Shared Mobility: Customer Insights
Six consumer insights on shared mobility that include rural penetration of ride-hailing services, demographics, car ownership in the present and future, use of multimodal transport, awareness, and the impact of Covid have been presented below. Several surveys and reports were used to provide the consumer insights.
Popularity and Rural Penetration
- “Ride-hailing dominates U.S. shared mobility, but like other forms of shared mobility, it has not spread much beyond urban centers. Typical users of shared mobility in the U.S. tend to be younger, urban, male, highly-educated, and middle-upper income.”
- “Ride-hailing has become more popular across all demographic groups, but the largest shares of users are amongst 18-29 year old, college graduates, and those with an income of $75,000 a year or more.”
- “Only 19% of Americans living in rural areas use ride-hailing apps, whereas in urban and suburban areas, those numbers are 45% and 40% respectively. “Rural areas use ride-hailing much less for many reasons”: poor coverage of ride-hailing services, unreliable mobile phone service, and credit/ debit card requirement. Also, longer and fewer rides reduce the earning potential for rural drivers.
- “Not all Americans are enthusiastic about using ride-hailing. A majority of respondents to a survey (67%) preferred “driving their own cars over using ride-hailing apps” and 63% would not give up their vehicles for ride-hailing even if it were free. The desire for autonomy and the American cultural draw of the car are still strong, but this could be slowly changing.”
- “Numerous studies have examined the effect of carsharing on overall vehicle numbers and show reductions ranging from 4.6 to 20 personal vehicles per carsharing vehicle. Differences can be attributed to a range of methodological approaches (e.g., postponed purchases and sold vehicles).”
- According to the “AlixPartners Global Shares Mobility Survey”, which was published in January 2018, “in the U.S., 21% of ride-hailing users say that the availability of services such as Uber and Lyft have allowed them to delay or avoid a vehicle purchase, while an even higher percentage of car-sharing users, 29%, say the same about the availability of services such as Zipcar, Car2go and Maven.”
- According to Deloitte’s “2020 Global Automotive Consumer Study”, 41% of millennial and Gen Z ride-hail users, 25% of Gen X ride-hail users, and 20% of ride-hail users from the boomer generation in the US “question whether they need to own a vehicle going forward.”
- “Reductions in auto ownership are commonly associated with increased public transit ridership, walking, and bicycling modal shifts, as well as reduced parking demand and VMT or vehicle kilometers traveled (VKT). In the United States, the average carsharing member’s VMT/VKT is reduced by 7.6 percent to 79.8 percent.”
Future Car Ownership
- According to the Ipsos “The Future of Mobility” survey, “consumer predictions towards owning a car vs. using shared mobility in future” are as follows:
- 34% American consumers believe that “the cost of owning a vehicle will not significantly change in the future, but shared mobility services will be much more convenient, so most people will use them instead of owning a car.”
- 22% American consumers believe that “owning a vehicle will become much more expensive and fewer people will be able to afford it, so most people will use shared mobility services instead.”
- 51% Americans believe that “owning your own vehicle will be as important as today.”
- According to the Ipsos “The Future of Mobility” survey, the following are the reasons for Americans now owning a car in the future:
- 41% of Americans would not own a car “if the total cost of ownership (fuel, repair, maintenance, tax, insurance, etc.) reached an unacceptable level.”
- 30% Americans would not own a car in the future “if all/ almost all of their transportation needs can be simply covered for lower costs than if owning a car.”
- 16% Americans would not own a car in the future “if they received tax benefits from the state for not owning a car.”
- 11% Americans would not own a car in the future “if there was no available parking space/if parking space cost reached an unacceptable level.”
- And, 45% would not refuse from owning a car under any circumstance; the remaining 55% Americans would be willing to use or are using shared mobility services from a cost-saving/ affordability point of view.
Multimodal Transport Commuters
- According to Deloitte’s “2020 Global Automotive Consumer Study”, fewer than one in five Americans use multimodal transport for a single trip. This indicates that Americans are more reluctant to shift to multimodal transport than counterparts in other countries such as Republic of Korea, India, and China.
- According to an American Public Transport Association 2016 survey, nearly 10% of shared mobility users “could be classified as “supersharers”—people who said they had used some combination of the non-transit shared modes (bikesharing, carsharing, or ridesourcing) across all three trip types (commutes, errands, and recreation) within the last three months.”
- “Compared to people who haven’t used any shared modes beyond public transit, respondents who are experienced with new forms of shared mobility own nearly half a car -less—1.5 versus 1.05 cars per household. Vehicle ownership is even lower among supersharers, who own only 0.72 cars per household.” Car ownership is even lower among those using multimodal transport.
Awareness and Autonomous Mobility Adoption
- According to “AlixPartners Global Shares Mobility Survey, “awareness of ride-hailing services in the US was 86% in 2017.
- Nearly three in ten (29%) Americans say that they would be comfortable in a robotaxi or autonomous ride-hailing vehicles.
- “Some e-scooter and car-sharing services suspended service temporarily, while others maintained operations, implementing sanitizing and other hygienic measures” during the lockdown. However, the use of all transport modes in the US declined, except bike-sharing. “Apart from providing a way to avoid contact with others, bikes offered a healthy and convenient alternative and the opportunity to be outdoors, where the risk of infection is minimal.”
- 20-40% of US-based respondents in BCG’s survey said that post the lockdown, in the short-term they would use shared mobility lesser than they were using prior to the pandemic.
- “Those who used a given mode of transportation more than ten times a week pre-COVID are likely to stick with that choice. In the short term, between 67% and 76% of heavy users of shared mobility plan to continue using (or to increase their use of) those modes—which include solo or pooled ride-hailing, taxis, car sharing, and bike and e-scooter sharing.”
- Cost concerns featured prominently in McKinsey’s shared mobility consumer reports of 2017 and 2019. Respondents noted that solo ride-shares may be too expensive for daily use. The consulting firm reports that the fare per mile stands at $2.50 per mile, compared to the $0.65 cost per mile associated with vehicle ownership.
- Consumers also reported that “surge pricing” during high traffic times such as rush hour was a put-off. Commenting on this, McKinsey notes that “customers value price over other considerations and will base their transportation choices on that sensitivity“.
- Comfort is noted as a pain point of concern as consumers regarded shared transit options such as buses and trains, while inexpensive, as “low comfort“.
- McKinsey reports that most customers they interviewed intend to use ride-sharing services even more frequently in the future.
- Respondents interviewed by McKinsey also assert that they expect ride-hailing services to “coach drivers” to improve their behavior and attitudes, as well as train them to reduce waiting times.
- McKinsey reports that consumers are happy using ride-hailing services. 53.7% of those interviewed cite ease of use as their primary motivation, as another 40% cite lower prices, with 37.6% attributing their choice to the convenience of the service. McKinsey also adds that in this study, consumers note that they pegged their selection of a service based on the drivers’ behavior, condition and cleanliness of the car, as well as price and wait times.
- McKinsey reports that findings from the consumer report show that many consumers feel that vehicle pooling may cause “uncomfortable dynamic” between passengers as they are “basically strangers“. Another McKinsey reports that consumers do not enjoy vehicle pooling services because of privacy and safety concerns as well as time constraints.
- This McKinsey article echoes this sentiment, noting that shared commutes are “relatively unpopular” as most of the users interviewed, particularly “business people on the go“, are hesitant to share their rides with strangers.
- As a countermeasure, McKinsey proposes the use of purpose-built vehicles that are more likely to offer ” greater individual comfort and privacy”. McKinsey describes purpose-built vehicles as having “lower levels of complexity, less powerful engines, simpler easier-to-clean interiors, and less complicated assembly processes“. They would cost approximately 25% less than a conventional car.
Behavioral Changes caused by COVID-19
- This McKinsey report notes that the onslaught of the COVID-19 pandemic has caused shifts in travel preferences and behavior. The article quotes a US-based micro-mobility company that rents e-scooters which asserts that the pandemic has caused the average trip distances to increase by an average of 20%, with cities like Detroit increasing by a full 60%.
- For San Fransisco, McKinsey notes that runs to the pharmacy and restaurants have prominently featured in the shifts in shared mobility transportation offered in the city.
- Another commentary by McKinsey notes that the pandemic has reduced overall mobility by approximately 62% due to reduced travel. Intercity travel is highlighted as the anomaly to this, as McKinsey notes that travel by private car is becoming the more preferred option. Traditional shared mobility solutions such as trains and airplanes are expected to take a hit as the use of private cars becomes more prevalent.
- McKinsey also reports that the pandemic has caused more and more consumers to want to be “reassured of guaranteed pickup” now and in the future. McKinsey opines that shared mobility solutions may not be able to sufficiently meet this need over the short and medium term.
Shared Mobility: Trends
Several reputable sources agree on specific trends in the shared mobility industry. The trends found were carefully scrutinized for consistency across reputable platforms, and some of the trends were also noticed in the global market. The trends found have been detailed in the brief.
1. Leading Vendors Devise New Business Plans
- Automobile manufacturers, startups, and rental car companies are cooking up strategies to harness the shared mobility drift.
- Top vendors look towards new collaborations, mergers, acquisitions, and contracts to establish their services across different markets. Their success is no more based on their services, but on how they can spread their tentacles across borders. Local companies leverage the option of buying ride-hailing platforms.
- Even emerging companies are already launching strategies with strong investor networks to beat established automakers in market valuations.
- Leading vendors in the market contract their services and franchise to private operators. This helps the vendors penetrate a broader demographic of markets.
- At the forefront of this trend, Uber plans to buy Careem, although certain authorities in various countries are threatening to stop the acquisition.
2. Technological Advancements and Health Measures Shape the Market
- Information technology is becoming a key force in defining the shared mobility market of the future.
- The market is responding fast to recent advancements in technology. These include advanced safety features and the commercialization of self-driving technology. Americans are also concerned about their privacy, therefore the drive for better systems capable of maintaining the data security in shared mobility.
- For a very long time, up to 70% of Americans admitted to being afraid of riding in an autonomous vehicle. The release of new safety features has weakened that fear.
- Vendors are taking stringent measures in the health assessment of their operations.
- It is predicted that knowledge of top-notch health and safety measures put in place by ride-sharing vendors will become a critical criterion for obtaining and retaining customers.
- All these advances are the joint efforts of original equipment manufacturers (OEMs), information technology experts, and car-sharing providers.
- Among the companies driving this trend is Good Company.
3. American Mobility Behaviors are Changing
- Shared mobility continues to gain traction across all demographics. By 2040, 80% of the total miles driven in the United States will be via shared mobility solutions. Many commuters prefer shared mobility solutions due to their affordability.
- The behavior of Americans towards owning cars and obtaining their driver’s license is also changing fast.
- With more Americans warming up to car borrowing, shared mobility might lead to a reduction in car sales.
- Unfortunately, this trend is temporarily weakening due to the pandemic. Americans are reviving interest in owning cars to avoid contamination.
- Companies like Uber and Lyft are offering commuting services cheaper than private cars and driving customers’ traction in the United States.