Friday, December 30, 2011

Carsharing Year in Review - 2011

2011 has been a landmark year for carsharing in the US and worldwide. Here's my annual review of developments in carsharing for 2011.

Before getting into specific developments, I'd like to make two general observations:

Are we seeing a demographic tipping point? — This was the year when the mainstream marketers admitted that many in Gen Y ("the Millennials") weren't thinking about cars the same way their parents were - they'd rather have their iPhone than a car. Car registrations and VMT are down; significantly fewer teenagers waiting before getting their driver's licenses; and especially an explosion of bicycle use in cities (even those without bike-friendly reputations).

I've always thought this 2009 headline in the Globe and Mail (Toronto) newspaper captured this shift in thinking about cars very nicely - "Object of desire or necessary evil?"

Parking is fundamental - Parking is a fundamental but often under appreciated aspect of car use. It wasn't until Donald Shoup layed the cards on the table in his landmark "The High Cost of Free Parking" that most of us realized just how fundamental parking really is. And carsharing operators also know how fundamental parking is to the success of their business. That's why designated parking on public streets has been such a holy grail - convenient access and great marketing exposure. And, as you'll see in several items below, some carsharing companies are slicing the parking issue in new ways - car2go and Zebramobil, as well as RelayRides in San Francisco are opting for floating parking (among other things).

And while on the topic of parking, I can't ignore the really goofy decisions that led to a bidding war for dedicated on-street parking spaces for carsharing companies in Washington DC during 2011.  DC has had a troubled history with carsharing parking, almost from the start in 2001 on-street parking seemed to generate more negative publicity than I've heard in any other city.  I'm sure the companies don't mind paying for such a valuable resource but for something that supposed be good for the city, the "bidding war" seems like a terrible to try to backfill the DDOT budget.  And if press reports are any indication, Zipcar probably didn't handle things as smoothly as they might have.

Now on to the big news of 2011:

Zipcar IPO — it finally happened!  After several years of speculation, Zipcar's new life as a publicly-traded company started in April.  And it got off to rousing start jumping from the $16 asking price to over $30 for a few days and then back to the mid teens, where it's been most of the time since then.  Since then investors have been debating the underlying fundamentals of Zipcar, and trying to understand carsharing, in general.

I think the significance of the IPO is, first and foremost to legitimize carsharing as a valid business model that investors can and should take seriously - a sort of "coming of age" for carsharing and new mobility.  So far profitability seems to be just out of reach for Zipcar, but they seem to be close enough and seem to have a big enough scope that investors continue to be cautiously optimistic. The market has spoken — certainly for North America but to some extent worldwide, as well.

Auto Manufacturers Enter the Carsharing Space — Daimler's car2go service started rolling out new cities at an amazing pace in 2011 — with gasoline-powered Smart cars in Hamburg, Germany, Lyon, France and Vienna, Austria in Europe and Vancouver, BC in North America and all Electric Drive Smart service in San Diego, Calif. and a day later in Amsterdam, Netherlands.

Meanwhile BMW launched it's look-alike one-way service in Munich and Berlin, Germany, albeit with larger (but still small) vehicles - 1-series and Minis.

On this side of the Atlantic, GM announced a partnership with RelayRides to integrate the OnStar vehicle telematics system with the peer-to-peer carsharing service - providing a potentially powerful marketing channel and at least partially solving RelayRides technology dilemma.

New Operational Models — As far as re-thinking the internal operations of traditional carsharing, peer-to-peer has been getting most of the attention.  Changing the cost of fleet from a fixed to a variable expense that is paid only when an actual rental occurs, changes the finances of the operator significantly.  It also changes the internal management responsibilities significantly, redefining the fleet managers' job to a marketing job to sign-up and manage vehicle-owning members.  So far signing up car owners does not appear to be a major hurdle.

There are some other interesting experiments that got underway in 2011, as well. In Munich, Germany, Zebramobil has implemented a round-trip service without fixed parking locations.  Vehicles must be left within a several block distance of various zones.  As with car2go, members find a vehicles in each zone via the internet.  In Nice, France, a high profile well-funded all EV carsharing service, Auto Bleue, got underway.

Autolib — In less than a year from contract signing the Bollore Group began the roll out of the service in Novemeber and December.  Opreationally, Auotlib vehicles must be returned to an available Autolib charging bay, unlike car2go's electric fleets in Amsterdam and San Diego, which can be parked anywhere (legal) within the floating parking zone.  Rates are almost identical between Auotlib and car2go.

Autolib is in a category by itself given the major commitment from the City of Paris government and significant private investment (reportedly € 50 million) by Bollore Group itself. As with the Velib public bicycle system, the world is watching at this distinctively French undertaking.   London has already expressed Autolib envy.  But it remains to be seen whether Autolib will serve as a model for the development of EV auto mobility services in other cities.

New service models — While peer-to-peer slices the operational issue of fleet in a new and potentially very profitable way, as far as users are concerned it's still the traditional reservation-based, round trip carsharing service model. In 2011 on-demand, open-end, one-way carsharing really burst on the scene - in both Europe and North America.

I think it's under-appreciated just how completely new on demand, open-end, one-way carsharing services like car2go, Drive Now and Autolib, really are.  On-demand overcomes a significant consumer complaint about traditional carsharing - requiring a reservation and especially having to specify the end time of the trip. A few services in Europe have successfully implemented "open-ended" trips but the challenges of maintaining good utilization with this great amount of flexibility for the user is daunting for any company, and especially a smaller companies.

The implications of these on-demand services on other modes urban transportation are really unknown at this point and I eagerly any shreds of information from modal split research. I expect they will show that a significant number of trips are by "card-carrying" car owners who use the service simply because parking is so easy with these services. But some of these trips may be taken from transit, as well. In the long run, I think it will be another transportation option that leads people away from car ownership.

Smaller carshares doing just fine, thank you — With all the attention being paid to the "big guys" 2011 saw the entry and expansion of a number of smaller carsharing operators, as well.  New operators include Time Car focusing on university campuses in Oklhama and Texas, PATS Carshare in San Jose. And joining the P2P universe Wheelz in  In Australia new entrant Green Carshare took over CharterDrive and the UK continues to see the launch of new car clubs serving much smaller cities and towns than anywhere in the US and many parts of Europe. The industry is now at a place where just keeping track of the companies is a major commitment.

Although college campuses seemed to be where most of the expansion in North American carsharing was taking place, most surprising to me was the move by NYC-based Mint Carsharing moved into Zipcar's home turf in Boston/Cambridge, Mass. taking over a recent start up as their toehold in the marketplace.  I expect there's plenty of room for growth in the Boston market and entering a market where an existing operator has already started the education process simplifies things somewhat.

And long-time carsharing companies, Autoshare, CommunAuto, Modo, I-Go, HourCar, LAX Carshare and City Carshare continue to thrive.  They are joined by host of smaller community-based groups doing great work serving their local areas.

2012 promised to be even more interesting, which I'll sketch out in another post.  If you want to see last year's review, it's here.  Best wishes for the new year