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Carsharing: Why Are Carmakers Getting Into the Act?

A number of carmakers are getting into carsharing (CS) through relationships with an array of services here at home and abroad, including ride-hailing (RH) ventures, as well. Uber and Lyft, the more familiar ride-hailing services to most Americans, have both entered into partnerships with carmakers. They aren’t the only ones. The question: What’s in it for carmakers?

Carsharing vs. Ride Hailing

Typically, a smartphone app provides entry into RH and CS services, but that’s where their similarities pretty much end.

RH is on-demand transportation, such as the aforementioned Uber and Lyft services, that relies on member drivers providing their own vehicles to operate as on-call transportation for customers. As long as an individual is registered with an RH service, has the app on his or her phone, and is in an area where the service operates, that individual can summon a ride. Rates are determined by time of day, availability of drivers and trip distance.

A CS service differs in a number of ways. Traditionally, CS has been more of a club, relying on a pool of cars available to drivers who pay a monthly fee or dues in order to be members. Usage charges are based on the type of vehicle and length of use, which can often be from an hour to a week. Zipcar is the big dog in this arena, but there are more than a dozen others in the U.S., including some run by rental-car companies such as Enterprise, Avis and Hertz.

Springing up recently and gaining traction are peer-to-peer CS services such as Getaround that match car owners with an available car to drivers wishing to rent a car.

Just 3 of the Marriages

You can’t tell the players without a program in place — this seems to be the unwritten rule of making sense of the many marriages partnering carmakers with RH and CS services. Because these are global industries, a number of the relationships have no direct impact on U.S. consumers, at least initially. Among the carmakers and RH services climbing into bed together are:

  • Early in 2016, General Motors announced an alliance with the RH service Lyft, purchased with a $500 million investment in the Uber competitor. GM stated the ultimate goal of this partnership is creating a network of on-demand autonomous CS vehicles.
  • Volkswagen just confirmed it ponied up $300 million to partner with the RH service Gett. Not well known to most Americans, Gett is a global RH service founded in Israel. VW’s stated goal is to help Gett expand its footprint in Europe, where it’s already the No. 1 RH service. In the U.S., Gett is active in New York City.
  • About the same time VW and Gett acknowledged their relationship, and without revealing the price tag, Toyota announced that it invested in Uber. In the initial phase of this relationship, Toyota Financial Services will work with Uber to lease vehicles to its drivers, and if this first phase is successful, there will be much more to come.

What Are Carmakers Thinking?

Even the most popular and well-anchored industries change: Railroads and newspapers are good examples of once iconic and well-grounded industries that became swamped almost overnight by technological advancements.

Carmakers are well aware that a sea change in transportation is on the horizon, and they are jockeying around to ride the wave rather than end up overcome by it. Without knowing exactly what the changes will be or how they will affect today’s model of building and selling cars to the public, carmakers are frantically developing self-driving cars, as well as establishing a beachhead in carsharing.

Some, like Toyota, also see it as an opportunity to grow their reach in other markets such as China. A Toyota spokesperson recently told me, “We’ve been a hardware company, but now we are going into software and services. We are dramatically changing our company.” Toyota isn’t alone.

What it means to you: With carmakers willing to back car-related startup businesses, we can expect changes in transportation to come at an even more blistering pace. Buckle up: We are in for quite a ride.

Russ Heaps
Russ Heaps is an author specializing in automotive, financial and travel news. For nearly 35 years he has covered the automotive industry for newspapers, magazines and internet websites. His resume includes The Palm Beach Post, Miami Herald, The Washington Times and numerous other daily newspapers through syndication. He edited Auto World magazine, and helped create and edit NOPI Street... Read More about Russ Heaps

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1 COMMENT

  1. You have incorrectly identified Lyft and Uber as being “Ride-hailing” companies.  They are Ridesharing companies. Both companies strictly forbid their drivers from allowing people to hail them, as they aren’t cab companies.  People must request them through their apps.

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