Automobile is not just for transportation but also a moving private space and a display of one’s personality. It is a product mixed with consumers’ sense and sensibility. For a product with so many personal egos, personalities and characters, owners are not very willing to share with families, not to mention strangers. However, to most people, automobile purchase is the second largest expenditure to real estate property in life. Buying a real estate property is an investment. Its value basically will be appreciated as long as the location is not in remote or rural areas. On the other hand, automobile purchase is a prodigal. For corporate customer, vehicle purchase cost is counted in asset depreciation which is tax deductible, in turn, providing at least tax saving benefits. For general customers, vehicle spending is an endless expense abyss. Beside car itself is value depreciated, consumers have to carry all other derivative costs including government tax and levy, gasoline fee, maintenance cost, insurance premium, and car washing/waxing etc. No wonder investment consultants strongly urge and advise young generation, you’d better take cab when necessary rather than burning cashes in car relevant spendings.
The cost of owning a car is indeed quite high, resulting in incubation of the “car sharing” concept. The big name automaker I worked used to seriously study the private car sharing feasibility, whether car owners are willing to share their private car to whom has transportation needs when the car is free in return of rental income to reduce the car owners’ costs. The project however was terminated in the study stage. Obviously, private car sharing concept is theoretically possible, but execution is not feasible in real life. What if the car sharing business model turns the car ownership to enterprise or government, while consumers purchase membership to be entitled to car utilization, is this workable?
Since 2009, based on the approval of “Taipei public bicycle rental system operation pilot run plan”, together with Giant bicycle, Taipei city government has been successfully promoting the “Smile U-Bike” to every corner in Taiwan in just 12 years. Particularly in greater Taipei area, with the comprehensive MRT and bus route network, and also very convenient taxi services, the “Smile U-Bike” now has 1,114 stations in 12 municipal zones, and the accumulated utilization has reached 198 million times. This fact indicates the “sharing” concept is definitely workable. The question, will it be the same success if the bicycle was switched to automobile?
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Let’s firstly look at the overseas practice… To penetrate into “Car Sharing” market, Mercedes Benz Financial Services in Daimler Group developed Car2Go brand in 2008, aiming at using “Smart” brand compact car to offer “car sharing” solution in urban areas. Three years later, the long time rival BMW also introduced DriveNow by using “MINI” to compete in the “car sharing” market. From the two big brands’ glorious sales history and performance in international market, they were supposedly conquer every “car sharing” markets with greater success. However, the truth is, when the two brands started the car sharing business in North American and European markets, they could hardly grab market share to push revenue growth, and the operation was so much cash burning. The two German auto giants in global luxury market bitterly tasted the failure in car sharing market. With the facts of setback, MB/BMW consequently turns the rivalry to partnership, and the both companies decided to work together and merge their respective brand “Car2Go” and “DriveNow” to a new name “ShareNow”, providing car sharing solutions in 31 cities across 14 countries with the fleet size of 20,000 units. The flexible quotation is able to cover insurance, gasoline and even parking fees, and rental can be charged hourly or daily at customers’ discretion. The MB/BMW partnership was deemed an invulnerable superpower, but unfortunately the alliance performance was under their expectation. Unable competing with local vendors’ quickness and flexibility, ShareNow finally went failure due to excessive operating costs and insufficient infrastructure for electric cars. In May 2022, the “ShareNow” was sold to Stellantis Group, which owns Fiat, Citroen and other brands.
As to the domestic market, Hotai-Toyota group is the most aggressive local player dedicated in the car sharing market. “iRent Mobility”, a subsidiary company to “EasyRent” of the Hotai group, has been recruiting talents, signing with parking lots, developing digital platform in recent years. The “iRent” brand vehicles are getting higher exposure and visibility on road, including cars and scooters. From Hotai group’s history of penetrating car peripheral businesses, backed up with strong brand network and solid financial funds, no failure cases had ever happened. In addition, Hsin-Miao, a Ford dealer, owns the American car rental brand AVIS and its car sharing sub-brand Zipcar. With the young and energetic leadership, plus Zipcar’s professional expertise and carpool sourcing directly from each brand’s distributor instead of dealer, it is believed Zipcar will also deliver outstanding performance.
How is the current status of car sharing business in Taiwan? The car registration numbers still slap the face of Taiwan’s car sharing development. In 2020, Taiwan totally registered 6,980 thousand cars and 1.41 million motorcycles… the numbers are even higher than 2019, the year before corona virus pandemic. In 2021, the numbers even went higher to 7,100 thousand cars and 1.426 million motorcycles. In the near future, it seems that Taiwanese market still prefers to “vehicle ownership” rather than “vehicle utilization”. In long-term future, whether car sharing will become mainstream in car industry is so much subjected to how determined the government goes for the policies of green-energy and carbon-reduction. As long as the government plans to lower the sales of fossil fuel vehicle, provide incentives to car sharing companies to form electric vehicle fleet with car parking privileges, provide incentives to consumers for “utilizing not owning” a car, the “car sharing” concept absolutely will widely spread and become a Mega Trend.
About the author - Mac
Desired to be a sport journalist when young, but have accidentally engaged in car and banking as professional career. The author had worked in automaker’s captive financing companies for years, in charging of car financing, leasing, insurance and floor plans. Currently is serving in a vehicle financing unit of a financial holding company, responsible for car financing and leasing, cooperating with a wide range of brands.
Born in the era of 60s, a fan of rock in 70s, movies in 80s, NBA in 90s, Stephen Chow in 00s, streaming in 10s and Apple in 20s.
Enjoy jogging, hiking, reading and writing in leisure time. Living in Taipei with wife and a dog.