Why Carsharing is the future

As GRAB takes out Uber in Southeast Asia their model becomes very clear. A new report shows that by 2025 there will be more than 36 million users of carsharing services. ASEAN will be one of the most important markets. Imagine the importance of millions of smartphone app users booking rides on carsharing services. The value of the market is billions.

But what happens around the world matters

The car sharing market aims at providing a cost-effective solution for vehicle owners to enhance their mobility and the daily commute. It helps users and authorities to efficiently manage the usage of parking space, improve travel choices, increase accessibility and reduce adverse environmental impact. Vehicle ownership comprises several fixed costs such as insurance, depreciation, and maintenance that adds significantly to the total cost of ownership. However, users of shared services pay only when they use a vehicle for time/distance based services.

Car sharing will change the traffic landscape across Asia and around the world.
A considerable percentage of U.S. consumers still consider personal cars as their preferred mode of transport, although preference is lower among younger consumers. However, the popularity of the car sharing market among the younger population is growing due to rising traffic congestion and high degree of convenience. Lack of proper transportation infrastructure in countries such as China, India, Turkey, Mexico, and Brazil is posing a challenge to the carsharing market.

One way car sharing market is expected to grow significantly over the forecast period due to the reduction in user inconvenience to return the vehicle at the starting point. One-way services are more flexible for the customers; however, they present more difficulties to operators. They are difficult to manage, as the freedom given to the users creates imbalances on the fleet distribution. To address the issue, the operator can move the vehicles from areas with surplus availability to areas with high demand.

In terms of fleet size and customer base, Asia-Pacific (including the ANZ region) has the largest market share with 2.3M users and 33,000 vehicles.

So, what makes Asia a hot-spot for the on-going excitement around shared mobility? Gang Xu, partner and managing director of BCG China and one of the authors of this report said: “Asia is definitely a ‘not-to-be-missed’ market for any organisation aiming to seize the multi-billion dollar opportunity of car sharing.”

The cost of ownership and congestion are the major driving factors that will favour a high penetration of car sharing in Asian countries. Also, in countries with a large urban population where the per capita incomes are relatively lower than the developed economies and transportation infrastructure is under-developed; the car sharing market will grow manifold in coming years. This includes China, Japan, India, Singapore, South Korea and Taiwan.