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Self-driving cars may speed growth of car sharing, say experts


[Car2go President and CEO Nicholas C. Cole poses with a row of vehicles on display March 22, 2012 in Washington, DC.]

While the aggressively-expanding Uber ride-sharing service gets all the ink, an older form of shared on-demand mobility has been growing quietly, steadily and may be poised for a huge leap in popularity with the advent of autonomous vehicles.

Car-sharing services arrived in North America two decades ago, starting in Canada, and have proliferated in major cities. Starting with co-operatives and small-scale businesses, car sharing has lured a growing list of automakers who’ve invested directly.


According to the latest report by the Transportation Sustainability Research Center at the University of California, Berkeley, as of October 2014, car-sharing was operating in 33 countries on five continents and an estimated 1,531 cities. Some 4.8 million members shared more than 104,000 vehicles. Almost half the activity took place in Europe and about a third in North America.

For the auto sector, car sharing represents a potential revenue stream, a channel to introduce future customers to their products and a hedge against a day when car ownership could start to decline.

It could also prove a point of entry for the first self-driving cars, according to Paul DeLong, car2go’s North American president and CEO.

“It absolutely makes sense for car sharing is an opportunity for people to get their first basically taste of autonomous driving, kind of like electric vehicles for us,” he said in an interview with Yahoo Finance Canada.

The synergy of sharing autonomous vehicles is a hot topic in the car-sharing community, said Susan Shaheen, co-director of the Transportation Sustainability Research Center.

“There is a lot of focus today on the ‘trifecta’ of shared, automated, and electrified mobility,” she said via email. “Many are researching this convergence and have found notable energy, environmental, cost, and land use benefits to this.”

A paper co-authored by Shaheen and colleague Jeffrey Greenblatt last year predicted that if automated vehicles become common, shared automated vehicles will become a major transportation mode, with people able to summon a car via smart phone.

Autonomous shared vehicles open the door to affordable personal transportation for the elderly, disabled and vision-impaired, even those too young to drive, said McLachlin.

“We’re watching the autonomous cars very closely,” she said. “As soon as they’re available and tried and true and tested and the insurance regulations and liability things are all sorted out … we definitely see a future with autonomous cars as part of our fleet.”

This wouldn’t be the first time the public would be introduced to unusual cars through a car-sharing program.

Germany’s Daimler AG, which makes Mercedes-Benz cars among other things, claims to have been the first manufacturer to move directly into car sharing in 2009 with car2go, using its smart, a tiny two-seat city car. It now boasts a fleet of 14,000 vehicles, including 1,250 in Metro Vancouver, which is its largest in the world.

“At that time we had all the doubters,” Paul DeLong, car2go’s North American president and CEO, said in an interview. “We’re the largest car-sharing company in the world. We went under the radar.

“We have a lot more people that said you know what, maybe there is something when it comes to car ownership that may be on the decline in some cities.”

DeLong said car2go recognizes the limiting nature of its largely smart-car fleet, conceding it might have factored into its lack of success in Richmond and North Vancouver, two areas it recently left due to vehicles going unused in the car lots of long periods of time. It’s adding the Mercedes B-Class four-door hatchback in some locations and could include other models in future.

There is always the prospect, he said, customers might turn into future buyers. DeLong believes using the diminutive smart, especially the battery-electric version, might have put it on some people’s radar.

“How many people went out of their way to purchase a smart or how many people were frightened because of the size?” he said.

Still in the driver’s seat

The possibility of converting users into buyers is particularly important with the urban millennial crowd; they represent some of the heaviest users of the car-sharing services, while car ownership among the group continues to decline.

A recent survey commissioned by Modo, a large, Vancouver-based non-profit car-sharing co-operative, suggests younger Canadians aged 18 to 34 are embracing car sharing.

The poll by Insights West found 13 per cent of respondents in Metro Vancouver had tried car sharing in the last year, a figure that rose to 22 per cent among millennials who were surveyed.

“There’s evidence two-way car sharing is changing people’s behaviours and how they think about car ownership and even driving,” Modo executive director Selena McLachlan.

ALSO READ: Ford joins competitors in growing car-sharing field

Pollster Mario Canseco agreed but added it’s not clear whether the choices cash-strapped young people make now are predictive of what they’ll do in later life if they earn more and have families.

“Will they continue to car share or will they become car owners?” Canseco wondered. “I think that’s the big question for the car industry later on.”

Modo, one of the oldest car-shares in North America, started in Vancouver in 1997 as the Co-operative Auto Network, with two cars and 16 members. It now has 450 vehicles dotted throughout Metro Vancouver and Victoria and 15,000 individual members, as well as 400 business members.


[Some of Modo’s fleet in Vancouver. / Facebook]

There are dozens of commercial and co-op ride-sharing services in North America with tens of thousands of members. But car sharing remains a work in progress, especially among commercial operators who are experimenting with different business models.

Major companies embracing the trend

In addition to Mercedes-Benz’ car2go service, German rival BMW launched its own branded car-sharing scheme in 2012, while General Motors recently announced its Maven car-sharing service.

Ford is trying different approaches, including GoDrive in London, U.K., and Ford Carsharing in Germany, allied with Flinkster, a local car-share outfit.

It recently ended an brief alliance with San Francisco-based Getaround in several U.S. cities. The unusual arrangement allowed customers who’d financed their vehicles through Ford Credit to earn extra money by essentially renting their rides by the hour, day or week.

“The experiment with Getaround is now complete,” Christine Hollander, Ford of Canada communications manager, told Yahoo Finance Canada via email.

“We learned from the experiment, and now focused on more traditional car sharing efforts, including what we’re doing in London and Germany.”

ALSO READ: Car sharing won’t be as disruptive as self-driving cars: study

The London venture involves 25 hubs across the British capital with guaranteed on-street parking, while the German operation involves 170 stations tied to Ford dealers.

Many commercial operations such as car2go offer what’s known as one-way car sharing. You pick up a vehicle at a designated spot and drop it off elsewhere. Hertz and Enterprise car rental, even U-haul, have also dipped their toes into car sharing.

One-way car sharing is an attractive alternative to using transit or taxis, even bicycles, for short-duration trips, said McLachlin. But it also depends on the availability of those other transportation modes for the return trip, such as after an evening of drinks with friends, she said.

It also thrives best in high-density urban areas with readily accessible car-share parking spots, preferably near rapid-transit lines.

Two-way car sharing alternative to car ownership

Co-ops like Modo offer two-way car sharing, favoured by users who need vehicle for several tasks or longer trips, after which they bring the car back to its designated parking spot. They compete directly with car-rental agencies and private car ownership, said McLachlin.

“You can go across Canada, as long as you bring it back,” she said.

Zipcar, owned by rental giant Avis, also offers two-way car sharing, with Zipcar lots in Ontario and B.C., as well as across the United States.

But both types serve car-sharing’s primary goal of reducing the number of vehicles on the road, both private and commercial. For instance, it allows multi-car families to pare down their fleet and some businesses to do away with company vehicles or taxi and rental accounts.

And the two services are not mutually exclusive. McLachlin noted 40 per cent of Modo’s members also have memberships in car2go or Evo, which is run by the B.C. Automobile Association. It effectively reduces their need to own a car to zero, she said.

“They’ve figured out that car sharing is not one kind of verb,” McLachlin said. “There’s a need for one-way and there’s a need for two-way.”

The age of the smart phone has enhanced the utility of car-sharing services. Now, instead of phoning someone to book a vehicle, apps enable users to book online and also use the phone to unlock the vehicle. Old-fashioned lock boxes for car keys and printed log books are out.

ALSO READ: GM unites car-sharing services under new brand ‘Maven’

But the economics of car sharing is still being worked out. Car2go recently removed cars stationed in the Vancouver suburbs of Richmond and North Vancouver. DeLong said the vehicles were sitting idle for long periods and the two-seater smart’s were not well suited to suburban families.

“A lot of our trips are made for 15 minutes, 20 minutes, five-kilometre runs,” DeLong said.

Car2go recently pulled out of Miami, Fla., for the same reason, he said, and also stopped service in Copenhagen, Denmark. That’s not surprising, McLachlin observed, because one-way car shares are often spur-of-the-moment trips that cannibalize other forms of transport, like someone missing a bus or running late.

“So if you look at something like Copenhagen, it’s replacing cycling, yet they’re a very pro-cycling community so they’re unlikely to replace too many biking trips,” she said.

Hertz last summer closed its twice-rebranded U.S. car-share service and cut back its European operation while Zipcar’s friendly takeover by Avis reportedly was prompted by the firm’s soft financial returns.