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Carsharing Services. A potential analysis of alternative business models in the automotive industry

Hausarbeit 2015 14 Seiten

BWL - Unternehmensführung, Management, Organisation

Leseprobe

Table of Content

1 Introduction

2 Carsharing
2.1 What is Carsharing?
2.2 Forms of Carsharing and Provider Landscape

3 Theoretical Background on Business Models
3.1 Definition of Business Models
3.2 Description of Alternative Carsharing Business Models

4 Potential Analysis of Alternative Carsharing Business Models
4.1 General Development and Potential of the Carsharing Market in Germany
4.2 Evaluation of the Potential separated by Business Model
4.3 Evaluation

5 Conclusion

Bibliography

Appendix

1 Introduction

Carsharing is rapidly growing service that gains more and more acceptance among car drivers. By now, alternative business models exist in search of new customers. This term paper aims to evaluate the potential of alternative carsharing business models in the automotive industry. Therefore, it will first set theoretical foundations by introducing different forms of carsharing and business model concepts. In a second step, dominant forms will be exemplified by applying it to a business model framework. In a last step, the author will make use of a SWOT analysis to examine potentials of each carsharing business model. This paper will exclusively concentrate on business-to-customer carsharing services on the German market. Other forms of the shared mobility will not be considered.

2 Carsharing

This chapter provides a brief overview on the principle of carsharing and introduces different forms.

2.1 What is Carsharing?

Carsharing is a special form of the so-called access based consumption. It refers to transactions that are market mediated but without transfer of property (cf. Bardhi/Eckhardt 2012, p. 3). The term carsharing (or short-term auto use) describes a principle where individuals gain advantage from private car use without the costs and commitments of ownership. Core characteristics are a short rental period, simple access to vehicles and good transition to other forms of mobility. This way of utilization is applicable for intermediate travel and routine activities (cf. Shaheen 2015, p. 2). Even though carsharing emerged in Europe between the 1940s and 1980s, it ultimately became popular in the 1990s. Since then, it is spreading and growing all over the continent (cf. Shaheen/Cohen 2007, p. 81). Among others, one crucial factor for this development is that by 2020 55 per cent of the world population is expected to live in cities, which will lead to considerable space, infrastructure and environmental problems. Thus, the possession of a private car becomes more and more unattractive as overstrained infrastructures make a smooth flow of traffic impossible (cf. Stricker/Gregor/Raymond 2011, pp. 7 sqq.). Carsharing has to be distinguished from other types of shared mobility solutions like ride sharing concepts such as Uber, which are not treated in this paper.

2.2 Forms of Carsharing and Provider Landscape

Over time different forms of carsharing have evolved in Germany and other countries. For the purpose of this paper the following three forms of carsharing will be discussed as they are already implemented in Germany.

Point-to-point free-floating carsharing

This form describes a type of B2C carsharing. It enables its customers one-way rides within specified geographic zones which are mostly urban areas (cf. Le Vine/Zolfaghari/Polak 2014, p. 6). Usage and booking is spontaneous - customers use their smart phones to locate the nearest vehicle and pick it up with a member card. The cars are only used and paid for the time needed, this leads to minimal idle times and economic advantages for the user. Providers of this form usually build up partnerships with the respective cities to obtain privileges like free parking spaces, reduced tolls or the usage of special vehicle lanes (cf. Cohen/Kietzmann 2014, p. 283). The operators of this system are predominantly big car manufacturers (OEMs), which run this business as an additional segment.

On German market currently four free-floating providers operate 6,400 vehicles. However, this paper will concentrate on the largest ones with similar business concepts (cf. Bundesverband Carsharing e.V., 2015). The biggest provider in Germany is DriveNow when measured by customers. In 2014 they served 470,000 customers with 2,370 cars in five cities. DriveNow is a joint venture between BMW and the car rental company Sixt (carsharing-news.de, 2015). Another large free-floating operator is car2go by Daimler AG and Europcar. With 300,000 customers, 3,500 cars and seven cities they are ranked two in Germany (carsharing-news.de, 2015).

Point-to-point station-based carsharing

The key characteristic of this form is that it is station-based. Users pick up the car from a designated parking station and return it to another or to the same. The parking stations dispose of an infrastructure, such as charging points for electric cars or customer service points (cf. Le Vine/Zolfaghari/Polak 2014, p. 6). Currently 150 station-based providers do operate 9,000 vehicles in Germany. Cambio is the largest provider with 48,000 customers and 1,000 vehicles in 17 cities. Book N Drive is the second biggest provider with 22,000 customers, 650 cars and six cities (carsharing-news.de, 2015).

Commercial peer-to-peer (P2P) carsharing

This form is characterized as a round-trip usage. It differs from mentioned above types as the carsharing fleet is decentralized and owned by private owners instead of central providers (cf. Le Vine/Zolfaghari/Polak 2014, p. 5). Companies like drivy.de and tamyca.de act as platforms to bring together supply and demand and charge a fee in return. Initial legal concerns regarding this form where circumvented by implementing on-top insurances for vehicle owners (cf. Umweltbundesamt 2015, p. 196).

3 Theoretical Background on Business Models

The third chapter aims to set foundations on the concept of Business Model to create an inevitable understanding of the subsequent elaboration in this paper. It will first clarify the term business model and then define which elements are used to examine the carsharing application.

3.1 Definition of Business Models

Since its inception the notion business model is discussed frequently and much controversially. This regards not only the definition per se but also the method of approach and its components. Thus, the German researcher Patrick Stähler (2001, p. 41) defines a business model as business concept that is already applied in practice. Osterwalder and Pigneur claim that, “a business model describes the rationale of how an organization creates, delivers and captures value” (Osterwalder/Pigneur 2010, p.14). In more detail, Osterwalder and Pigneur (2005, p. 2) describe it as “( ) the translation of strategic issues, such as strategic positioning and strategic goals into a conceptual model that explicitly states how the business functions.” For the purpose of this brief paper the definition of Osterwalder and Pigneur will be taken into account.[1]

According to Lehner (2014, p. 21), business models are the mediation layer between business processes (operational level) and business strategy (strategic level) and are thus settled at the tactical level. Further considerations of the interplay of strategy and business models will be not taken into this paper.

For a study of in this paper applied business model elements see Appendix 1.

3.2 Description of Alternative Carsharing Business Models

The following table shows business model elements applied to the three forms of carsharing. The given information is exemplary for the respective carsharing form and excludes provider-specific details:

Sources: Le Vine/Zolfaghari/Polak (2014), pp. 5 sqq., Businessmodelsinc.com (2013).

4 Potential Analysis of Alternative Carsharing Business Models

In this chapter the German carsharing market will be examined to set foundations for the subsequent potential analysis of alternative business models.

4.1 General Development and Potential of the Carsharing Market in Germany

Station-based and free-floating carsharing providers currently dominate the German market. Here, the number of both carsharing locations and customers is significantly rising over the last years. In 2014, 1.04 million people were authorized drivers in 490 carsharing cities – which amounts to a plus of 37.4 per cent when compared to the previous year. Thus, the number of disposable cars also increased by 10.4 per cent to 15,400. By now, the system reaches 46 million people when it comes to geographic coverage (cf. Bundesverband Carsharing e.V., 2015). When it comes to future potential for carsharing, analysts forecast further growth. Thus a representative survey of 2014 stated, that up to 50 per cent of current non-users could be mobilized within the next 24 months (cf. Berylls Strategy Advisors 2015, p. 1). Among existing customers a high level of satisfaction is expected to lead to a 24 per cent higher intensity of usage (cf. Berylls Strategy Advisors 2015, p. 4). General market data for P2P carsharing are yet hard to quantify as no consolidated figures exist for Germany.

4.2 Evaluation of the Potential separated by Business Model

The conceptional framework for accessing the potential of alternative carsharing business models will be given by applying a SWOT analysis. In this case it is based on analyzing internal strengths and weaknesses as well as external threats and opportunities of a business model.

Point-to-point free-floating carsharing

Strengths: Operating free-floating carsharing is a capital intensive business model as it includes the involvement of a high number of vehicles and sophisticated mobile and web technologies for reservations, payment and keyless entry (cf. Cohen/Kietzmann 2014, p. 287). The large-scale OEMs running this business have by definition great amounts of free cashflows deriving from core business to invest in carsharing and especially to extend it to more geographic areas. Another important strength of this business model is the provided instant-access to vehicles that is considered as the most important criteria for 47 per cent of carsharing users in Germany (cf. Berylls Strategy Advisors 2015, p. 3). In other words car makers are in an ideal position to deliver carsharing services. Advantages of this form derive, for instance, from appealing new customer groups or enhancing the brand perception and image.

Weaknesses: Carsharing users require proximity to available cars and city overarching roaming (cf. Berylls Strategy Advisors 2015, p. 3). By now, the usage is limited to specific areas in metropolises and thus prevents this business model from reaching a broader customer base. Furthermore do 66 per cent of carsharing users require a multi-brand offering whereas OEMs exclusively provide their own brands (cf. Berylls Strategy Advisors 2015, p. 5).

Opportunities: Free-floating carsharing records the highest growth rates in the business with a plus of 51 per cent of authorized drivers when compared to 2014 (cf. Bundesverband Carsharing e.V., 2015).This is due to geographic expansion and the fact, that this form was piloted in 2011 whereas station-based carsharing was introduced in 1997. Considering the growth rates as well as the high customer satisfaction free-floating carsharing could be expected to denote further growths (cf. Berylls Strategy Advisors 2015, p. 4).

Threats: The most important threat derives from the competitive environment. Recently some station-based providers have integrated additional free-floating fleets into their business model (cf. Bundesverband Carsharing e.V., 2015). If this trend continuous the competitive advantage of free-floating OEMs will vanish.

Point-to-point station-based carsharing

Strengths: This form is also capital intensive due to large vehicle fleets but fleet management is less complex for providers and can be conducted to reduced rates. It is typically operated by providers, which have up to 20 years of experience in this business model. This type is favourable for wider and longer rides as it is less limited to specific areas (cf. Bundesverband Carsharing e.V., 2015). It satisfies the customer need of diversified brands and vehicle types which free-floating providers usually not serve (cf. Berylls Strategy Advisors 2015, p. 5).

Weaknesses: The most severe weakness of this business model derives from its relative distance to the customers. For 47 per cent of the customers proximity to available vehicles is the most important criterion for using carsharing (cf. Berylls Strategy Advisors 2015, p. 3).

Opportunities: In 2015, the number of carsharing stations is growing by 17.9 per cent and reaches 36 million people within Germany (cf. Bundesverband Carsharing e.V., 2015). If these growth rates proceed, station-based carsharing is expected to be available nationwide.

Recently some operators added free-roaming carsharing to their portfolio (cf. Bundesverband Carsharing e.V., 2015). This measure undoubtedly gives the greatest opportunity to get hold of new market shares and to compete with OEMs in their segment.

Threats: With 380,000 authorized drivers station-based carsharing providers have a clearly weaker customer base when compared to free-roaming. The same picture reveals when it comes to annual growth rates (+18,8 per cent) (cf. Bundesverband Carsharing e.V., 2015). Providers have to be aware of financially strong OEMs, which are expanding their businesses rapidly.

Commercial peer-to-peer (P2P) carsharing

Strenghts: For its providers P2P carsharing is a low capital business due to the absence of physical assets. Compared to the other forms of carsharing P2P is even more sustainable as already existing private fleets are used instead of expanding the production of new vehicles (cf. Cohen/Kietzmann 2014, p. 284). Furthermore P2P carsharing provides the broadest vehicle variety when it comes to brands and vehicle types, which is an important criterion for users (cf. Berylls Strategy Advisors 2015, p. 5).

Weaknesses: P2P carsharing is by definition limited to round-trip usage and excludes point-to-point rides, which massively hampers customer flexibility. Furthermore it limits the convenience of usage, as it requires manual exchange of car keys and documents and does not possess telematic services (cf. Le Vine/Zolfaghari/Polak 2014, p. 3,14). Providers in addition scarcely interact with municipal government to provide car parking in overcrowded metropolis (cf. Cohen/Kietzmann 2014, p. 290). In the end, quality and safety aspects of rented vehicles stays to a certain degree unclear as maintenance remains under control of the vehicle owners.

Opportunities: This business model benefits from the increasing diffusion and use of mobile devices and software. As a consequence it leads to higher market transparency and mass appeal, which attracts further customer groups and growths rates (cf. Umweltbundesamt 2015, p. 196). As a specific application scenario of the collaborative economy it is likely to benefit from this social trend.

Threats: The resource base of P2P providers is weak when compared to the big players on the market. This affects spendings on advertising, communication and general investments. In case the rapid market expansion of free-floating providers continuous in this way, market shares of P2P providers are even more at risk. Furthermore future legal issues or restrictions can hamper the business model in addition, as recent lawsuits initiated by rental companies have shown (cf. Umweltbundesamt 2015, p. 196).

4.3 Evaluation

As elaborated in the previous chapter, the concept carsharing has a firm foothold in Germany as an adequate alternative for car ownership. This is indicated, amongst other things, by the high number of authorized drivers and available vehicles. For the future further growth is predicted by both providers and independent experts. The analysis of the different business models in Germany has outlined, that each has its legitimated existence as different customer benefits are focused. Free-roaming carsharing gains its strengths through a high degree of the provided access-flexibility. Therefore it is most suitable for short distance travels in conurbations. However, OEMs also have the resources to expand this business model to smaller cities in future. Station-based carsharing is suitable for longer rides and provides a multi-brand concept. The established vendors have extensive experience in this business and have thus a better geographical coverage throughout the country. P2P is the latest carsharing principle on the market. It is mainly conducted by Internet start-ups lacking a broad resource base. The system gains its strengths through round-trips and the greatest vehicle variety in this comparison. Despite expected growth it is likely to remain as a niche solution for specific customer groups as quality uncertainty and legal obscurity tarnish the image. All in all, the quantitative highest potential is attributed to the free-floating system. However, the strategy of station-based providers of adding free-floating to their business model could be considered as the silver bullet as it combines the advantages of both systems.

5 Conclusion

This paper provided an overview on alternative forms of carsharing, which were then embedded in the concept of a business model framework. To evaluate the potential of these business models a SWOT analysis has been conducted. This analysis revealed that each business model has strengths and weaknesses deriving from its specific set-up. Moreover the models differ in kind and intensity of how external factors such as competition or customer needs influence its future development. As of today, the concepts can coexist due to the heterogeneity of how customer needs are served. However, it has to be noted that free-floating and station-based carsharing are the most promising forms of today’s market. For the future it is likely that providers with strong resources will bundle the advantages of several systems to create a new dominant business model and expand it nationwide.

[...]


[1] For further research and comparison of business model literature cf. Osterwalder 2004 pp. 23 sqq.

Details

Seiten
14
Jahr
2015
ISBN (eBook)
9783668199408
ISBN (Buch)
9783668199415
Dateigröße
515 KB
Sprache
Englisch
Katalognummer
v320210
Institution / Hochschule
Philipps-Universität Marburg – Research Group Technology and Innovation Management
Note
1,3
Schlagworte
Carsharing Business Model Business Model Canvas Osterwalder Pigneur Car Sharing Car Sharing in Germany Patrick Stähler Geschäftsmodell Automobilindustrie Automotive Bundesverband Carsharing e.V. OEM Station-Based Carsharing Free-Floating Carsharing Peer-2-Peer Carsharing

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Titel: Carsharing Services. A potential analysis of alternative business models in the automotive industry