Carsharing Part of the "Smart mobility" research report

With the flexibility and potential cost savings it offers, carsharing is set to chart strong growth in the near future.

Car Sharing

Carsharing: Extending the benefits of automobility without the attendant costs

Carsharing programs are changing how urbanites across the country get around. These services give consumers all the benefits of automobile ownership without the attendant high fixed costs (including purchase, insurance, maintenance, and parking costs).

In its most basic form, carsharing is car rental by the hour. Providers include commercial entities such as car2go, owned by Daimler Benz; DriveNow, owned by BMW Inc; and Zipcar, owned by Avis. They also include private individuals who participate in peer-to-peer (P2P) carsharing programs, renting their personal vehicles for use (e.g., through avenues such as Getaround, RelayRides). These P2P programs can serve less dense and lower-income areas than their commercial counterparts, which require a certain level of population density and a certain demographic profile to be commercially viable.

The expansion of carsharing is visibly changing the transportation landscape in urban areas. While these programs have existed since the '90s, they have grown impressively in recent years, achieving a sizeable consumer base and prompting major automakers to acquire carsharing companies.

Last year, commercial carsharing membership in the United States rose by 34 percent to more than 1.3 million members, up from less than a million in the previous year. The nation’s commercial carshare fleet grew to more than 19,000 vehicles in 2014, an increase of more than 2,300 vehicles from 2013.1

The growing popularity of carsharing should come as no surprise, since autos are unlikely to be replaced anytime in the foreseeable future as the “personal vehicle” of choice. As Chris Borroni-Bird, co-author of Reinventing the Automobile: Personal Urban Mobility for the 21st Century, explains, “No other means of transportation offers the same valued combination of safety, comfort, convenience, utility, and choice of route and schedule.”2 More than 75 percent of US consumers still see the personal car as their preferred mode of transport, although this preference is lower among younger consumers.3 For Generation Y consumers, in particular, affordability and high operational and maintenance costs are enough to dissuade many from owning a vehicle, making carsharing programs an attractive alternative.4

Growth and trends

Carsharing’s steady growth has been accompanied by a corresponding increase in studies of the phenomenon. The trends that will determine carsharing’s future thus are becoming clearer. Here are some highlights.

Carsharing services are a niche transportation option for certain demographic groups. Today’s typical carsharing participants live in urban neighborhoods with medium to high household densities and have relatively high education levels; a large proportion of them rent their homes. For carsharing services to be commercially viable, a new carshare “pod”—that is a fixed parking area for one or more carshare vehicles—needs a minimum of households from the target demographic within a half-mile.5

Carshare members eventually reduce the number of cars they own. While many members are already carless when they join carsharing programs, research shows that overall participants eventually reduce their average vehicle ownership from 0.47 to 0.24 vehicles per household, with one-car households that become carless constituting most of this shift.6 This shift typically takes place over several years.

Carsharing services are leading more Americans to forego vehicle purchases. As more Americans come to view carsharing as a viable alternative, they will forego the purchase of a vehicle. One analysis found that carsharing services led Americans to forego the purchase of 500,000 new or used cars between 2006 and the end of 2013.7

The congestion-relief potential of carsharing rises with the number of carsharing services. Studies show that carsharing significantly reduces the number of cars on the road. According to one estimate, each carsharing vehicle reduces the need for 9 to 13 private automobiles.8 At the same time, the average number of vehicle-miles traveled by carsharing members is also reduced, with estimates of the reduction ranging from 26.9 to 32.9 percent.9

The evolution and growing ubiquity of carsharing services should fuel continued growth. Previously, carsharing was limited to neighborhoods within half a mile of an available parking lot. This is no longer the case. Business models have evolved to include both point-to-point and round-trip systems, while parking options have expanded to include both on-street and dedicated spaces in an increasing number of new developments, increasing the flexibility and convenience of carsharing. As carsharing networks become denser and more ubiquitous, their attractiveness to vehicle-holding households will increase.

Changing consumer preferences will facilitate the growth of carsharing services. A recent global Deloitte survey of consumer attitudes and preferences revealed that, among 23,000 consumers in 19 countries (in both developed and developing markets), an average of about 50 percent of respondents did not consider personal cars as their preferred mode of transportation.10 The study showed that the views of younger Americans are often in line with those of their peers overseas. In the United States, just 64 percent of Generation Y consumers view the personal car as a preferred mode of transport.11 This shift in consumer preferences will further broaden the appeal of carsharing.

Estimating carsharing potential

As with ridesharing and bicycle commuting, we modeled the maximum potential benefits of carsharing (see appendix B for details). Our method was simple. We identified neighborhoods nationwide where carsharing is likely to be feasible, using established criteria for where carsharing works and where it doesn’t.12 (We relaxed those criteria slightly to account for ongoing improvements to carsharing’s business models and efficiency that are increasing its reach.) Then we calculated the likely potential carsharing members in each of those neighborhoods, and estimated how many of their cars they would shed and how many fewer miles they would drive daily and annually once they join a carshare program.

In the United States, we estimate that carsharing could reduce nationwide vehicle ownership by nearly 2.1 million, or slightly more than 1 percent of the total number of vehicles in the United States in 2013, according to the Census Bureau. Academic research suggests that new carshare members would reduce their daily travel by 1.87 vehicle miles each over time, allowing us to calculate savings from congestion reduction, carbon emissions, and safety improvements.13

We project the potential annual savings from carsharing to reach a ceiling of $4.3 billion annually. These savings would come from different sources. Drivers who become carshare members would eventually save $1.4 billion in direct vehicle maintenance and upkeep costs as they reduce their own driving. Commuters nationwide would benefit from reduced congestion, avoiding $185 million worth of wasted fuel and $2.2 billion in time delay.

We project cities would save $366 million in annual deferred road construction costs, $77 million in accident avoidance, and $36 million in savings from almost 1 million metric tons of reduced carbon dioxide emissions.

As with real-time ridesharing and bike commuting, not all cities would benefit equally from carsharing. Figure 6 displays our estimates by metro area.

DUP-1027_Fig-6_Estimated-economic-impacts

Figure 6 shows that the largest, most densely populated cities have the most to gain from increased carsharing. The New York City metro area could reduce its vehicle population by almost 3 percent if carsharing were fully implemented, and could potentially see carsharing membership as high as 13.2 percent of all commuters. VMT reductions from these new carsharers could lead to $1.4 billion in annual savings to New York City and its commuters, including $127 million in deferred annual road construction costs. Chicago, San Jose, San Francisco, Oakland, Washington, DC, Baltimore, and Boston are not far behind in their carsharing potential.

Figure 7 shows neighborhoods of the New York metropolitan area where carsharing is feasible, and where the predicted vehicle reductions from carsharing would be concentrated.

DUP_1027_Figure 7. Carsharing feasibility, New York metropolitan area

As figure 7 indicates, carsharing offers high potential benefits for cities such as Jersey City and Union City. Some New York-area cities are already moving in this direction. Hoboken rolled out its Corner Cars municipal carshare program in 2010 in partnership with Hertz, and saw immediate reductions in car ownership among members.14 White Plains, NY saw its first three Zipcar pods go live in 2012.15

Small college towns are fertile ground for vehicle reductions as well. Moscow, ID is a typical example of a college town with a high potential vehicle reduction from carsharing. For small towns in rural areas, carsharing’s most important benefit may be its role in attracting and retaining a young, educated workforce. A recent study of what makes communities desirable for Millennial workers found that 31 percent wanted a combination of trains, light rail, buses, carpooling, carsharing, ridesharing, bicycling, bike sharing, and walking as their primary ways of getting around. Between 23–39 percent of respondents, depending on where they lived, said they wanted their primary method of transportation in the future to be something other a personal car.16

Five ways to accelerate carsharing

  1. Assist providers with startup costs. The startup costs associated with launching a new carshare pod are considerable: the vehicles themselves, the associated technology, the acquisition of parking spaces, and the costs to market the new service. Normally, a new pod requires about six months to achieve financial viability.17Financial assistance from city governments and public transportation agencies can facilitate the expansion of carsharing to new locations where the market is not yet established. Such investments can offer attractive returns: Paris invested $47 million in its Autolib electric carsharing program in 2011, expecting that its investment would be returned through subscriptions by 2018. Recently, however, Autolib announced that the investment would be paid off in less than half of the time originally anticipated.18
  2. Build awareness of carsharing as a less-expensive alternative to car ownership. Transportation agencies can help market carsharing as one of a number of transportation alternatives available to their residents as part of a long-term strategy to build greater public awareness of multimodal options. Portland, ME, which leads the nation in declining vehicle ownership, has begun to market itself to young professionals as a city where living without a car is not only possible, but even preferable.19
  3. Provide public parking spaces for carshare vehicles. The rates carsharing providers pay for parking range from free (as dedicated spaces included in developments or other partnerships) to market prices. To facilitate the expansion of carsharing, cities could opt to discount the price for public parking or to provide spaces for free.20When compared with the cost of investing in other means of congestion reduction, such as expanding roadway infrastructure, some cities have found that making public parking spaces available for carshare vehicles yields a comparatively good return on investment. In 2012, for example, Washington, DC provided universal parking passes for 200 carshare vehicles to promote one-way carsharing in the District. The lost revenue from parking fees is offset by annual fees paid by the service provider.21A 2010 University of California at Los Angeles study found that the university’s cost per carsharing vehicle was $1,500 per year in user subsidies and lost parking revenue, but this could be offset by costs for building new parking structures, which were estimated at $37,030 per space, adjusted for inflation.22State and regional governments can help this trend by encouraging municipalities to include long-term social goods in their ROI calculations for carshare projects.
  4. Consider development requirements that support carsharing. Cities can encourage carsharing by requiring developers to include dedicated carshare spaces in new projects. Montgomery County, MD aims to nurture alternative transportation by giving developers a range of options concerning what parking they must include in new projects.23 A city councilor in Portland, ME—who himself does not own a car—stated in 2012 that Portland’s decision to reduce the number of parking spaces required for new developments has lowered development costs and increased the pace of new development.24
  5. Support carsharing through fleet sharing. State and local governments can support the expansion of carsharing in areas with a government presence by developing fleet-sharing agreements with commercial carshare providers. Government entities could save money by replacing a portion of their fleets with vehicles managed by a carshare provider. The guaranteed revenue provided by the agreement would, in turn, benefit carsharing providers by helping them cover the capital costs of expanding service in the area. These agreements could also even allow carshare vehicles to be used by private citizens members during non-business hours, when the demand for such vehicles is greatest.25

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