Millennials and younger generations tend to be reluctant to buy items. Instead, they prefer to have access to products via different sharing models. “25 years from now, car sharing will be the norm, and car ownership an anomaly,” says author and economist Jeremy Rifkin in the latest Goldman Sachs Global Investment Research.
What we experience in Atom Mobility - a platform that can be adjusted to any sharing model and type of vehicle - is that people of any age are willing to share vehicles they own. From cars to e-scooters and even forklifts. Moreover, people are willing to start their own businesses based on sharing.
This will be a practical guide for those who are seriously considering starting a sharing business. As this business niche isn’t new, a lot of people have suffered bumps during the launch process and have learned their lessons. Atom Mobility has collected them and created a practical guide highlighting what you should consider when you are considering entering the vehicle sharing business.
🛴 Choose the vehicle type and operation model
This seems like a simple decision, but it’s not. Currently, the most popular vehicles for sharing are bikes and e-bikes, scooters, e-mopeds and cars. If you already own a fleet, then the offering will be obvious. If not, you’ll have to start by calculating which vehicle type you can afford. Here is some meaningful insight into the difference between launching a vehicle sharing business with scooters, e-bikes, and mopeds. By the way, the brand is not important. The most important parameter that can later reduce maintenance costs is the quality of the IoT system fitted into the vehicle and, of course, the quality of the vehicle itself.
You will need a minimum of 50-100 vehicles to start your business. Accordingly, you can calculate the amount of the initial investment you require. Obviously, car sharing requires way more money than creating a bike fleet of 100 vehicles. However, leasing is also an option. In addition, you have to do the market research, because your success depends on demand - if there are already two or three companies in town offering e-scooters, you will have to invest a lot of money on marketing to persuade people to use your services instead those of your competitors. So you should probably consider choosing another type of vehicle to establish a point of difference and thus secure competitive advantage.
When you start to do your calculations, start with the vehicle price. From one perspective, this is the easiest part, but it is very important to calculate:
● How many rides should be taken with one vehicle during the day for it to be profitable? For example, take a look at this Shared Mobility Report from France. It might help you to get an impression of the demand and fragmentation of the market.
● What is the value of one ride? Bear in mind that the price per ride in a car is approximately three times higher than on a bike, but so are the expenditures.
● What is the structure of your costs? You have to insure every vehicle. Taxes have to be paid and vehicles have got to be inspected from time to time. Are all these positions included in your cost estimate? By the way, this is a great resource with an Excel table showing how market leaders estimate their income and expenses.
The next decision to make regards the sharing model. Currently, there are several on the market that have demonstrated proven value:
● Charging stations - there are charging stations all over the city. When the ride ends, the vehicle is left at a charging station and it is charged in readiness for the next time it is going to be used. Although this approach can create significant additional costs, it lowers everyday servicing costs.
● Free-floating vehicles - shared vehicles can be left wherever it is convenient for the customer. The city council may not be happy with it as this model sometimes clutters up the streets. So you should definitely check out whether there are any existing regulations in this regard before you launch this model.
● B2B or corporate vehicle sharing - the company owns the fleet that can be used by their employees. This is quite a secure way to run your business, but you will need to sell it to other SMEs which is not an easy task and requires significant sales resources and expertise.
● P2P sharing - anyone can register a vehicle on the platform, which can be rented by any other user. This may seem easy, but it is actually quite complicated, because the owner is putting his property on the platform which he wants to get back in the same condition as it was before. As a sharing service provider, how can you guarantee that the vehicle won’t be broken? You should run background check on users, as well as have insurance in case anything happens.
You can also read more about different operational models here.
🏢 Check the city regulations
In recent years both the demand and offering for ridesharing have grown to such an extent that cities have been forced to regulate this business sector. If you are planning to operate within city limits, you’ll definitely have to check out the relevant legislation.
Regulations may be in place that have been set by the City Council. So the first thing to find out is - is vehicle sharing allowed at all? In cities with high vehicle ridesharing service and density, the city council might organize tenders to identify which companies can provide the most appropriate ridesharing service. Other requirements for companies might also apply, so you should monitor this situation carefully.
As far as density is concerned, there’s no point in creating a new ridesharing business if the vehicle density is already more than 700 shared vehicles per 100,000 people. If the ratio is one shared vehicle per 100 - 140 people, very careful calculations should be done as it could signal that the market is overcrowded so demand might be low.
💰 Consider all costs
Every business plan starts with an Excel sheet. As always, it is not possible to predict all costs but you can sneak peek into existing companies and take a look at their cost structure. You should take the following items into account:
● Maintenance costs - every vehicle now and then will have to be repaired.
● Vehicle purchase and depreciation costs - you need to know after how many kilometres you are going to have to replace your existing vehicle with a new one.
● Charging costs – you will need a team to take care of vehicle charging. Of course, costs will differ depending on the ridesharing model, but there are going to be charging costs in some shape or form.
● Bank commissions and payment transaction costs - even if you haven’t used credit to buy vehicles, your bank will still charge you commission for its services. If you use Stripe, Adyen, or a similar payment operator, you should take into account additional costs for every transaction.
● Marketing - it is vital to go loud upon launch so that everyone notices the new company in town. This requires a sizable marketing budget. If you decide to use promo codes, free rides, and other bonuses to attract new customers, this will reduce your profit margin on a certain amount of rides.
● Customer support - customers always have questions, which they will ask via Messenger, phone or any other platform. You have to have a team in place that can provide answers right away.
● IT system support - it is crucial that the service is up and running all the time. And there are a lot of different parts involved starting from software to IoT systems and data.
● Additional costs - always leave space for unplanned costs. The industry average is approximately 3 - 5% per ride.
At this point, you are ready to start to talk to manufacturers, haggle about prices, and ask them to send you a vehicle for a test. You should not forget to discuss the prices and delivery policy of spare parts, in order to avoid unplanned downtime.
🤑 Financing options
If you already own a company and see ridesharing as an additional direction in the development of your business, then most likely you will be ready to invest in its launch. If not, and you are planning to start a new company, the first thing to consider is how can you launch a test? The idea of a vehicle sharing business alone will not be enough to attract investors or convince banks to give you a loan. You will always have to prove that this business can really take you somewhere in this particular place. And a successful test with a small number of vehicles could be good proof.
You could consider crowdfunding as an option if you want to get some seed capital. Consider choosing the most popular platforms like Spark Crowdfunding, Seedrs, Fuderbeam, or Crowdcube. They are so interested in your success that they will also put their effort into marketing your campaign on their channels. This is your opportunity to make some savings on your marketing expenditures, which will definitely benefit you later on.
🛵 Plan fleet management
So far so good. You have a plan and a budget, so what’s next? Now you have to put your fleet management system on paper:
● Maintenance and charging - at the end of each day you are going to have to check the condition of every vehicle. Does it need to be charged? Is everything working smoothly or do some details need to be changed? This everyday care usually “eats” 30 - 40% of overall costs.
● Spare parts - you should be ready to spend about 10% of the total value of the vehicle on spare parts. In addition, you should have a proper warehouse. Losing 30% of the fleet for three months due to a spare parts’ shortage is a nightmare for any business.
● People on the streets - your company will require two employees per 100 vehicles to inspect and collect them. So estimate their salaries. Remember that these people won’t have regular working hours. They might charge you overtime for work at night. And another thing to consider is how they are going to get about the city. If the vehicle is broken, how are they going to be able to take it to be serviced?
● Customer support - no matter how mature the market is - your customers will always have questions. Who’s going to answer them? Remember that customer reviews create a rating that builds the further success of the company.
As the ridesharing business is becoming more popular, you should probably consider outsourcing the vehicle service. There are new companies on the market that focus on servicing vehicle sharing platforms.
📈 Build your marketing strategy
Marketing starts with the brand. You have to decide whether you’re going to hire a marketing agency or work with the designers and marketers yourself. Either way, you will need a brand name, logo, web page, and corporate colours.
Our experience shows that the success of the launch event is a bridge to the future success of the vehicle sharing company. So it is really worth focusing your attention on the big bang at the beginning. It is crucial to get as many downloads during the first days of the operation as possible. Even if not everyone uses your service straight away, you will have a database of potential customers with whom you can work, for example, by sending push notifications - consider using Intercom or Mailchimp for this.
Oftentimes collaboration with influencers is a good channel to use. And local media are interested in vehicle sharing businesses entering the city. But never forget social media - it is the most appropriate channel for marketing, as well as quick responses to customer requests.
Now sit back, relax and enjoy your amazing results… 😆 No, the vehicle sharing business doesn’t work that way. During the first month you will have to put a lot of your effort and the effort of the whole team into adapting your initial plan to real life. The first season is usually full of experiments and failures, but the most rewarding part of this business is the opportunity to scale.
👍 ATOM Mobility is here to help you with all the challenges you will face. ATOM Mobility provides reliable and proven white label technology helping entrepreneurs to focus on marketing and operations. Now serving customers in over 15 countries worldwide. Check what our customers are saying: Story of Ride, Story of Qick, Story of GOON
Click below to learn more or request a demo.
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.