'Car-Sharing'- An Innovative Transportation Solution

Hi,

This time I'd like to tell you a little about a new Israeli venture called 'Car2Go', which is an innovative transportation solution that tries to provide an answer to the growing demand for a more convenient, cheaper and 'greener' transportation, as opposed to the orthodox option of individual car ownership.
Its entrepreneurs define the concept of Car–Sharing as an idea that sits in the meeting point of global trends in environmental awareness and individual cost savings. Its business model is spreading vehicles around metropolitan areas, within walking distance from any main location. To use a certain vehicle, a client either books one on-line or through the phone with its membership card. Basically, it's a "pay per use" car service that grants members hourly excess to a fleet of cars.
Although it's not a new concept, there are several reasons that strengthen the willingness to forego individual ownership, such as rising gasoline prices, environmental awareness, and density in urban areas. Nowadays, a dozen of companies successfully operating in the global market have already demonstrated that the concept could work to some extent.
However, my personal impression is that the "the bottom line", providing the desired ROI to stockholders, is closely affected with the following conditions which are specific to a certain environment in which that concept is implemented:
1. Insufficient/ineffective local alternatives – the indirect competitors for that concept are off course all other means of public transportation available to the customers, such as subways, trains, busses etc.
2. High environmental awareness – when the consumer taste is oriented for 'green projects' the likelihood for adopting Car-Sharing even if the alternative of owning a car in terms of convenience and price might exceed using a 'pay per use' service.
3. Ability to reduce high operational cots – By its nature, the business model of Car-Sharing is based on heavy investment in vehicles which is exactly the main difficulty embedded in the rental car business. However, finding a way to build an operation with advantages in purchasing vehicles and high occupancy per vehicle by co-operating with car dealerships or a rental agencies could be the right way to do it.
Let's test the existence of the conditions above in the case of Car2Go in Tel-Aviv. One can easily see that nowadays there is no municipal answer to the deficiency of high level public transportation in the crowded Tel-Aviv area (home to 3.15 million people as of 2008) as opposed to many other modern capitals in the world. The lack of subway and railway infrastructure hardens the access inward and outward of Tel Aviv, and thus provides an opportunity for non-governmental solutions of many kinds.
Regarding the readiness of the market for Car-Sharing, there is clearly an increasing environmental public awareness in Israel, yet it's definitely lagging behind the European community. In this aspect, it's not going to be an easy task to educate the target audience.
In general, the operational hurdles are dealt by backing Car2Go's business with the Israeli car rental agency Sun Car, with a fleet of about 1,000 vehicles.
Parenthetically, in days when sales of the global car industry are in a 25-year low and car rental agencies are desperately looking for ways to expand revenue stream by selling their used cars, I would expect Car-Sharing to find its way more easily into the ball-park.
Could Car2Go be the pioneer of this concept in Israel and enjoy a first-mover advantage? Will other metropolitan areas also implement this concept in the near future? Are the municipal authorities going to directly support those 'quick' solutions to a constant urban problem which they had failed to solve by now? I guess no one really knows nowadays what lies ahead in the car indusrty.

Have a great weekend.

Gadi


See also:

1.About Car-Sharing:

'Car-Sharing where and how it succeeds' by the Transportation Research Borad

http://books.google.co.il/books?hl=en&id=DDxB61imYzkC&dq=carsharing&printsec=frontcover&source=web&ots=nrInhY0Ove&sig=D1J2yRzVqizwkzrwvRp8_kKiwK0&sa=X&oi=book_result&resnum=1&ct=result#PPA1,M1

2. More about 'Car2Go':

http://www.car2go.co.il/

http://groups.yahoo.com/group/WorldCarShare/message/2749

http://www.vimeo.com/2174370 (Interview with the founder in Hebrew)

3. Other players of 'Car-Sharing':

Zipcar (US) -
http://www.zipcar.com/
Mobiliy (Switzerland) -
http://www.mobility.ch/pages/?dom=6