The following trends are likely to shape, directly or indirectly, how Vancouver's car sharing market will develop over the next decade. The action of these trends, together with inter-firm rivalry, make the market very dynamic. Maintenance of the status quo by any one of the incumbent firms (car2go, Evo, Modo, and zipcar) is likely to result in erosion of market and profit share over the long run.
- The City of Vancouver will become ever more densely populated, particularly as rezoning allows new mixed use, residential-commercial developments to concentrate along Skytrain arteries. These routes include the Cambie Corridor, which coincides with the Canada Line, and the planned Broadway Line to UBC. This crowding will put ever more pressure on parking and roadways and will make alternatives to car ownership increasingly attractive, especially as new city residents look to cut costs. Incumbent car sharing organizations should take advantage of this substantially increased demand. They should erect barriers against entrants that will inevitably be drawn to the industry by, for example, aggressively expanding their fleets.
- Changes in regulation will eventually permit ride hailing services, like Uber and Lyft, to enter Vancouver. In addition, it is possible that peer-to-peer car rental organizations, like RelayRides, will also take root in the city (see point 4, below). Traditional car rental agencies – particularly Avis, which owns Zipcar – may also begin to use slack capacity in their fleets for car sharing. The City of Vancouver will continue to expand its cycling and public transit networks. Developments of this kind will increase the number, variety, and power of substitutes for car sharing.
- Car manufacturers will increasingly enter the car sharing market with their own vehicles, either via wholly-owned subsidiaries, like Daimler/car2go, or via joint ventures, like BMW/DriveNow. Incumbent firms will need to harden themselves against the growing power of vehicle producers.
- As the internet of things inevitably extends into the car, both ad hoc and organized peer-to-peer car sharing will become increasingly common. The phenomenon will be driven by everyday car owners having continuous and remote access by way of mobile apps to many of the metrics that currently require expensive after-market hardware and specialized software. This information will be available either for free, or very cheaply, “out of the box,” that is, without complicated set-up. Metrics will include vehicle locations, engine diagnostics, and fuel levels, among many others. In addition, owners will be able to lock, unlock, and disable their vehicles remotely, which will obviate the need to transfer physical keys to renters and also provide a measure of security.
- Software has fundamentally disrupted every industry into which it has been injected. In the words of Marc Andreessen, “Software is eating the world." Although limited forms of car sharing are possible in principle without software, large scale, real-world, efficient sharing requires it. Indeed, the platforms underpinning free-floating fleets, like those belonging to car2go and Evo, are absolutely dependent on software. However, it is in the nature of software to destroy and remake entire industries with ever increasing frequency; car sharing, though already software-enabled in its current form, is not immune. As software enables both the technology and business model behind peer-to-peer sharing, new online, app-based marketplaces will emerge to connect owners and renters and to provide bespoke insurance. This new model of car sharing will have a dramatically lower cost structure than those borne by centralized fleets and will fundamentally threaten existing business models. Peer-to-peer sharing will also be able to expand geographically much more rapidly than traditional car sharing organizations, will deliver much larger and more varied fleets, and offer a wider range of price points, including for free, or barter. (One might imagine, for example, an owner providing free use of a car for the day if the driver agrees as part of the deal to deliver packages, or pick up IKEA furniture, or ferry passengers, etc.)
- Incumbent firms risk commoditization in the face of massive, decentralized supply, alternatives to driving, and vicious inter-firm rivalry. It will be essential for them to maintain perceived trustworthiness. This will mean, among other things, maintaining the highest standards of availability and reliability of their fleets, and being ever responsive to customer needs and complaints.
- Through the sharing economy, the Internet will effect profound and potentially disorienting changes that will reverberate in every corner of our lives. Ben Thompson, author of Stratechery, an influential blog about the intersection between technology and strategy, has written, “[T]he definition of ownership begins to shift. This will clearly first play out in automobiles: the long-run promise of Uber is a world where few [people] own cars and few cars sit idle. This will impact not just automakers but insurers, dealers, repair shops, and more. More profoundly, it will affect people. We will be less tied down, more willing to move, especially if our work becomes just as transactional as our possessions. And that, ultimately, will change the way we relate to each other, just as the shift from the small knit community in the countryside to the chaos of the city upended everything we thought we knew about how individuals, communities, and governments interacted." It is therefore not sufficient for incumbent firms simply to keep abreast of technological developments. They must also be exquisitely attuned and responsive to these changing cultural and social mores.
See also: An Introduction to the Sharing Economy.