Why the Car-Sharing Economy Won’t Kill Ford
With an increase in population density of the largest U.S. cities, the need for better mobility has been preoccupying automakers with a new generation of consumers on their hands. Clearly, the “two cars per family” model is unsustainable in New York, San Francisco, and other bustling metropolises. Considering the willingness of millennials to share rides and the growing expense of owning a vehicle in big cities — not to mention its environmental impact — car sharing looks more like the ideal solution for the future of mobility.
Understanding how gridlock and other mobility issues could turn away car shoppers, Ford Motor Company is exploring different ways to attract young drivers without adding vehicles to the road. Car sharing is an obvious place to start. As the 2015 Ford Trend Report indicates, Americans under 40 are ready for a shared vehicle in their lives. Among the highlights from the report, 70% of Americans said they were open to unconventional modes of transportation. Other studies by the automaker revealed 56% of Gen Y and Gen Z were open to sharing rides.
Among everything Americans would consider sharing, “rides in a car” took second place behind only books (hard copies with a spine and pages, we’re assuming). Comparing the magnitude of daily transportation compared to passing a book among friends, automobiles hold a commanding place. The growth of Uber and other ride services (especially in their car-pool manifestations) indicates this trend will continue growing.
Automakers are keen to be part of the solution. Recently, Ford began testing a car share service that offers one-way trips in economical vehicles for London residents who need a short-term rental. This model meets a need for greener transportation (in the effort to reduce greenhouse gas emissions) as well as the mobility issues chairman Bill Ford has referenced in his public appearances
Facing a future in which millennials are as likely to pay for a piece of a car rather than the whole thing, automakers face a crossroads in their existing business models. A Ford program introduced June 23 addresses the issue in a novel way.
At the Further With Ford Trends conference in Palo Alto, chief executive Mark Fields introduced the Peer-2-Peer Car Sharing service that is a new element of the company’s Smart Mobility program. In this system, buyers of Ford vehicles would be able to rent their cars to drivers screened by the automaker, with each side pocketing part of the fee. It will launch with 14,000 participants in six U.S. cities and have a simultaneous run in London.
The point is reducing the total cost of vehicle ownership. According to research conducted by Penn Schoen Berland, one third of millennials are interested in renting out their possessions with over half saying money savings was the biggest advantage of the sharing economy. Ford’s Peer-2-Peer system gives owners concerned about initial payments a way to defray costs; for Ford, it gives the automaker a way to take some of the ride-share market occupied by Uber and Lyft.
Environmental impact is not lost in this shuffle by any means. According to Ford’s studies, 64% of Americans say sharing lessens environmental impact. Experiments in car swapping, in which a driver of an SUV might trade a compact car owner for the day, are also underway in Dearborn.
Millennials may not be able to afford one car (let alone two) with city parking costs and the price of urban living rising. Sharing a vehicle or using one only when you need it seems like a better solution as a generation’s priorities evolve. Companies that hit the right price point in the greenest way possible will find millennials a receptive audience to car sharing.