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Why own a car when you can share or subscribe one?

While the shift towards shared mobility had begun long ago, the idea has now clearly come of age moving towards subscriptions.

By: Amit Kumar, CEO of OLX Autos India

Shared mobility, as the name suggests, is the idea of sharing transportation modes, regardless of whether it is public transportation, personal cars or even bicycles. It is not a recent concept; rather, its origins can be traced to 1940s Switzerland. Shared mobility’s current form took shape, starting about a decade ago, when the first ride-hailing platforms were launched. Additionally, advances in network connectivity and wireless technologies have accelerated ride sharing uptake.  

Meanwhile, there are a host of autonomous vehicles (AV) in the offing, with a few already having begun operations. Tech behemoths such as Google, Apple and Amazon all have AV development programmes in progress. And making fast inroads in the shared mobility space are car subscription services. 

What is interesting to note is the fact that personal cars have long been perceived as status symbols. But personal cars are, on average, parked 95 percent of the time, while loan repayments against these depreciating assets last anywhere between three and seven years. Millennials, in particular, have been quick to recognise this not-so-efficient aspect of car ownership. 

Popular shared mobility options

From a global standpoint, Zipcar was a shared mobility pioneer. The Boston, US-headquartered firm began operations in 2000. It was acquired by the Avis Budget Group in 2013 for an estimated US$500 million. 

This ride sharing platform’s model is an interesting one in that users can pick up a vehicle from designated parking spots across a city. This is unlike rental cars that must be picked up and dropped off from a company location with filled fuel tanks. Additionally, rental fees are charged by the hour and not on a daily basis. 

Over the past decade, ride hailing services such as Uber, Ola, Lyft, Grab, GoJek and DiDi were key towards popularising shared mobility across the world. They offer convenient transportation solutions without the need for car ownership and the responsibilities that come along with it. 

Uptake of car subscription services

The term subscription typically brings to mind books or OTT services. In recent years, the same philosophy has been tailored to offer innovations in shared mobility. Major global players in the car subscription space include Fair Financial Corporation, Clutch Technology, CarNext and FlexDrive, among others. This segment’s growth is expected to be highest in the Asia-Pacific region on account of higher populations and rapid urbanisation. 

One early entrant in the Indian car subscription space offers two kinds of cars – namely, unboxed and brand new. Unboxed vehicles are units that are less than two years old. Subscription periods range between one month and a maximum of 48 months. During this tenure, the subscription company will manage vehicle maintenance, road tax and insurance payments. The user will only be charged a flat monthly fee. 

Over US$100 billion has been invested in shared mobility companies in the past 12 years. This growth–in shared mobility–mirrors the increasing participation in a sharing economy.

Autonomous vehicles and ride sharing 

Robo-taxis and AVs are definite shared mobility modes of the future. Vay, a Berlin-based AV startup is on the cusp of receiving regulatory approval to launch its fully-remote fleet. The company has been testing its technology for two years on Berlin’s streets, with safety drivers at the wheel. Likewise, Swedish autonomous truck company Einride is among the leaders in the autonomous trucks sphere. 

The shared mobility market is on track to register significant growth over the next five to seven years; it will grow at a rate of 16 percent CAGR and clock US$180 billion in 2025. There is a strong possibility that even higher growth levels may be witnessed as robo-taxis become popular. Currently, robo-taxi services have been launched in Phoenix, Arizona by Waymo – Google’s AV division. Once these become commonplace, it is safe to say that new vehicle ownership levels will see a marked decline. 

Shared mobility and environmental stewardship 

Aside from the convenience and lower cost aspects, shared mobility also fulfils environmental goals and alleviates traffic congestion in cities worldwide. In densely populated countries such as China and India particularly, shared mobility will see the highest growth levels. Research and analysis firm FutureBridge says, “China is a leader in ride-hailing services and some of the leading players like Uber and DiDi already have gained a strong foothold in the country through joint ventures, collaborations, and M&As.”

Shared mobility promises substantial reductions in CO2 emissions and significantly less fossil fuel demand. Both are key facets of the United Nations’ sustainable development goals. Zipcar, for example, estimates that for every one vehicle they offer, they are substituting the role of 13 vehicles. Over the course of its operation, it estimates that it has kept 415,000 additional vehicles off of roads, resulting in reduced carbon emissions of upto 1.6 billion lbs annually. 

With the Russia-Ukraine conflict leading to a steep increase in crude oil prices, chances are millions of people globally will explore shared mobility options to offset mounting fuel costs. More importantly, traffic congestion will be eased while the inconvenience and expenses associated with parking will also be a thing of the past. Amid such developments, the question on top of mind is, “Why own a car when you can share one?”

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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