Mobility services 'will polarise market'

November 14, 2016

Mobility services will create a polarising shift among OEMs’ customers as their popularity grows. Carmakers will need to expertly manage sales, marketing and their dealer networks to protect or grow market share as a result.

Where consumers were previously a single group of end-users who could be targeted with similar marketing messages, users of mobility services split into two categories – hirers and users.

Hirers are the car owners, who use new mobility service platforms to rent out their vehicles as a source of income when they aren’t using them. Users are the customers, who utilise mobility services provided by hirers or by companies that offer car-sharing services.

Neither group will be exclusively tied to mobility services as they may also own a private car.

This shift represents a major challenge for carmakers, as consumers will exhibit changing needs and loyalties that go beyond the traditional boundaries of car ownership.

Hirers may be swayed in their choice of vehicle because they can access a particular software platform or because a model of car is more suitable for intensive use by multiple users. Replacement cycles may also be more frequent, depending on the success of a hirer’s car sharing efforts.

Users may be directed to certain brands by the software platform they use to hire vehicles or by their perception of quality and value for money when it comes to available vehicle choices.

The change in market dynamics will wipe out traditional certainties about brand choice and market share as the two groups develop and change.

Consumers who spoke to research firm Kantar TNS reflected the increasingly complex market, with about one-third - the users - saying they would either avoid buying a car of their own, postpone a planned purchase or sell one of the vehicles they have at home.

While new car sales among this group may fall, the vast majority of lost orders will be replaced by the second group - hirers - who are more likely to keep a car they planned to sell, replace their car earlier than planned or buy a model more suitable for hiring.

Research firm Kantar TNS estimates that 30% of the urban population will use mobility services and either become hirers or users and that there could be a 10% drop in the urban vehicle parc overall.

However, research for Autovista Intelligence’s Mobility Intelligence report indicates that sales will rise when sales to companies offering car sharing services are included.

It says car-sharing operators typically replace their cars every 18-24 months; margins are too tight to realise a profit on vehicles if they use a shorter replacement cycle, but beyond 24 months, the vehicle has been used so intensively that the residual value drops off.

Furthermore, the majority of members who join a car-sharing service do not own a car and had no plans to buy one.

The additional complexity of the market makes it essential for OEMs to maintain close relationships with consumers. This is becoming easier through smartphone apps linked to mobility services.

Where once OEMs needed a customer to visit a dealership or respond to advertising, now they are actively engaging online through app-enabled smartphone services such as BMW/ Sixt-owned DriveNow or Daimler-owned Car2Go.

This week, Daimler moved to widen its consumer influence with the launch of a new car-sharing platform, Croove, which will go live in December 2016, initially in Munich.

The smartphone app pairs up users with private owners of any brand of vehicle.

The project is part of the carmaker’s CASE strategy, which covers connectivity, autonomous driving, car-sharing and electric drive systems.

Dieter Zetsche, Daimler chairman, said: ‘On average, a car is parked up for 23 hours a day. Why not make it earn a little money during this time? Car-sharing will be a key element of the mobility concept in tomorrow's cities.’

Daimler also owns the recently merged mytaxi and Hailo services which created Europe's largest app-based taxi booking service with a total of 100,000 drivers.

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