Not So Fast. Ride Sharing Might Not Take Over the Auto Industry After All

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Uber and Lyft are darlings of the tech world, but are their ride sharing platforms poised to take over the auto industry? Not so fast.

After speaking with many clients and industry experts at the recent NADA show in Las Vegas, our team noticed the show floor buzzing with discussion on “Sharing/Subscription” – the “S” in C.A.S.E.

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But what does the “Sharing/Subscription” economy mean to the auto-industry and how does it affect your business? Let’s take a look.

How Fast are Ride Sharing and Vehicle Subscriptions Gaining Traction?

Did you know, 44% of respondents in our latest survey said they are using ride sharing services like Uber and Lyft on a regular basis?

The current industry narrative is that the “American Dream” of owning your own car will be crushed by popular millennial-driven ride sharing services, as consumers elect to forgo car-ownership. IHS Markit predicts that the auto industry will see a 33% decline in auto sales from 80 million to 54 million cars between 2017 and 2040.

Manufacturers have already begun developing combative businesses models. A hot topic at CES was the recently developed, Porsche car subscription service where drivers can abandon car ownership entirely, and have on-demand access to their entire lineup of cars every day, for $2,000- to $3,000-a-month.

"80% of the U.S. population is now living in urban areas."

Skeptics may say that ride sharing and related programs are only likely to impact urban areas.

“80% of the U.S. population is now living in urban areas,” says Assurant Vice President of Global Strategy & Development, Chad Ammons, referring to the latest World Urbanization Prospects report. “Thinking your business may not feel the impact of this trend because you are in a rural area, will have devastating bottom-line consequences.”

The Ride Sharing Forecast for the Auto Industry

Even with all of the industry disruption, there is still upside with this trend for F&I products and providers.

“There is a real opportunity in the market to improve the business model for dealers especially since car mileage and wear-and-tear is going to skyrocket,” says Ammons. “Cars being sold won’t sit idle 96% of the time. They are going to be used quite heavily, presenting real bottom-line opportunities.”

Independent ride sharing operators are leveraging their personal automobiles and personal phones to conduct business. If those were to break down or falter in any way, operators are essentially “out-of-business.” Figuring out how to protect those two assets will be a winning formula for the industry leading businesses of tomorrow.

Now, we want to hear from you.
Shoot us an email with your take on the sharing economy.

  • How is the sharing economy impacting your business right now?
  • How do you see the sharing economy changing the landscape of the auto industry?
  • What research can Assurant provide to enhance your strategic planning?

       

Email us to let us know your thoughts on trends that are shaping the auto industry.