A research note from the autos analysts at Deutsche Bank suggests that the rise of car sharing could create new opportunities for carmakers and that the view of a shrinking market could be wrong.
"The consensus view is that auto sales will decline, and that this will be negative for U.S. original equipment manufacturers," writes Deutsche Bank's team. "We believe that the consensus view may be wrong."
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The bank's team agree that the vehicle fleet will likely fall as vehicle utilisation rises, with population density serving as a key determinant of the size of the on-demand fleet. The net effect in the US could be to reduce the vehicle fleet by around 25m units. However, they point out that vehicles utilised more intensively will have a much shorter life-cycle – just three years for an on-demand and shared vehicle, they estimate. The higher rate of turnover of a smaller fleet would see sales volumes rise, according to the analysts.
"US sales nonetheless increase under every scenario we've examined because vehicle scrappage is determined by miles driven," the research note says. "Each on-demand vehicle will travel more miles (10 to 20 percent more) than the cumulative six to nine privately owned vehicles that it replaces."
This increase in aggregate mileage is primarily attributable to "empty legs"—that is, the distance on-demand vehicles would travel going between one passenger and another. For instance, the analysts note that nearly half of the miles that uberX drivers travel in New York City are without a passenger.
The researchers also point out that under the car sharing scenario, the auto industry becomes less cyclical, as miles travelled, rather than the state of the economy and credit conditions, will drive sales volumes.
