ReachNow service. “BMW is one of our customers,” observed Thomas. “It has taken its fleet of vehicles and hired chauffeurs so that customers can use the app to request a car or a ride. This is just one way to get the most use out of a fleet.”
The savvy operator will put two and two together and repurpose his car-share vehicles for ride-hailing during certain times
Utilisation is not just about vehicle occupation but also how long the vehicles are used and how many miles they cover. “These are all important aspects for the MaaS provider because it helps them determine if they can increase their membership,” said Gruenenberg. “Zipcar has said that it is interested in people selling their second or even their first car and instead relying entirely on MaaS services.”
Software as a Service (SaaS) specialist Vulog recently examined member behaviour within mature markets, which for MaaS simply means there’s been a service in place for two years. It found that in the last year alone, free-floating vehicles have seen an 11% increase in trip length. “Trips are trending upwards, meaning many people are using these cars for a range of different purposes, not just for going from point A to B for work but also for weekend trips,” clarified Alex Thibault, Vice President and General Manager, North America, Vulog. “People are really relying on these cars.”
Infrastructure, however, could make or break it. “Shared mobility operators attract more customers if infrastructure exists,” Gruenenberg stated. “Whatever the distance I need to travel, I will choose the specific service that meets my needs.” The average journey distance for shared scooters in Detroit, for example, is 1.5 miles. Bike-share averages between one and five miles. Moped sharing journeys in Europe average four miles. Uber is generally used for longer trips, and somewhere in between there is public transit.
If the services and the infrastructure are in place, then residents are more likely to conclude they don’t need to own their own car. “At that stage, we can have the big discussions about a pure MaaS environment,” said Gruenenberg.
Who is buying?
Recent statistics suggest this is the direction in which the market is gradually heading. Car2go has historically claimed that 10% of its users are thinking about selling their car or have sold their car already. “There is definitely a shift where people are getting rid of their cars and moving to MaaS,” Gruenenberg added.
If autonomous ride-hailing services take off as they are expected to, it will change the composition of who is buying. That buying power will change the dynamics of the automotive world
The University of California, Berkeley Transportation Sustainability Research Center (TSRC) conducted a study with car2go a few years ago, which found that each shared vehicle removes nine to 12 vehicles from the road. In Canada, the city of Vancouver has seen a big impact from the Evo car-share service, which has grown dramatically. In 2017, Evo operated 750 free-float cars in the city. Today it operates 1,300. Thibault pointed to a recent study in which 15% of Evo users said they would consider selling their cars because of the service’s dependability.
While private ownership may decline, shared mobility fleets will still need to purchase vehicles. For automakers, this is less about a drop in volumes and more about a change in who is buying. “In the future, it is the mobility service providers that will be buying the cars, particularly as the industry moves towards autonomous vehicles (AVs),” said Thibault. He expects that sometime between 2025 and 2030, the majority of cars in North America’s cities will be sold to mobility services and not to private owners. “If autonomous ride-hailing services take off as they are expected to, it will change the composition of who is buying,” he added. “That buying power will change the dynamics of the automotive world.”
This article appeared in the Q3 2019 issue of M:bility | Magazine. Follow this link to download the full issue.
