Ride sharing Market – Snapshot
Ride-sharing, also known as carpool, vanpool, dynamic ride-sharing, and instant ride-sharing, is a mode of traveling in which a single ride is shared by more than one anonymous passengers traveling along the same route. This method comprises picking different passengers from different places and ferrying them to same or different destinations. Ride-sharing is an old concept that has penetrated in the market since 1907. In the early 20th century, the method was known as ride sourcing in which the location of vehicles was unknown. Faster network speed, Global Positioning System (GPS), and smartphones have changed the face of the global ride-sharing industry, which enabled users to book a ride whenever they want and knowing the exact location of the vehicle, which in turn has enhanced the safety of passengers.
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The global ride sharing market is primarily driven by the inability to own a vehicle predominantly among mid- and lower-income group population. Asia Pacific and Latin America account for a significantly lower number of vehicles per 1000 persons. Ride-sharing offers the users a sense of owning a vehicle at a much lower cost than owning one. Therefore, consumers are preferring ride-sharing services. High volatility in fuel prices, rising traffic congestion, increasing working class population demands for daily commute in urban areas of major countries, supplemented by limited provision of public transit support in some countries and supportive government initiatives for expansion of ride-sharing activities are fueling the global ride-sharing market. Additionally, factors such as rise in daily commute to work places in urban areas and increased need to save fuel, which is wasted in such congestions, by providing a ride to commuters and colleagues heading along the same route are anticipated to fuel the global ride-sharing market.
Increase in pollution coupled with increasing global temperature is prompting governing bodies to reduce emission occurring through the transportation vehicles. Governing bodies across several cities of the U.S. and Europe have established separate lanes on major highways, known as commuter lanes, to be used by vehicles containing two or more number of passengers. In several cities across the U.S., vehicles occupying more than three passengers, known as high occupancy vehicles, are exempted from tolls across cities. Initiatives taken by governing bodies are focused on reduction of traffic in order to reduce pollution. Lower cost of traveling, as compared to the cost of owning a vehicle and hailing a vehicle, elimination of need to drive, and easy availability at the touch of a button are key factors attracting consumers toward ride-sharing services.
The global ride-sharing market is witnessing a key restraint from taxi operators. Ride-sharing apps are gaining popularity among consumers, which in turn is hampering the local taxi business. Consequently, taxi operators are opposing ride-sharing services in several countries, such as Japan. Safety of passengers sharing the ride is a factor of prime importance. Recently, in China, cases have been reported in which the driver murdered a young female passenger. Such incidents are threatening the safety of passengers, which in turn is restraining the ride-sharing industry.
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Expansion of major auto manufacturers is likely to offer lucrative opportunities for the global ride-sharing market. Global automakers are emphasizing on the deployment of autonomous and electric vehicle fleets across the ride-sharing and ride hailing industry, which is expected to reduce the traveling cost for shared rides, prominently. Autonomous vehicles are being tested for their safety and efficiency. Uber Technologies Inc. has partnered with the Volvo Group in order to add 24,000 autonomous vehicles into its fleet in the near future. China is witnessing a surge in adoption of electric vehicles. Ride-sharing firms across China have a significantly higher number of electric vehicles in their fleets.
Ride-sharing is highly popular for traveling within city limits. Consumers prefer ride-sharing services for traveling to public transportation nodes such as railway station, airport, and bus station, as well for shopping, parties, restaurants, and for visiting relatives and friends. Therefore, the intra-city segment of the market accounted for a major share of the market, in terms of revenue, in 2017. Distance is a key factor that influences customers while preferring ride-sharing services. In Europe, where the average distance between major cities is much smaller, the Ride-sharing for intercity travel is gaining popularity.
Global auto manufacturers are expanding their footprint across the ride-sharing industry. Increase in adoption by consumers, improved demand, and higher revenues are attracting auto manufacturers to penetrate into the ride-sharing industry. Several auto manufacturers such as General Motors, Volkswagen Group, Toyota, Daimler AG, and BMW have entered the global ride-sharing market, either by acquiring small ride-sharing firms or by forming strategic alliances with them. In March 2018, Daimler AG acquired Germany-based car rental startup Car2Go. In 2016, General Motors announced a new car sharing service, named Maven. The OEM segment of the market is predicted to expand at a significant pace due to the increase in merger, acquisition, and joint venture activities by OEMs. Private ride-sharing companies are dominating the market. Globally, leading ride-sharing firms, such as Uber, Didi, and Grab, are focused on expanding there footprint across developing countries by acquisition of small, local, ride-sharing companies.
Sedans or hatchbacks are highly preferred vehicle categories by consumers. Easy availability, faster service, and comfort of driving are fueling the demand for sedan/hatchback type of vehicles. UVs and buses & coaches are popular for business-to-business ride-sharing, where a ride-sharing service operating company provides pick-and-drop facility for employees of another company. Business to consumer (B2C) type of business model is highly popular across the global ride-sharing industry. B2C ride-sharing service comprises service provided by ride-sharing firms directly to consumers. Autonomous vehicles are expected to boost service providing companies as they can eliminate the expense over a driver. Autonomous vehicles are being deployed rapidly across the automotive industry. Infrastructure across several nations is suitable for autonomous vehicles, while these are banned across several countries and areas. Therefore, the manual segment is leading the global ride-sharing market. Enhanced safety, expected reduction in rate of accidents, convenience, and efficiency are prompting ride-sharing service providing companies to adopt autonomous vehicles.
Considering the surge in demand for ride-sharing services, governing bodies are also focused on providing services at airports, railway stations, bus stops, and shopping areas. Privately-operated ride-sharing services dominate the industry, as these provide instant, rapid, and less expensive services. Demand for electric vehicles is at its peak. Zero emission, decreased prices of electric vehicles, government incentives, and increasing fuel prices are boosting the demand for electric vehicles. Governments of several nations are expanding infrastructure for plug-in electric vehicles in order to boost their adoption among consumers. Demand for plug-in electric vehicles is anticipated to rise rapidly during the forecast period.
Asia Pacific comprises rapidly developing countries such as China and India. Demand for ride-sharing and ride-hailing services is at its peak across these nations and is expected to surge in the near future. Presence of leading global service providers, significantly lower number of vehicles per 1000 people, lower GDP per capita, and flexible laws by governments are propelling the ride-sharing market across the region. Asia Pacific accounted for about 40% of global market, in terms of revenue, in 2017. Latin America and Africa have significantly lower number of vehicles per 1000 people; hence, the demand for ride-sharing and hailing activities is rising across these regions. Expansion of key global players across Latin America and Middle East & Africa and merger and acquisition activities witnessed in these regions are expected to fuel the of ride-sharing market in these regions..
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Ride sharing Market – Snapshot