Emerging trends in urban mobility such as the growth of car sharing are accelerating according to the analysts at Frost & Sullivan.
Transportation analyst and Frost & Sullivan partner Sarwant Singh says that new trends in the area of urban mobility have accelerated over the past year.
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He cites a number of examples such as the growth of car sharing (including rental by the hour), lifestyle retailing, rising vehicle connectivity and the explosive growth of online retailing.
“To take car sharing, initially we saw the premium OEMs getting involved, but volume players are now starting to get active in this area. Ford, for example, has now got into car sharing with Fordtogo which is a project to provide car sharing across all Ford dealerships in Germany. We are also seeing more leasing companies getting into the car sharing business.”
Singh says that the car sharing business itself is changing. “It was seen as a consumer business model. But we are now seeing more corporate car sharing. This is something that the car leasing companies are driving.”
Singh also maintains that the lines between traditional car rental and the emerging car sharing business are becoming increasingly blurred. “Avis has bought Zipcar, so Avis is now in short-term rental. Interestingly, Hertz has recently bought a leasing company – so they are flexing for longer-term business, typically two or three year lease contracts. So the whole space – short-term, medium-term and long-term rental – is getting more blurred, companies getting into each other’s territories.”
Avis is now targeting the airport business. It has already happened in the US and the idea is that Zipcar can work off established Avis rental infrastructure. “Airports are where the car rental companies traditionally make their money,” Singh says. “And this is an important development. Imagine you land at Heathrow, take a Zipcar, drive home and leave the car there. Also, business people flying in for a meeting might also prefer a car for a few hours as an alternative to taxis.”
Another key trend is the rapid evolution of digital technologies in the urban environment. Singh cites the emergence of ‘lifestyle retailing’, such as that offered by Audi with its ‘City’ outlet in London. Potential buyers can configure cars on large screens, an experience suited to city living and that uses up less space than the traditional dealership. “It’s more of a lifestyle kind of retail concept – like Apple – and means that you can have a retail point in the centre of the city, rather than in the outskirts where land is cheaper. Audi has only three cars in the whole showroom, but the advanced digital technologies mean that you can see any car you want on the wall, put options on, you can gesture control and so on.”
Digital connectivity is another driver and autonomous driving is something that is beginning to attract much more attention, even if the fully driverless car remains some way off as a commercial proposition rather than an experimental car. “We might not see significant autonomous driving before 2020 but we will see certain features of autonomous driving such as valet parking and traffic-jam assist. With traffic-jam assist, if you are caught in a traffic jam, the car will drive itself up to a speed of, say, 30mph. You can take your hands off the steering wheel, check your email or read a book…”
That’s an interesting vision. Driving in heavy traffic, having to work the brakes, clutch and keep your eyes on the slow but variable speed of the car in front can be hard work. But the position of the car in the urban environment is also part of wider trends in urban transportation, Singh points out.
“In many major cities, including London, we are seeing that more people are using bicycles and buses. And we are seeing the increasing integration of mobility using data, so that people can use different modes of transport. There are more apps becoming available to give people more information about journeys.”
What about the talk of more young people eschewing car ownership in large European cities? “In Germany in the last few years there has been a 25-30% decline in new car driving licenses issued to the under-25s. People are applying for driving licenses much later in their lives.” At the same time, older people are driving for longer and there are more of them around, so the driving population is becoming older. The old timers of the future may well be grateful for the fancy electronics that make driving a car easier.
The premium OEMs who are getting into car sharing – for example, Daimler and BMW – are also, Singh believes, listening to their customers. “They may well want to continue to own a premium brand vehicle as their main car, but if they live in a city and own a second car for mainly urban use, that car may well not be replaced in the future – with people much more open to joining a car club or car sharing.”
When urban mobility trends are discussed, the emphasis tends to be on personal mobility and people movements. However, Singh highlights a major change which is impacting the movement of goods and freight. “We are seeing very rapid growth in online retailing,” he says. “The UK is the online retail capital of the world. In UK in 2009, only 4% of all retail sales were online. In 2011, that had grown to 11% and it is now around 14%. A department store like John Lewis is now at around a quarter of its sales being online. This growth is creating an increased demand for light urban delivery. Iveco recently sold 2,000 trucks to Tesco for its home delivery business. The trucks are engineered to operate in an urban environment. So, the urban logistics market is growing fast and that’s benefiting some commercial vehicle manufacturers.”
See also: ANALYSIS: Car rental companies take acquisition route to car-sharing business
On June 19-20, Frost & Sullivan is hosting an event in London entitled: “Urban Mobility 3.0: New Urban Mobility Business Models.” More details
