In the midst of the on-demand revolution where numerous traditional services have been transformed into their on-demand parallels, car sharing is making impressive progress. This industry emerged in the closing years of the past decade when Enterprise – one of the pioneers of rent-a-car service in the US – introduced CarShare. The success of this car-sharing business model encouraged investors to introduce multiple startups.
Although the industry is demonstrating notable expansion, yet some entrepreneurs carry the fear that this model may not be a sustainable one. This article reveals why car sharing is sustainable before exploring the marketplace and requisite technology that ensure success.
Why is Car Sharing Business Model Sustainable?
The car-sharing industry is growing steadily. It is bound to pace up significantly in the next five years for undeniable reasons. The following are the two most notable factors which would attract large-scale adoption of car-sharing services.
Vehicle Ownership Regulations
Vehicles are being manufactured and sold for over a century. Until now, the number of consumers buying vehicles is still growing annually. However, the percentage increase is slowing down for a range of reasons.
- Ride-hailing and car-sharing businesses are eliminating the need to keep private vehicles.
- Public transit and carpooling are becoming more efficient and cost-effective than ever before.
- Governments are increasing the amount of taxes on purchase of private vehicles to implement sustainable urban planning.
- The concept of shared mobility is attaining realization in many cities around the world providing space for implementation of car sharing business models.
Inefficiency of Traditional Car Rental Businesses
In the wake of successful adoption of on-demand economy, traditional car rental businesses would soon lose their market share. Consumers tend to embrace comfort – especially when it is coupled with cost-effectiveness.
Unlike traditional businesses, car-sharing companies facilitate customers by providing rental cars at their doorsteps. The customers can schedule a car on rent with only a few taps on their smartphones. There is no need to go through a lengthy verification process.
Moreover, on-demand car rental also ensures the security of vehicles since you can track the location of every vehicle in real-time. Car sharing model is far more flexible than traditional vehicle rental businesses because the customers can rent a vehicle for as low as 30 minutes. You can choose to make variations in the time limit.
Independent observers are certain that traditional car rental business would be obsolete by 2022. One notable indication is the adoption of on-demand services by major industry players including Enterprise Rent-A-Car and Zipcar. Besides, many startups offering car share services are also demonstrating great successes.
Exploring the Car Sharing Marketplace
The traditional car rental business offers only a B2C model. In essence, the rental company owns every vehicle in a fleet and rents them out for at al least 12 hours. Their customers comprise the general public.
However, the advent of on-demand economy and development in shared mobility also introduced B2B and C2C or commonly referred to as P2P models. Following is a brief introduction to each of the car sharing models.
B2C Car Sharing
In terms of on-demand industry, this otherwise traditional rental business facilitates customers by enabling them to acquire a rental vehicle easily. The leading car rental companies ensure that customers are able to access the vehicle, unlock, and drive around without needing human assistance.
One notable innovation in this model is the facility to drop a vehicle at a different location from where one started. This is significant because customers in conventional circumstances had to drop vehicles to fixed locations designated by service provider.
B2C rent-a-car services mostly employ the same charging criteria as in ride-hailing services. The number of miles and time consumed are the two primary factors affecting rent charges.
P2P Car Sharing
This peer-to-peer model is highly sustainable for its ability to reduce costs and facilitate customers simultaneously. It is inspired by the idea of dockless bike sharing where customers leave bikes anywhere inside the designated operational region. Although urban administrations do not allow the same for cars, yet customers can leave them at parking spaces.
The peers in this model can either be members of the general public or employees of the same or different companies. A number of startups including Turo and Getaround employ this model. One noteworthy factor is the use of personalized cards. Users can unlock vehicles using the RFID tags inscribed on these cards. The receiving sensors are mounted mostly behind the windshield.
The most attractive factor associated with peer-to-peer car sharing is the flexibility in charges. Customers do not necessarily have to schedule a ride for at least 12 hours. Instead, they can acquire it for as low as 30 minutes.
How Does P2P Car Rental Work?
The users request a vehicle from a mobile phone app. Top service providers offer a range of features in their apps but ensure that users attain flawless experience. The integrated software in response shares the location of the nearest vehicles.
At times, the requesting user is able to connect the peer who currently holds the vehicle. The two peers can communicate to decide about the drop-off point. Once the customer reaches vehicle, s/he can unlock it by holding a personalized card parallel to the sensor on the shield. In the same way, the customer can lock the vehicle using the card.
Software Essentials for Car Sharing Business
Technology plays the most crucial role in the success of a startup. The same is the case with car sharing industry which heavily relies on user and dispatch panels. The software systems of such startups are evolving for over a decade with innovative approaches. CabStartup with its multiple case studies in car sharing industry incorporates following components in customer app and admin panels.
App for Customers
The efficiency of some of the performance-intensive features including app speed, in-app user experience, ease in navigation to various tabs, and app size should go without saying. Such features are essential regardless of the business model.
However, there are features specific to car sharing business model. The following are some of the most features indispensable for the success of such a startup or transformation of the traditional rental business to on-demand equivalent.
There is a wide range of choices for users regarding the selection of vehicles. Like Uber or Lyft where users can choose UberX, Black, SUV, or other region-specific option, car sharing should also segment registered vehicles in various categories.
One drawback of this segmentation is the fact that it reduces the number of vehicles available in the vicinity. For instance, if there are a total of 10 registered vehicles in one kilometer radius, only two or three of them would offer the luxury class.
You can tackle this challenge by offering the vehicles from alternative classes. Thus, the customer can decide about the selection depending on the available time.
Both traditional and modern car rental businesses either adopt a fixed price model or variable model for rent estimation. Some of them are utilizing both approaches depending on what works best for business.
- In a fixed price model, the cost of hiring a vehicle would be predetermined. In essence, there would be fixed time slots offering multiples of 30 or 60 minutes. The charges double once the user enters the second time slot. Many companies adopting this model offer discounts on acquiring vehicles for a greater number of time slots.
- The variable charging model resembles the fare criteria of Uber and Lyft. Like these companies, the charge primarily depends on the number of miles traveled including the fractions up to one decimal point and the total time consumed.
Booking a Car Share Service
The top service providers ensure that the booking process remains as simple as Uber. The users should be able to schedule a time when they want the vehicle and tentative time when they are going to end. Besides, the design of the app should allow users to comfortably select vehicles and available time slots.
Booking a ride using the business-to-customer model is plain straightforward. The customer schedules a ride with all the details that one wants to add. A worker of the company drops the vehicle at the place of the customer’s choice as long as it remains within the designated fence. Later, customer can abandon the vehicle and pay via credit card or an e-wallet once the ride is over.
However, P2P car sharing is different in that it involves ride sharing between two peers. You may choose to offer customers a facility to pick the abandoned vehicle and drop it at their doorstep for an additional charge.
Any ride-hailing app including rideshare, carshare, carpooling, and others should include multiple payment options. While credit card remains most prevalent, in-app wallets provide considerable flexibility to users.
The personalized membership card should be integrated with mobile app and admin panel software so that customers and administrations remain aware every time this card is used to unlock or lock a vehicle.
Dispatch and Admin Panel
Dispatch panel would assist you while ensuring that the customer gets the requested class of vehicle in time. You can place reminders and view all the available vehicles in a region. Although the panel is automated and does not require human input, yet it aids in quality assurance.
The admin panel is a car share equivalent of the executive information system. It comprises data regarding business growth, loopholes, and monitoring of real-time operational activities. The following are the three most notable car sharing features in an admin panel for car sharing companies.
Vehicle Surveillance and Management
Administrators can view every vehicle in real-time. Although this kind of surveillance did not draw any criticism in the case of ride-hailing businesses, yet some critics consider it unethical to know the location of a vehicle. They believe that such surveillance breaches privacy.
However, knowing the location is crucial for the safety of the user and the vehicle itself. The city administrations in most urban areas also recommend tracking the car share vehicles in real-time. Thus, you may choose to implement real-time tracking or otherwise.
Management of vehicles implies the distribution of cars as per the demand in a region. High-income areas are likely to attract more vehicles from the luxury class. The distribution should ensure that you can cater to the request of the customer in the desired time.
The customers should not only be able to get quick assistance with instant messaging or calling options but also review and rate each time they request a car. This feedback would allow you to improve services by evaluating every vehicle and response time of staff. Moreover, you would also win back the trust of a user by responding to them at their feedback.
Customer support would also allow quick assistance if a car breaks down during booking. The users can ask for a reevaluation of their charges if they believe that they were wrongly charged. An admin should have the power to approve or block a user based on poor ratings. Similarly, the work status of drivers can also be changed.
A dashboard enriched with data regarding progress toward business targets is crucial for tracking objectives. It enables businesses to find the notable areas generating revenues and those which are pulling more money out of the owners’ pockets with meager returns.
The companies in car sharing industry reward bonuses to top performing gig workers. Thus, the dashboard should also track the achievements of gig workers and automatically pick ones that are eligible for bonuses.
CabStartup Admin Panel uses robotic process automation and data mining techniques to ensure that visualized statistics on the dashboard remain flawless.
You would surely be operating in a predetermined region and would not want the vehicle to move out of this designated area. Geofence defines the boundary of this region. It is visible on app for users as well as admin panel. Any vehicle moving out of geofence would alert administration since the location of every vehicle appears in real-time.
Administrators can redefine geofence easily by simply dragging and dropping the points on map. The changes update in apps as well as admin and dispatch panel on the next day because a vehicle might be outside the updated fence but inside the old one.
Every user should have a distinct profile so that they can be recognized when unlocking a vehicle. The existing startups offer membership for users. There is a base amount for becoming a member. The profile syncs with membership details.
Cloud-Based Platform for Car Sharing Business Model
Car sharing businesses scale up with time. They also require incorporation of more features as the competition progresses. It is unwise to operate the entire business using local servers. Instead, you can acquire cloud-based car sharing platform for uninterrupted operations. Such a platform enables you to ensure high speeds and provides scalability almost effortlessly.
The emergence of new businesses is increasing the magnitude competition in this industry. Thus, companies are coming up with more innovative ideas to facilitate customers and aid in business operations. Thus, CabStartup also incorporates multiple innovative features apart from these indispensable ones.
One notable example is the sharing of signal strength. There are often cases where either driver – who drives the vehicle to the customer’s indicated location – or requesting users have poor internet signal strength. Consequently, they fail to connect and one of them cancels the ride.
CabStartup platform alerts the user if the person they are dealing with has unstable internet connection. Therefore, they can either wait or seek assistance from customer support.
Get Started Today
The car sharing industry is flourishing with emergence of new startups and the transformation of traditional companies. The high sustainability associated with this business model enables it to become one of the top investment grounds for entrepreneurs.
CabStartup is assisting ride-hailing startups around the world with car share and taxi management platforms. Our experts also help companies with traditional business models to adopt advanced technologies and get ahead of competitors in the process.
We would like to work with you for the development of your car-sharing business model. Take a free trial of CabStartup platform so that you can evaluate it.