The bike-sharing industry is on the rise. It is the only mobility industry that statistics indicate didn't experience significant losses during the pandemic. The future is also bright as there are government initiatives around the world to support bike-sharing. However, there are things that newcomers in the business can learn from the previous leaders - success in the industry with high demand is no guarantee that the company will be a success.
A bike is a comfortable means of transportation in regions where motorized vehicles are widely used but create heavy traffic jams and pollute the air. This is a problem in regions like Asia-Pacific, North America, and Europe. And this is where and why bike-sharing has become popular. According to the Statista Mobility Outlook, bike-sharing was the only mobility sector that grew its global revenues during the pandemic by a third in 2020. The single-person set-up and open-air nature of bike riding made it the perfect mode of transportation for the pandemic.
Bike-sharing is a shared transport service in which convectional bikes or electric bikes are made available for shared use to individuals on a short-term basis for a price or free. Development of GPS technologies, mobile payments, and IoT devices, as well as reduced locking and tracking system costs for bikes, have recently led to the popularity of a dockless bike-sharing system that allows users to leave the bike anywhere convenient.
According to Mordor Intelligence, the bike-sharing market was valued at USD 3 billion in 2020, and it is anticipated that it will reach USD 4 billion by 2026. The COVID-19 pandemic affected the bike-sharing sector in several countries. The most negative consequences were the daily decline in bike bookings.
Bike demand is majorly driven by developing countries, such as China and India that especially focus on e-bikes. China has always been the largest exporter of e-bikes. According to China’s Ministry of Industry and Information Technology, the country's output of electric bicycles reached 25.48 million during the first 10 months of 2020, a year-on-year increase of 33.4%. During this period, the revenue of major bicycle manufacturing companies reached about USD 22 billion, an increase of 16.8%. According to the China Bicycle Association, from January to September 2020, the volume of bicycle exports was 12% up on the same period last year, rising to USD 2.43 billion.
However, the bike-sharing market growth in Europe is predicted to be the fastest across the globe, as it is anticipated that a large number of service providers will venture into the region in the coming years. In regional countries, bikes are being rapidly made available near major transit hubs, such as railway stations, thereby offering users convenience and ease of travel. In addition, the European Union (EU) also promotes such services, because they are environment-friendly and help to reduce traffic.
Global bike-sharing service market size between 2020 and 2026 in billion U.S. dollars according to Statista:
Currently, major players in the bike-sharing market are:
- Lyft Inc. - in November 2018, Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike. It thus became the largest bike-share service in the United States.
- Hellobike - a transportation service platform based in Shanghai, China. Founded in 2016, the company merged with Youon Bike the following year. In a series of fundraising rounds dating back to 2016, Hellobike has raised over US$1.8 billion from investors.
- DiDi Bike - Didi Chuxing Technology Co. is a Chinese vehicle for hire company headquartered in Beijing with over 550 million users and tens of millions of drivers. The company provides app-based transportation services, including bike-sharing.
The biggest companies in the market are associated with China as are the biggest deals. Looking at the recent biggest deals in bike-sharing, the first worth mentioning involved Didi Chuxing’s bike-sharing arm Qingju. It raised USD 600 million in a Series B equity fundraising round and will be granted an additional USD 400 million in loans.
What was also interesting that at the end of 2020 the mobile application of Mobike, one of China's earliest and largest bike-sharing providers, went offline after its acquisition by Meituan three years before. Mobike was acquired by Meituan for USD 2.7 billion in April 2018. In January 2019, in an internal letter to employees Wang Huiwen, co-founder and Senior Vice-President of Meituan, informed them that Mobike will be renamed Meituan Bike and that the firm would become a unit of the new parent's location-based service department.
The growing interest in e-bikes
One trend that will definitely influence the industry in the near future is the growing interest in e-bike sharing. Pedelecs or pedal electric cycles or EPAC (Electronically Power Assisted Cycles) are becoming increasingly popular. This is a type of electric bicycle where the rider’s pedaling is assisted by a small electric motor. Such vehicles are capable of higher speeds, compared to manually operated bikes. As the demand for higher speeds for short-distance traveling increases, so does the preference for e-bikes. People are ignoring the fact that sharing services on pedal-assisted bikes are cheaper than e-bikes, as the latter offers effortless driving, more convenience, and variable motor power, as well as higher speeds.
One of the most interesting investment deals in 2020 that underlines the interest in e-bikes involved London-based free-to-use shared electric bike firm London-based HumanForest. It announced in September that it had raised £1.8 million. HumanForest offers 20 minutes free per day and a corporate subscription service. It launched in June 2020. In just four months of the company’s operations, 14,000 riders have taken almost 42,000 rides with the number of rides increasing by over 100% month on month!
Later that year, the company raised £1.27m via crowdfunding with the support of over 520 investors, of whom approximately 30% were trial users. The company says that it ran a successful trial during summer 2020 in London with 200 e-bikes. The new funds will be used to expand the fleet to 1,500 e-bikes.
HumanForest’s business model is based on three sources of revenue - users pay 15p per minute after their free daily 10-minute ride is up, while partner companies pay to advertise their brand on the HumanForest digital platform and companies pay to offer their employees further minutes for the HumanForest fleet.
Bike-sharing - more positive than negative aspects
If we analyze positive, as well as negative aspects that could influence the future of bike-sharing, the positive aspects far exceed the negative ones. The only negative aspects are high initial investment costs, as well as the rise in bike vandalism and theft. Positive aspects that could stimulate the bike-sharing business in the future are growing venture capital investments, an increase in the inclusion of e-bikes in the sharing fleet, as well as technological advances in bike-sharing systems.
There is also increased interest from governments in different initiatives for the development of bike-sharing infrastructure. Furthermore, governments are offering subsidies to service providers for developing stations and expanding their reach to a large number of commuters. For instance, in 2018, Chinese Municipal governments subsidized the Public Bike Sharing Program development to encourage non-motorized transport and offer convenient, flexible, and low-cost mobility options. Meanwhile, in Europe, the new public bike-sharing system was launched in the Italian Municipality of Trieste in February 2020. The system, known as BiTS, is being implemented as part of the city's Integrated Sustainable Urban Development Plan at a cost of EUR 390,000, with the aim of developing sustainable mobility by promoting walking and cycling to reduce urban pollution.
Despite the fact that interest in bike-sharing is rising and will continue to do so, it is equally important to learn and not forget the mistakes of pioneers of the industry. For example, the company Ofo was founded in 2014 as a university project, but soon afterward raised $866 million from investors led by Chinese e-commerce giant Alibaba. Ofo was a station-free bike-sharing platform operated via an online mobile application. In total, over the course of nine investment rounds, the company has raised USD 2.2 billion but has still consistently experienced cash flow problems that were driven largely by intense competition in a market that has yet to be proven to be commercially viable according to analysts interviewed by Forbes.
Fees dropped to 1 yuan ($0.14) for each hour of use and sometimes were even free. Despite this fact, Ofo still managed to reach a valuation of $2 billion in a 2017 funding round and around $3 billion at its highest point, and at one time the company deployed more than 10 million bikes globally and attracted as many as 200 million users. “The company’s cash-burning operations and high valuation have combined to deter potential investors, and when capital became scarce, the startup could no longer cover its once sprawling operations,” wrote Forbes.
In 2018, Ofo announced a massive reduction in operations, and by 2020 it faced a large amount of unpayable debt as a result of which the company was no longer operating bike rentals. “Explanations of what exactly went wrong are still evolving, but it seems likely that the mind-boggling amounts of cash pumped into what wasn't essentially a "bike-sharing" model, but rather a rental business pepped up by a smartphone app, had something to do with it. Yes, the company bought bikes and placed them in the streets without docks for anybody to use, and that was somewhat new. And yes, a smartphone app served as the key. But the company owned the bikes, just like any old-fashioned rental shop, and incurred huge maintenance costs,” explained analysts from Roland Berger Strategy Consultants, who were quoted in its magazine “Own the future”.
So it doesn't matter how big the demand for the service is, you should always apply simple business principles to your business.
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With the increasing demand for shared mobility, we've seen different business models in the car market: traditional car rental, peer-to-peer car sharing, and on-demand car sharing.
In this blog post, we're going to compare these business models. We'll look at the established traditional car rental companies and how they stack up against the newer peer-to-peer and on-demand services. We'll explore how these companies are doing financially – and make some predictions about their possible future.
Traditional car rental
Traditional car rental companies like Hertz, Enterprise, and Avis operate by owning or leasing their own fleets of vehicles. They usually have rental offices and parking lots in strategic locations such as airports and city centers. Customers looking to rent a car make reservations through the company's websites, mobile apps, or by phone. Typically, customers pay a daily or weekly rate, plus additional costs for mileage and optional services like insurance.
Avis – proving that traditional car rental is going strong
Avis was founded in 1946 in Detroit, and it quickly established itself as a major player in the car rental market. Avis is best known for its "We Try Harder" slogan, which was introduced in the 1960s and became a symbol of the company's commitment to customer service. Over the years, Avis has expanded its operations globally.
Avis had a strong second quarter in 2023. They reported $3.1 billion in revenue, with a net income of $436 million. The company saw an increase in usage compared to the same period in 2022, reaching 70.5%. Avis also performed better than expected on Wall Street, with earnings of $11.01 per share – surpassing the estimated $9.79.
At the end of Q2 2023, Avis had around $1.1 billion in liquidity and an additional $1.1 billion for fleet funding. Avis CEO Joe Ferraro credited the strong results to the company's ability to capitalize on the growing travel demand, particularly during the busy summer season.
Hertz – usage and fleet growth
Hertz was founded in 1918 in Chicago. Over the years, Hertz grew into a global brand, serving both the leisure and business travel sectors. Despite various ownership changes, it has maintained a strong presence in the car rental market.
Hertz also reported a healthy second quarter in 2023. They made $2.4 billion in revenue, mainly due to high demand – rental volume increased by 12% compared to the previous year, and their average fleet grew by 9%.
Each vehicle brought in an average of $1,516 per month during the quarter, thanks to a usage rate of 82%, which was 230 basis points higher than in Q2 2022. As of June 30, 2023, Hertz had $1.4 billion in liquidity, with $682 million in unrestricted cash. Overall, Avis' old rivals Hertz are doing quite well too.
Peer-to-peer car sharing
Peer-to-peer car sharing allows private vehicle owners to offer their cars for rent through platforms like Turo and Getaround. The vehicles are distributed across various neighborhoods and residential areas, offering a decentralized and more flexible system. Customers can use these platforms to find and reserve their vehicles of choice.
Turo – promising financials, uncertain IPO plans
Turo, founded in 2009, began as RelayRides and was later rebranded. Turo offers an online platform that allows individual car owners to rent out their vehicles to other people when they are not using them. The company provides a marketplace where people can list their cars for rent, and renters can search for and book vehicles for short-term use.
Turo has gained popularity as a more flexible and often cost-effective alternative to traditional car rental services. It allows car owners to monetize their vehicles when they're not in use and provides renters with a wide selection of cars to choose from.
Turo, valued at $1.2 billion in 2019, has seen promising financials. In 2022, they earned $746.59 million, up 59% from the previous year, with 320,000 vehicle listings. They went from substantial losses in 2019 and 2020 to a net income of $154.66 million in 2022.
Turo also grew its marketplace, engaging with 160,000 active car owners and 2.9 million riders worldwide by the end of 2022. However, according to their S-1 filing, they anticipate increasing expenses in the future, which might challenge their profitability.
Turo applied for an IPO on the Nasdaq in 2022 but didn't proceed. The IPO plans were delayed, likely due to challenges like the 2022 tech downturn. However, recently, Turo revived its plan to go public and could list their shares in the fall of 2023.
Getaround – an uncertain future
Getaround is another popular peer-to-peer car-sharing platform that allows individuals to rent out their personal vehicles to others when they are not using them. It's often referred to as the "Airbnb of cars." Introduced in 2011, it is currently accessible in over 1,000 cities in the United States and Europe.
In 2022, Getaround earned $62.3 million in revenue. However, they reported an EBITDA of -$25.0 million, indicating that its operating expenses exceeded its earnings. Overall, the company experienced a net loss of -$46.8 million for the year. Getaround's total assets were valued at $217.1 million.
During its public market debut in 2022, Getaround witnessed a significant decrease in its share value, plummeting by as much as 65%.
In March 2023, the company got a notice from the New York Stock Exchange saying it didn't meet the requirements. This was because their average global market capitalization over 30 consecutive trading days fell below $50 million, and their reported stockholders' equity was also below $50 million.
Overall, Getaround's stock market troubles and weak finances make their future uncertain for now.
On-demand car sharing
On-demand car sharing services like Zipcar and Share Now (formerly Car2Go) maintain their own fleets, which are parked throughout cities in designated spots or on the streets. Customers can access these vehicles in real-time using mobile apps. The pricing structure usually includes fuel, maintenance, and insurance.
Share Now – downsizing, acquired by Stellantis
Share Now, a German carsharing firm born from the merger of Car2Go and DriveNow, now operates as a subsidiary of Stellantis' Free2Move division, offering car sharing services in European urban areas. It has over four million registered members and a fleet of 14,000+ vehicles across 18 European cities.
In late 2019, ShareNow announced the closure of its North American operations due to competition, increasing operational costs, and limited support for electric vehicles. Service in London, Brussels, and Florence was also discontinued.
On May 3, 2022, Share Now was acquired by Stellantis, with the ownership now managed by Stellantis subsidiary Free2Move, following the closure of the acquisition on July 18, 2022.
CityBee – a success story in Baltics
CityBee, founded in 2012 in Lithuania, started as a car-sharing service primarily aimed at businesses. It now operates in the whole Baltic region. Customers can choose from a variety of vehicles, including cars, vans, bikes, and electric scooters. The fleet also includes electric and hybrid cars. CityBee takes care of insurance, fuel, and parking fees in CityBee areas.
In 2022, CityBee reported a sales revenue of €33,168,028, slightly down from the previous year's €39,814,173. However, the company's profitability surged, with a profit before taxes of €2,193,820 – a substantial increase from the €968,722 in 2021. This also resulted in a higher profit margin of 6.61% in 2022, compared to 2.43% in 2021.
CityBee saw its net profit rise to €1,857,517 in 2022, a substantial increase from the €876,986 in 2021. The company's equity capital also grew to €4,688,176, indicating a stronger financial foundation. CityBee shows that on-demand car sharing can succeed with the right approach in the right market.
There's room for different business models
The shared car mobility market is large enough for different solutions to exist together – especially with car ownership costs going up. Companies like Hertz and Avis demonstrate that the traditional rental model remains relevant and holds significant profit potential.
Despite financial challenges, peer-to-peer car sharing and on-demand car sharing are attracting a fresh customer base. Peer-to-peer car sharing offers a more personal touch by letting people rent their own vehicles. On-demand car-sharing services are a great solution for urban residents, offering quick pay-as-you-go access to vehicles.
While the position of traditional car rental giants might seem unshakeable, it's a fast-moving, evolving market. Regional success stories – such as CityBee – certainly prove that challengers are not asleep.
If you own a fleet, operate a car rental business, or are looking to get into one, ATOM Mobility can equip you with an end-to-end software suite that will put you miles ahead from competition.
Running a successful shared mobility business is more than just providing rides from one place to another. It's about placing your customers at the heart of your business – making them feel valued, appreciated, and the real focus of all your efforts. In other words, it involves a customer-centric approach.
Let’s take a closer look at what a customer-centric strategy means, why it's important – and how to adopt it in a shared mobility business.
What being customer-centric means and why it's important
Customer centricity means shaping your business to deliver an excellent customer experience at every step. It's a strategy to build stronger brand loyalty and satisfaction, leading to deeper and longer-lasting customer relationships.
It involves shaping your messages and services to match what your clients want and like. Being customer-centric is about recognizing the pivotal role customers play in the success of any business.
Here are the main reasons why it’s a worthwhile strategy to consider:
- Customer satisfaction and loyalty: When you put your customers first, you're more likely to provide them with what they truly want – and satisfied customers are more likely to stay loyal to your brand.
- Positive reputation: Satisfied customers become your brand advocates. They share their positive experiences, enhancing your brand's reputation and attracting new customers.
- Easier to stay ahead: Talking to customers and getting their feedback can help make your services more innovative and proactive. It helps you stay ahead of the curve and meet changing customer demands.
Key aspects of a customer-centric shared mobility business
Now, let's look at the key areas in which shared mobility businesses can enhance the customer-friendliness of their services.
User-friendly and engaging software
Software is often the first point of contact for customers when they start using a shared mobility service – and it's important to ensure that this first impression is positive.
In this case, a user-centric approach is about making sure the software doesn't get in the way but rather enhances the user experience. For customers, it should be effortless to book a ride or rent a vehicle.
Consider these factors when aiming to provide a customer-centric software experience:
- Keep it simple: Make sure the software is straightforward and easy to use – especially for people who might not be tech-savvy. It's a good idea to have a clear layout – keep the interface organized with easily visible buttons for key tasks like booking rides, checking ride details, and providing feedback.
- Let customers pay as they like: Give users multiple ways to pay (cards, ApplePay, GooglePay, PayPal and more), and, if possible, show them an estimate of the service cost before they confirm it. This helps users know what to expect and makes the process more transparent and user-friendly.
- Features to drive engagement: Consider additional features that can boost user engagement and make the overall experience more enjoyable. One intriguing option to explore is gamification, which involves infusing apps with game-like elements. The idea is to offer users a feeling of achievement as they advance and complete various tasks within the app.
If you are after a white-label solution, Atom Mobility offers a user-friendly high-converting mobile app for both iOS and Android, which can be customized to match your brand. The app is regularly updated and supports various vehicle types, languages, and geographic locations.
Great customer support
When a business is all about making customers happy and putting them first, one of the key aspects is having great customer support. It’s key to better customer satisfaction, loyalty, and positive word-of-mouth.
Here are the key principles that define great customer support:
- Speed: Customers don't like waiting a long time for answers to their questions – they want quick solutions to their queries. It's a good idea to give customers various options for getting help, like phone, email, chat, and social media. You can also offer self-help tools like FAQs, chatbots, and online guides. Some customers like finding answers on their own, which can cut down on the number of questions needing human assistance.
- Knowledge: While being fast is important, it should come with knowing your stuff and giving accurate info to customers. Your support representatives should have a deep understanding of your company's services, policies, and available resources. Customers must have confidence in the information provided by your customer service team – nobody wants to call about the same problem repeatedly.
- Treating customers with care: Good customer service means treating customers with respect, courtesy, and professionalism in every interaction. Sometimes customers may feel anxious or frustrated, and it's crucial to empathize with their needs – picture yourself in their situation, and let them know you're fully committed to their problem.
Safety, feedback, and proactive solutions
Let's explore other important factors like safety, feedback, and proactive solutions that can solidify a business's role as customer-centric.
- Commitment to safety and reliability: According to a survey by McKinsey, safety is the top priority for shared mobility users worldwide. In other words, businesses should make customers confident in their ability to provide safe and reliable services. Take shared micromobility fleet vehicles as an example – they should be well-maintained in both appearance and technical condition. This ensures that customers feel confident and secure when using them. Ride-hailing businesses should find ways to promote safe driving and take strong action against drivers who don't follow the rules.
- Listen and act on feedback: You should actively engage your customers through a continuous feedback loop. Collect and analyze your customer feedback – whether it's through in-app surveys, email, or social media channels. This way, you can identify areas for improvement and make necessary adjustments to improve the customer experience. When customers think their feedback matters, they usually feel more connected to a business.
- Stay ahead of the curve: Last but definitely not least – try to be proactive. When you see an opportunity to improve things, there's no need to wait for a customer to point it out – go ahead and do it. By staying ahead of the game, you can pleasantly surprise your customers and even exceed their expectations.
Conclusion: putting the customer first
A great shared mobility business is not just getting from point A to point B – it's an experience that customers appreciate and want to repeat. With the right tools and mindset, you can deliver this kind of experience to your customers and set the stage for your business's long-term success. A customer-centric approach simply recognizes that your customers are your business – since their satisfaction is what fuels your own success.