Car Sharing Before and After the Pandemic

By Shari Saffran And Michael Palocz-Andresen

In this article, the structure and organisation of car sharing is first explained in more detail and then compared with individual vehicle use and conventional car rental. There follows an illustration of the costs that can or cannot be saved by using or not using car sharing. Subsequently, the environmental aspects and the corona influences are considered and a critical conclusion with the advantages and disadvantages Is drawn.

Introduction

The idea behind car sharing was to make it as cost-efficient as possible, since, unlike a private car, the costs only arise if the car is actually used. This should enable more people to use it.

According to the experiences of the last one and a half years, people who own and drive their own car have a lower risk of infection. Private cars help people to avoid travelling by public transportation, to keep their distance and to stay away from the closed spaces implied by public transport. Travelling by one’s own means of transport is an effective way of maintaining social distance and reducing the risk of infection from airborne coronavirus infection. But poor people around the world don’t have a car of their own. In these cases, car sharing offers people the opportunity to stay mobile and keep their distance, even during the coronavirus pandemic.

To reduce the risk of the infection, it’s best to keep a car for an extended period of time, rather than renting a new car for each trip. As a result, the car comes into less contact with other car sharers, which lowers the overall risk for everyone. Since the coronavirus is transmitted through the air, it makes sense to open the windows and ensure good air circulation. The passenger should leave the car in a clean condition. This contribution pays off in the form of improved hygiene and less risk for other passengers.

Car sharing is intended to be environmentally friendly, since the providers design the range of cars in cooperation with the environmental association. Normally, car-sharing vehicles are more modern and efficient than average private cars. They also reduce pressure on space, as an average of four to eight vehicles become redundant per car-sharing vehicle and free up parking spaces on the streets ¹.

Figure 1 shows the advantages of the car sharing system

International comparison

The car-sharing market has spread worldwide. Continentally viewed, Europe represents almost 50 per cent of the market and the trend should increase even further by 2022². In Europe, almost 40 per cent of vehicles are in free-floating use, with a large proportion in tier 1 cities in countries such as Spain, Italy and Germany. In addition, around 50 different operators are active in more than 130 cities across the continent. The development in Western Europe is still shaped by large operators, such as Share Now, Free2Move or Zity, which are financed by automotive OEMs.

Eastern Europe is experiencing an interesting dynamic. Russia has become the largest and one of the fastest-growing car-sharing markets in the world. The two largest car-sharing providers together have more than 37,000 vehicles in use in cities such as Moscow, St Petersburg, and Sochi³.

While membership increased by 2.4 per cent in the US, there was a large increase of 25.6 percent in Canada. The total in North America in 2018 was 2,110,111 members sharing 23,376 vehicles. Of these, 91 per cent were located in the USA⁴.

In the Asian area, the share economy is less represented in high-income countries, but is mainly used in poorer countries, such as Indonesia and Malaysia. Environmental considerations play less of a role there; ride-hailing and car sharing are simply more affordable than using one’s own car. High-income countries such as South Korea and Japan show an increase in the purchase of private vehicles.

Although the sharing trend has not yet fully arrived in Asia, a sharp increase is expected in the near future. This has nothing to do with a change in income, but with the expectation of advanced technology. Once autonomous-driving or “robo-taxis” can be rolled out on a large scale, the share economy should also rise rapidly. In such a scenario, a much larger increase in share mobility is expected in countries like China than in poorer countries like India⁵.

An improved sharing structure is also expected in parts of Africa. In 2018, Volkswagen started local production in Rwanda and introduced the car-sharing concept⁶. The goal here is to create prospects and generate economic success. Consequently, this is also expected to create thousands of new jobs and tie in with technological progress⁷.

Figure 2 shows the number of car-sharing users in the world between 2017 and 2025.

Table 1 shows the largest car-sharing companies in the world⁸.

Environmental aspects

In Germany, 75 per cent of all passenger kilometres are travelled by car, leading to a high pollution rate that harms the environment [9]. 

Although most trips are short-distance and usually only to work or to do grocery shopping, people consider public transportation to be inconvenient. There may be several reasons for this: on the one hand, it could be because public transport does not go from door to door. Sometimes, people even have to change trains or switch between modes of transport, such as bus, train, bike, etc. On the other hand, one reason could be the loss of control of departure and arrival time. Travellers are dependent on bus and train schedules and have no influence on punctuality. Furthermore, there has been an increase in train cancellations and delays, especially in the major cities of the world.

In order to retain flexibility and independence, while at the same time being more climate-friendly than with an own car, a compromise must be found. First of all, car-sharing vehicles are often more energy-efficient than private cars. Car-sharing providers like Share Now or Cambio adapt their offering to cities and users; they use smaller, newer vehicles with lower emissions, which are serviced regularly. In an increasing trend, more and more electric cars are also being offered as share cars. The My-e-car company, for example, offers only electric cars for sharing. It is not the only company to take this approach; in general, more electric cars are offered and driven in the car-sharing sector than are driven by private owners¹⁰.

However, the condition of the cars is not the sole reason for the environmental benefits. When several people share a car and sell their own, a lot of free space is created. In Germany, the Federal Environment Agency (UBA) found that private cars are moved for only one hour a day on average¹¹. As a result, the car is idle for an average of 23 hours a day, occupying valuable space, especially in cities. Instead of creating more parking space, cities could be equipped with more plants to counteract CO₂ emissions, or the space could facilitate social institutions or healthcare institutions.

Figure 3 shows important environmental aspects of car sharing.

Car sharing does not have to be used as a sole concept. Especially in combination with other means of movement, like public transportation, bicycle riding or simply walking, it brings an enormous added value for the environment and greatly reduces CO₂ emissions.

The UBA study has shown, that a coordinated expansion of car sharing and public transport could reduce CO₂ emissions by more than six million tons per year, which means four per cent of the transport-related CO₂ emissions in Germany¹².

It should be taken into consideration that the proportion of trips made by public transport and by bicycle would also increase. The savings of six million tons of CO₂ emissions can be achieved only if public transport rises from 5.2 per cent to 21.1 per cent, and the share of bicycles increases by 0.2 per cent to 3 per cent. Car sharing use would rise to 1.4 per cent of total transport performance¹³.`

How can this be accomplished?

First of all, people should ask themselves whether it is necessary to take their own car to work or if there are more efficient or even quicker possibilities for getting to the workplace. The idea is that people start considering different modes of transportation and understand that the private car does not necessarily have to be the best.

There are many options that do not require a car. The south German city of Augsburg realised this and was the first city to offer a flat rate that includes all means of public transport and shared vehicles, such as an e-scooter, a bicycle, or even a car¹⁴.

By being able to pay for the mode of transportation on a monthly basis, usage becomes much more attractive than having to open an app or take a ticket at the counter every time there is a need to travel.

It is important to know that car sharing is seen as an alternative to private car ownership, because only in that way can there be an improvement for the environment. Accordingly, offers like that of Augsburg are important in order to make the sharing economy as attractive as possible and to convince car owners to give up their own vehicles and switch to alternatives.

The influence of corona

The pandemic has influenced our daily lives in many ways. It is not just our social and working lives that have changed completely, it is also the way people think about mobility.

The fear of infection is greater than ever before. People pay more attention to hygiene and keep a greater physical distance from other people. To comply with this, places with many people, such as public transportation, car sharing, etc., are being avoided. Although travellers do not have to stay in a confined space with other people, the feeling that another person previously used the vehicle and may have left their germs behind scares many people. The LeasePlan Mobility Insight Report confirms that. In a survey of 22 countries, including Germany, it was found out that around 79 per cent now value their own car more since the pandemic, and 76 per cent prefer it to other modes of transportation¹⁵.

This trend was especially noticeable in times of lockdown. The largest car-sharing provider, Share Now, suffered a reduction of 56 per cent in car rentals in Berlin and 62 per cent in Hamburg, compared to pre-crisis times¹⁶. The only worse development was in public transport, where there was a decrease of 80 per cent.

The curve only went up again when the lockdown was coming to an end, which can be traced back to the willingness to travel more often. The rules were relaxed and borders opened again. The total number of infections has been decreasing, and with it the fear of being infected. Although the opportunities for car sharing were similar to those before corona, many people remain wary¹⁷.

Have they become accustomed to the convenience of having their own car?

It is clear that surveys like LeasePlan’s show that a rethink about mobility has taken place, which means that the old concept of car sharing can no longer function as before. It also needs innovation. That is why car-sharing providers have developed a hygiene concept that should provide enough safety for drivers. Besides the general hygiene rules, some providers, like Share Now, disinfected their vehicles four times more often than usual. All shelves and usable surfaces, such as the steering wheel, gear lever, and handbrake, are cleaned and disinfected¹⁸. There is even an extra-complete package offered that guarantees a deep clean before the vehicle is used.

The measures have proved to be successful.  Last year, sales increased by 45 per cent in comparison with lockdown times¹⁹. So a recovery of the industry is in sight, at least for those companies that have adapted to the new situations.

A relatively linear development can be predicted up to 2030 (see figure 4).

The general market development shows that the sharing trend is increasing. Despite the corona pandemic, no long-term losses could be identified in figure 4. However, in the event of future pandemics, there will be a clear difference in the growth rate. This is due to the fact that the providers did not consider an expansion of their vehicle fleet to be sensible, because the trend in times of lockdown was rather towards owning cars.

It cannot be predicted what trend will arise after corona, and when corona will even be over. Will there be a time after corona? Or is before corona equal to after corona?

The course of the pandemic will continue to influence the future of car sharing. As long as there are travel restrictions, mandatory home offices, and fewer leisure activities available, demand is also unlikely to increase further. In particular, demand in the countryside, which in any case is not high, is more liable to fall than rise.

Car-sharing providers can only wait and see how the situation develops and how they will be able to adapt their offers accordingly and, all being well, expand them.

The Cost of car Sharing rental and comparison with alternatives

Basic structure of the price

Prices for car sharing are usually clearly defined. There is a price for kilometres travelled, a price for time, and also models where the price is calculated on the basis of kilometres and time. In addition, a monthly or annual basic fee may be charged. In some cases, there is also a one-time registration fee. For example, car-sharing provider Drive Now charges 0.09 cents per minute for a Smart, and 0.34 cents per minute for a BMW X1. Furthermore, a daily rate of €30 euros a day could be charged for the BMW and €19.99 for the Smart²⁰. In addition, significant price differences can be observed among the various car-sharing options. Free-floating offers are generally more expensive than station-based car-sharing offers.

Comparison of individual vehicle and car sharing

With regard to the comparative costs of individual vehicles and car sharing, car sharing eliminates costs that would be incurred with an individual vehicle. These are the purchase cost, parking space costs, vehicle tax, insurance costs, and maintenance. A breakdown service is furnished by the provider. According to Stiftung Warentest (Foundation Product Testing in Germany), the owners of a small car pay an average of €206 euros per month for 5,000 kilometres per year²¹. For the same number of kilometres, a car-sharing member pays only €138 euros per month. In addition, discounts are available for students and trainees, as well as monthly subscriptions.

Saving cost with car sharing

The principle of car sharing is financially worthwhile up to a certain threshold of kilometres that the user wants to drive with the car in a year. According to ADAC calculations, car sharing is worthwhile for people who drive less than 10,000 kilometres a year, compared to an individual vehicle. The Bundesverband Car Sharing e.V. (the Federation of German Car Sharing) also made a calculation of the possible savings. With a mileage of 8,000 kilometres per year, the adoption of car sharing can save €741 per year compared with owning a small car. The total costs, including fixed costs, workshop costs, travel/operating costs, and depreciation, amount to €3,617 per year for a small car. With the car sharing model, the figure is €2,876²².

Comparison between conventional car rental and car sharing

With conventional car rental, the price is usually calculated based on the number of days the car is used. For car sharing, it is calculated per trip, so the user pays only for the actual use. At the end of a conventional car rental, the vehicle has to be refuelled in most cases. Depending on the driving style of the driver, the fuel costs are variable. With car sharing, on the other hand, there is a fixed price per minute, kilometre, or both. Billiger-Mietwagen.de, a comparison portal for rental cars, came up with an example calculation with the conclusion that, on longer distances, a rented car is the more economical choice, while on shorter distances a car-sharing vehicle wins²³. For a weekend trip of 48 hours and a distance of 250 kilometres, the price with car sharing company Share Now is €219. Share Now offers 48 hours as the maximum rental period. With a conventional car rental, the price for the weekend totals €102.96²⁴.

In summary, the advantage of an individual vehicle is that the car is always available. It can be found where it was left parked. This is especially important for people who are dependent on a car. In addition, the private car can be personalised according to one’s own needs and preferences. Furthermore, the hygiene aspect plays a role here. The car is used only by the owner and by the people the owner allows to use it. The car sharing model has the advantage that it is particularly flexible. As long as the model is free-floating, the user can park the car anywhere and get into another car-sharing vehicle in a different place.

Because of the flexibility regarding vehicle types, a spontaneous change of plan is no problem. Another advantage of car sharing is the digital, location-independent booking, which saves the user time. Furthermore, the fewer kilometres a user wants to cover in a year, the more likely it is that car sharing is worthwhile. The point at which owning a car is cheaper is at around 10,000 kilometres per year²⁵. If a user covers longer distances, a car from a conventional car rental service is cheaper.

Conclusion

Car sharing offers many benefits. One of them is that the individual vehicle is always available. In addition to that, most companies offer a variety of models that people can switch between every day, according to their own needs and preferences. So drivers no longer have to commit to a model and can easily change plans spontaneously. This can be particularly beneficial when switching between short and long distances.

Hygiene is also taken into account in car sharing, so that only the hirer or their friends are allowed to use the car. Besides that, the client saves time with the digital, location-independent booking. Car-sharing companies have implemented measures to improve hygiene in shared cars.

However, car sharing is only worthwhile for people who drive less than 10,000 kilometres per year; above that, a private car would be more appropriate. Aside from that, travellers have less responsibility as users, because they are not responsible for repairs and taxes. This is paid by the provider. Car-sharing travellers are also insured for the ride. This means that the overall costs are lower.

Moreover, it is flexible, especially in larger cities with the free-floating-model, as it is offered in many locations and users can park the car anywhere. In the countryside, it is still possible to expand. Car sharing is also environmentally friendly. As already explained under the environmental aspects, it creates enormous benefits for the environment, such as lower emissions.

Because of the benefits, fewer people would use their own car and more space is available in the form of parking spaces. This space could be used for the expansion of green areas.

However, billing based on minutes could be a problem if travellers are stuck, for example, in a traffic jam. So billing in kilometres should be offered in combination with minutes. One remedy for the problem might be linking car sharing to traffic messages.

Car sharing has many benefits, especially since it is, in most cases, cheaper than running an own car. However, it should be expanded in some areas still, such as cost accounting and in rural areas. This would allow more people to use it and discover the advantages it offers.

Table 2 shows the motivation factors and levels of travellers²⁶.

Outlook

Car sharing has faced similar challenges to other mobility sectors as a result of the COVID-19 pandemic. Reducing the risk of infection has become the most important factor in choosing the mode of transportation.

This article was originally published in The European Financial Review 02 September 2022. It can be accessed here: https://www.europeanfinancialreview.com/car-sharing-before-and-after-the-pandemic/

About the Authors

Shari Saffran studies Business Informatics at the Leuphana University Lüneburg, Germany and works in the area of sales/business development alongside her studies. In one module, she looked at the climate-damaging effects of the automobile trend and elaborated car sharing as a solution to this problem.

Michael Palocz-Andresen has been working as a full professor for Sustainable Mobility since 2018, supported by the DAAD at the TEC Instituto Tecnológico y de Estudios Superiores in Mexico. He became a full professor at the University West Hungary till 2017. Currently, he is a guest professor at the Leuphana University Lüneburg, the Shanghai Jiao Tong University and the TU Budapest. He is a Humboldt scientist and instructor of the SAE International USA

Acknowledgement

The authors would like to thank Prof. Dr Peter Pez, Leuphana University Lueneburg, Germany, Institute for Urban and Cultural Research, Professor of Geography for supporting the above seminar series in international relations at the university for many years. 

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