The world’s largest accommodation provider, Airbnb, owns no property and the world’s largest taxi firm, Uber, owns no cars. It’s one of the ironies of the sharing economy that you no longer need to be big to make it (really) big in some of the world's toughest industries – a development that has major positive implications for LeasePlan.
Impact of mass mobility
Ride-hailing is arguably the most important development to impact the world of mass mobility since cars became an affordable addition to the average family in the 1950s and 60s. In fact, according to Morgan Stanley, the global market for the sort of personal mobility solutions offered by the ride-hailing giants such as Uber, Lyft and Didi could be worth as much as $10 trillion – around 100 times larger than today's taxi market. The implications are enormous: in the future, as ride-hailing in all its forms becomes ubiquitous, hailing an Uber might become cheaper and more convenient than owning your own car. "In this context, you can foresee a situation in which a significant number of people prefer to tap into a ride-hailing service, such as Uber, rather than owning their own car," says LeasePlan’s António Martins.
Less likely to buy a car
There are signs that this vision is already becoming a reality, especially among millennial populations living in densely populated urban areas. For example, in 1983, 92% of U.S. 20 to 24-year-olds held a driving license. In 2014 it was just 77%. In 1983, 46% of 16-year-olds had licenses. Today it’s just 24%. All told, a millennial today is 30% less likely to buy a car than someone from the previous generation. The brutal economics of car ownership in today’s congested cities are accelerating this trend: in New York City, for example, car ownership works out at around $3 a mile, whereas the average cost per mile of an UberX is around $1.50 – a figure that is expected to come down as autonomous vehicles take to the streets.
“In this context, you can foresee a situation in which a significant number of people prefer to tap into a ride-hailing service, such as Uber, rather than owning their own car”, says Antonio Martins, Managing Director of LeasePlan Portugal.
Driving license owners
Portugal was a great learning experience. We’re now building on these local successes and developing global strategic partnerships with the major ride-hailing firms. Although the exact value proposition will vary slightly per country, our overall goal is consistent: to help our partners accelerate the ride-hailing revolution and be the number one provider of fleet management services to the ride-sharing industry.
While the economics of ride-hailing may take years to reach the point where it no longer makes sense for most people to own their own cars, the trends towards on-demand mobility is already leading to significant new growth opportunities for LeasePlan. “Companies like Uber don’t want to have cars on their balance sheets; they want to focus on their core business, which is matching drivers with passengers through advanced technology,” says António. “Providing cars is our core business, so we’re very well placed to help them meet that need.”