Pros and Cons of P2P Car-sharing

Hello!

My name is Sergey, and I’ve been working at Bright Box since 2014 as a product manager on various cutting-edge connected-car and dealer-to-owner hardware/software IT solutions.

And according to numerous rumors, long-term predictions and official car makers’ announcements, car ownership will also evolve and turn significantly different from what it has been for ages.

They say that, in a few years, car ownership will be transformed into owning your time and mobility without the hassle of maintenance, repair and insurance.

This vision of future transportation seems the most plausible to me personally, and today I’m about to kick off my series of Medium.com posts (actually, this is the first) reflecting my point of view and worldwide experience on:

  • Urban Transport Infrastructure (Public Transport + Rental Cars + Taxi + Car-Sharing + . . . .)
  • Vehicle Remote Control
  • P2P Car-Sharing

Last but not least is the trend mentioned above — P2P car-sharing — which is the most obvious win-win approach for owners and car makers, as it is for me.

Wikipedia determines peer-to-peer car-sharing (also known as person-to-person car-sharing and peer-to-peer car rental):

The process whereby existing car owners make their vehicles available for others to rent for short periods of time.
Peer-to-peer carsharing is a form of person-to-person lending or collaborative consumption, as part of the sharing economy. The business model is closely aligned with traditional car clubs such as Streetcar or Zipcar, but replaces a typical fleet with a ‘virtual’ fleet made up of vehicles from participating owners. With peer-to-peer car-sharing, participating car owners are able to charge a fee to rent out their vehicles when they are not using them. Participating renters can access nearby and affordable vehicles and pay only for the time they need to use them.

This is the long story short: Users get pay-as-you-drive access to available cars around (with insurance, maintenance and car wash included); car owners get paid each time someone books their car. Additionally, car makers get average-mileage increases (up to two times per car). Therefore, the scheduled-maintenance-visits count also increases dramatically.

Automotive industry goes eco-friendly

I haven’t even mentioned ecological benefits: CO2 (and NOX and PM10) emission reduction, a decreased overall number of vehicles, lower pollution and gas consumption in properly maintained cars, freed-up parking space and much more. So, the wider usage of P2P car-sharing networks could become a strong, environmentally friendly governmental initiative.

These initiatives have been developed over the past two years as part of seamless city mobility programs such as Smart City Singapore, Transport For London (TfL) and many more. The U.K.’s approach seems more remarkable, as they had already had offline “Car Clubs” (based on owners’ cars) running for a few years when the first rumors on P2P car-sharing spread worldwide. So, these clubs are currently involved into new nationwide transport infrastructure along with public transport, taxi, rental fleets, etc., as described in TfL’s “Car Club Strategy” document.

Still there remain important challenges (especially concerning P2P part of new vision of mobility):

Challenge 1: Low public awareness

What is P2P car-sharing?

Because the market of shared mobility is currently at the upgrowth stage in most European countries, public transport remains the main mobility option for those citizens who don’t own cars.

Let’s say 37% of Londoners have never heard of car clubs at all. Overall, the car count on darenta.ru (Russia’s first online P2P car-sharing) is approximately 800, which is 0.001% of Russia’s 56 million registered private vehicles. It’s a humble result, isn’t it?

Challenge 2: Lack of confidence to P2P car-sharing

Sure, the “shared economy” state of mind requires long-lasting promotion and explanation through years to overtake the “ownership” one. Legislative advantages and reduced taxes are also very important as incentives to encourage car owners to share their cars.

Another controversial question concerns the responsibility and reliability of club members. Would you, as a car owner, prefer to let only your friends or neighbors drive your car, or you just wouldn’t care who drives your car because you have full insurance coverage? TfL predicts 500K shared car club members by 2020 (currently there are 135K users) in the U.K.

Recently I conducted a bit of research: I drive my car (2015 Kia Forte AT) in Moscow, Russia, for about 1.5 hours every day (6% out of 24 hours). Although owning the car costs me about 500 to 700RUB daily (10 to 15 euros, three-year approximation based on the residual value of my car with minimum obligatory liability insurance). Sharing my car with club members, let’s say, for 0.10EUR/minute for two hours weekly could have doubled the usage efficiency percentage and earned an additional 700–900 euros for me annually (an amount comparable to the yearly cost of maintenance and insurance).

Challenge 3: Route types to focus on

According to experts’ research, all routes can be categorized into three groups. (This refers to the whole transport system but is also true for P2P car-sharing.) In conditions of currently low (but constantly growing) membership, the P2P car-sharing business has to focus on certain types of clubs based on route types (or to accept high logistics expenses and incorporate them into fares):

  • Round-trip (A-B-A)

This model involves a car club member booking a specific car, located in a
dedicated parking bay, for a period of time and then returning the car to the same dedicated parking bay, before the end of the reserved time.

This type of route can become a focus of neighborhood-based P2P car-sharing products. Let’s say, everyday commuting from home to work and then back can be fully covered by this kind of products providing mobility to those who book cars on a daily (or almost daily) basis and extra income for those whose cars are vacant in the daytime.

  • Fixed one-way (A-B)

This model involves a member starting a reservation in an available car at a designated parking bay and driving to another designated parking bay, where the reservation ends.

This type of route obviously causes car return, and maintaining the constant availability of cars incurs a density expense. Existing car-sharing companies with commercial fleets usually offer discounts for returning cars to the city center, and they even have dedicated employees responsible for getting cars back to the places of highest demand.

  • Floating one-way (Floating A-B)

This model requires that a member spontaneously identify an available nearby car, reserve that car and drive it to his or her destination, wherever that may be. To end the reservation, they must park the car within a specified geographical operating area, allowing for one-way trips or round trips. This strategy addresses round-trip, one-way and free-floating operations.

This model is also hard to forecast and schedule a specific car occupation. Returning car also is on company’s expense.

Thus, the second (A-B) and third (floating A-B) models will probably be more expensive and less trustworthy for the user, mainly due to the higher risk that there won’t be an available car nearby at a given moment. The risk is increased in the case of scheduled future rides.

The neighborhood-based round trip (A-B-A) P2P car-sharing model has geographical constraints, but it offers planning, reliability and total cost advantages that are comparable to with others.

However, a truly disruptive product should probably cover all three types of routes from the very beginning. So, what approach will we take? Will future car makers put their efforts into building brand-based P2P car-sharing clubs?

Questions asked . . . . What’s next?

My personal opinion is that in three or four years the sharing economy will spread over huge markets, including the automotive industry.

You can also express yourself on a car-sharing product vision by completing my five-minute P2P car-sharing survey: https://ru.surveymonkey.com/r/HKBY6WB

One more announcement:

My teammates and I are about to participate in the Junction 2016 Hackathon (November 25–27th, Helsinki) to build and validate a prototype (MVP) of fully automated (keyless) P2P car-sharing platform based on the Remoto (connected car) and Embers (connected parking bay) technologies in front of more than a thousand developers and experts from all over the world. Please, stay tuned and subscribed so that you won’t miss our future posts.

You can also feel free to visit our website and Facebook page. We’re building an end-to-end platform that makes car ownership easier and brings a new level of connectivity to every car. OEMs and dealers also win, thanks to tailored big-data analysis and fleet management:

Remoto

To contact me directly please use LinkedIn, Facebook or Telegram.

Thank you!