What Impact are Car Sharing Services having on the Canadian Automobile Industry?

August 21st, 2019 by

car sharing

Car ownership in Canada is at an all-time high and sales have continued to increase over a period of many years. However, there are signs that sales growth is beginning to decline, and there are several reasons why this trend may continue.

More people than ever are living in urban areas where housing density is high, therefore, driving around is no longer an easy task. Additionally, they’re faced with parking problems, higher capital costs, insurance, fuel, and maintenance, as well as the increasing cost of owning a car in general. This has caused many people to abandon their cars altogether, this is particularly true for young people who have no ambitions to own a car.

The Growth of Car Sharing Services

Many of the new generation of non-car owners rely heavily on public transport, which is possible in urban areas where journeys are frequent and relatively cheap. Increasingly, however, they’re also using car-sharing services. This enables them to hire or drive a car whenever and wherever they please.

Many of these people have realized that any car they own sits immobile for at least 90% of its life, resulting in money being lost during the time the vehicle sits immobile. Therefore, they prefer the convenience and lower cost of using either public transport or a car-sharing scheme, depending on which is more appropriate for what they wish to do.

The car share market is still relatively small and its likely effect on the automobile industry is still unclear. However, it is continuing to grow and is starting to worry many in the industry who believe the effect will be a negative one. At present, it’s not possible to confidently predict anything for certain, but some assumptions can be made based on reasonable facts.

Possible Effects of Car Sharing

If car-sharing services grow as they are expected to, it will result in a corresponding decrease in car ownership. That, in turn, will result in fewer cars on the road, as well as streets being less congested with parked vehicles. The logical conclusion is that the automobile industry will ultimately manufacture fewer cars, although that’s not necessarily the case.

Privately owned vehicles spend the vast majority of their time parked, whereas car-sharing versions will be used much more frequently by many people. Therefore, they’re almost certain to do more miles and depreciate faster, resulting in the vehicles needing to be replaced frequently. That’s particularly true because car-share users won’t stand for battered old vehicles and will insist on a modern and reliable car. The outcome is that, although there will be fewer cars on the road, generally, they will be newer, meaning car sales will most likely not be reduced as much as many people may believe.

One big effect may be the type and variety of cars that are made. At present, many manufacturers rely on innovative features to attract new buyers who are keen to upgrade to the latest model. Car share users, however, will have a vehicle only a short time and so won’t be particularly interested in those features. Instead, they’ll want a car that is reliable, clean and sufficiently roomy. That may well spell the end of coupes, sports cars, and high-performance cars, except for a niche market of keen car owners.

The car market will undoubtedly be changed by car-sharing but will not necessarily be reduced as much as many people fear. It will most likely mean fewer cars on the road and a reduction in variety.

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