Making Car Ownership Obsolete

Photo by Jana Birchum

Four years ago, Heyride introduced Austin to the concept of ridesharing, but stalled out. Now Austinites are contending with the post-Uber, post-Lyft transportation world. Yet while the rideshare wars grabbed all the headlines, carsharing services like Car2Go and Zipcar have been steadily building up their share of the market, with a clear message: We're not going anywhere.

Carpooling may be as old as cars themselves, but it was Car2Go which pioneered the modern business model of leasing vehicles out for short rentals, often just a few minutes. Founded in 2008, the firm is found in 30 cities internationally, including Austin since 2010. Dacyl Armendariz, Car2Go's external communications manager, said, "We were here before those ridesharing options were here in Austin, we're still here, and while all that debate was going on, our goal remained the same. We just want to get people from point A to point B."

Previously, Car2Go had described Uber and Lyft as less competition and more a complementary service: While ridesharing will get people longer distances, carsharing works better for short hops. However, the departure of the two firms after the failure of Prop. 1 in May has shown how much competition there actually was. Since the pair quit, Car2Go reports a 25% bump in its business.

However, Car2Go North American operations and General Manager James Emery isn't rushing to see cause in the correlation. The firm was pushing to expand its ridership well before the Prop. 1 fight, with service refinements such as redrawing its service zone (see "Car2Go Closes Ranks," Sept. 25, 2015). "The whole purpose was to increase demand within the core areas of Austin," said Emery. The old, larger map saw cars parked on its outskirts for hours, sometimes even days, at a time, while potential riders in the core area were struggling to find a free vehicle. The goal was to get cars where drivers are and, in between tightening the service map, adding more vehicles to swell the fleet to 330 cars, and an optimization program (wherein staff drive unused cars into the highest-demand areas), "we believe we've accomplished that," said Emery.

While Car2Go was the first to market, they're not alone anymore. They're already facing competition in Austin from Zipcar, although theirs is a slightly different model. Rather than two-seat cars leased out by the minute, Zipcar rents out a more diverse supply of cars by the hour or day. The firm has a much smaller local footprint, with only 50 cars in Austin, but has grown the fleet by 20% over the last year.

The presence of such firms is already having an impact on how people approach transit. On July 20, UC Berkeley's Trans­porta­tion Sustainability Research Center issued a study of Car2Go users in five cities (Calgary, San Diego, Seattle, Vancouver, and Washington, D.C.) found that its rides produced less greenhouse emissions – no surprise, considering the small engines of the Smart Fortwo fleet are designed to be most efficient on short-hop trips. However, members were also less likely to buy a new car, more likely to put off replacing a car, and, in a small but statistically significant number of cases, actually just got rid of their existing vehicle and turned to other modes of transport instead.

Therein lies one big difference between ridesharing and carsharing. Ridesharing requires that drivers own their own vehicle. By contrast, Zipcar Austin Market Manager Justin Camarda said, carsharing is "an alternative to car ownership. ... In general, we believe that the more options people have to get around a city, the easier it is for them to ditch their personally owned car."

That's a reasonable market positioning for Zipcar, which is owned by car rental Avis Budget Group. But it's a little more surprising for Car2Go, since they're owned by car manufacturer Daimler AG. However, Armendariz said, "Car2Go's mission is to sell zero cars," and that's a part of a transition for the parent company, which she described as shifting from being a car company to a mobility company.

Locally, both carshare companies have experimented with financial inducements to gain even more market share. Zipcar gave its members a $10 driving credit, while Car2Go tried price restructuring: First there was a six-week free registration campaign running May-June, then a temporary per-minute price reduction from 43 cents to 32 cents. Emery said, "We've just changed that now to an hourly and daily rate reduction across the weekend."

Car2Go is also evolving its service to meet changing demands: For example, it just added four-door Mercedes B-Class cars in three Canadian markets (Calgary, Toronto, and Vancouver). Then there's the imminent arrival of self-driving cars, which Armendariz predicts could end the old slog of walking to a car. She said, "Instead of you opening up your app and saying, where's the nearest car, instead you'll be able to walk out, open your app and say, here's a car, and the car will drive up to you."