Shared mobility is here to stay, having proven its immense popularity with today’s consumers. Automobile manufacturers worldwide have projected a slowdown in sales growth figures.

Although growth rate is decreasing contributed by the rise of shared mobility, it is not reversing. The new trend is just exposing automakers and related industries to new opportunities, both local and global. It’s not as if shared mobility is impacting a large portion of the industry as a whole. Car sales in developing countries are still projected to outpace the demand of shared mobility over the next 15 years.

Shared mobility might be very beneficial overall, but it will not spare taxi businesses unless they adopt the shared journey model.

Through 2030, roughly a third of the expected increase in vehicle sales from urbanization and macroeconomic growth likely will not happen because of shared mobility. However, the concept can be turned on its head, if automakers, suppliers, and other mobility players take steps now to position themselves for the changing trends.

Shared mobility is not the entire future, seeing as it will effectively become public transport if it were to take over completely. Asia will see the lowest demand for shared mobility due to strong expected growth in private car ownership. Over in the west, a 2017 McKinsey survey revealed that 67 percent of US respondents prefer driving their own cars instead of ride hailing. 63 percent of respondents were unwilling to trade their vehicles for shared-mobility rides, even if they’re free.

In three key markets (China, Europe, and the US), the shared mobility market hit nearly $54 billion in 2016. The strongest scenario, involving heavy customer demand for autonomous taxis or robo-shuttles in low-density locations and cities, still leads to an expected 28 percent growth from 2015 to 2030. Even the safest estimate points to steady growth based on convenience and economics, projecting 15 percent annual expansion.

Finding a space in the society where shared mobility can be fit in is the real challenge. People would only choose ride-sharing if it is significantly better than public as well as private transport.

The aspect working against shared mobility is the lack of a universal model. That means investors need to conduct market segmentation at the city level. While those using shared mobility expect to use it much more in the coming years, it still addresses only one percentage point of the 30 percent share targeted of annual distance driven in vehicles. Purpose-built vehicles would function more seamlessly than current automobiles adapted to suit shared mobility.

A specially-designed vehicle would be typically 25 percent cheaper to make than an equivalent private car, as industry players offer cost-efficient alternatives to taxis and public transportation. On the other hand, cities like Berlin that rely heavily on taxis would be hard nuts to crack for shared mobility.

Treadig the fine line between public transport and private vehicle ownership is a formidable challenge faced by shared mobility players.

As shared mobility keeps gaining momentum, automakers and suppliers alike need to understand what is driving their popularity, which would vary from region to region. It will put a dent in private car sales around the world, but automotive players can nonetheless position themselves to benefit from its ultimate success.

Source: McKinsey & Company