Background of the Study
Transportation solutions are recurrently being affected by the shifts in technology and social responses to innovation, which create multiple opportunities for individuals and organizations to benefit from the so-called mobility-as-a-service (MaaS). The latter means that vehicles are available to consumers on-demand, allowing them to gain access to personal transportation when and where they need it (Jittrapirom et al., 2017).
In a sense, the philosophy behind MaaS is rather similar to the one employed by Spotify or Netflix, for instance, conveniently leaving room for a wide assortment of transportation options available to customers from all target populations. There are also additional opportunities linked to peer-to-peer (P2P) rental services (e.g., Flexicar) or even rideshare apps such as Uber. One of the reasons why these solutions became so popular was the increased number of vehicles populating the streets of the United States (Meijer et al., 2019). The concept of MaaS allowed many individuals to step away from utilizing their vehicles and rental cars to reduce their impact on the environment as well.
Vehicles can be easily perceived as an asset that may be deemed as underutilized in the case where the majority of resources are spent irrationally (for example, if one does not use their car on an everyday basis, they could send it to the car-sharing company of their choice). Therefore, a higher utilization rate would mean a reasonable reduction in the number of cars that circulate across the city (Goodall et al., 2017).
This might also solve the parking problem and help the team discover the chances of recovering asset costs at the end of the day. Even though the potential of MaaS is rather high, Meijer et al. (2019) suggest that a complete transition to car-sharing will never be possible due to the increasing personal needs associated with their vehicles. When a vehicle is placed on the road, it affects the environment and the economy on the one hand and societal attitude toward the automotive industry on the other. To cultivate a healthier balance, therefore, there is a need to recover at least some of the costs linked to vehicle maintenance and support. The current competitive analysis is required to show how Gig Car Share has been able to enter the market and compete with some of the established names in the industry.
Trends in MaaS and Car-Sharing
Transportation currently faces a rather high-paced development process that forces many organizations to come up with innovative approaches to the car-sharing industry. The value of MaaS continuously increases, causing consumers to switch to car-related services instead of using their cars at all times (Meijer et al., 2019). There are numerous smaller and bigger players in the field of MaaS that are looking forward to establishing a high-level portfolio for them to attract a larger number of consumers. An essential trend that cannot be overlooked when discussing the role of MaaS is the growing interest in car-sharing among power industry moguls.
This happens mostly because multiple alternative fuel options appear across the globe, re-establishing the value of electricity and changing the vector of the supply and demand concepts characteristic of the modern automotive industry (Jittrapirom et al., 2017). In the case of car-sharing initiatives, the role of electric vehicles becomes even more important, as pilot programs, including eco-friendly means of transportation, are currently being launched across the United States.
Another crucial value that cannot be ignored when discussing MaaS trends in the development of stronger mobility ecosystems that could secure transportation-related improvements that establish just one environment where all important concepts would be considered (Hensher, 2020). In other words, shared transportation is expected to transform community attitudes toward public transport and alternatives to personal cars. The growing number of organizations making it possible to share vehicles and rent them with no limitations is another sign of the ecosystem improving continually.
According to Goodall et al. (2017), many companies also make sure they build partnerships with similar organizations to respond to the ever-growing demand. Without a doubt, the communication between respective organizations and their clients establishes multiple pathways for the development of long-term relationships where every stakeholder involved might have a chance to bring positive change and share their timely feedback to help the industry evolve.
The impact of COVID19 on the transportation industry and car-sharing represents another crucial element of discussion that cannot be ignored when looking at MaaS. One of the reasons why this becomes true is the high level of vulnerability to crises experienced by the automotive industry (Hensher, 2020). Accordingly, when there is an unstoppably growing uncertainty, many organizations and individual entrepreneurs tend to slow down their operations and cease the majority of their investments to maintain a healthier financial situation. Nevertheless, MaaS proved to be a strong industry that has the potential of overcoming even the most negative circumstances despite losing approximately 30% of employees to the pandemic or any other crisis-related scenario (see Research and Markets (2021) for more information).
As per Hensher (2020), the key issue with COVID19 when it comes to car-sharing and P2P transportation is the presence of a multitude of interruptions that caused the supply chain to deteriorate. The increasing number of cars being sold daily is another obstacle that contributed to the impact of COVID19 on transportation, reducing the number of possible compensations intended to cover the financial loss linked to the pandemic.
MaaS Market Size and Dynamics
Nowadays, the shared mobility market continues to grow relentlessly due to the possibility of achieving viable alternatives to public transportation that could be utilized by community members with no limitations. Even though the future for the industry looks bright by the predictions, numerous individuals believe that car-sharing initiatives are not as safe as they are portrayed by responsible organizations (Hensher, 2020).
This is one of the main reasons why the policies and regulations for potential users are changed rather often to align with their needs in the first place. Terms and conditions are also altered in an attempt to attract a larger customer base and develop an infrastructure where consumers would not be afraid to travel larger distances or at least perceive MaaS as a crucial contributor to the success characteristic of the transportation industry.
According to the evidence, though, micromobility solutions are not as beneficial as their fully-fledged alternatives, which makes it important to look into their potential more often. This could be one of the best efforts to establish a higher demand and have more service providers come up with location-specific proposals (Jittrapirom et al., 2017). As may be concluded here, additional investments are always an option for transportation industry representatives who are interested in improved valuation.
The influence of the pandemic on the development of the industry has also been drastic, causing numerous micromobility startups to slow down their operations because of the closer look being taken by the community at public transportation (Meijer et al., 2019). The industry seems to remain reluctant to the benefits of micromobility, with the biggest moves expected to become a reality in the nearest future. On the other hand, improvements in the area of MaaS are only going to become visible in the case where the society chooses to contribute to possible solutions with the help of detailed feedback.
One of the major factors that currently slows down the development of the MaaS paradigm is the limited strength of penetration of the majority of new entrants. For the most part, this happens due to the huge impact of the Internet on the car-sharing market and other alternatives based on the P2P structures (Meijer et al., 2019). This becomes essentially important when the value of the infrastructure is decreased due to the lack of respective knowledge and a gap in the affordability of proposed services. Nevertheless, MaaS is also an opportunity for both urban and rural populations to adopt new means of transportation and monitor the level of pollution and commuting time (Jittrapirom et al., 2017).
The rise of clean energy has made it easier for MaaS-related organizations to reorganize the infrastructure and streamline internal operations in a way that could boost sales and attract more consumers. The US car-sharing market continually evolves under the influence of consumer feedback, and it looks like the predictions calling for efficient road networks are going to create room for an even bigger number of growth opportunities related to the MaaS market.
San Francisco and Seattle: MaaS Market Analysis
The existing statistics show that San Francisco currently benefits from numerous indicators of sustainability, such as the growing attention toward alternative means of transportation and the number of vehicles owned by a single household (Veerapanane et al., 2018). The key issue associated with the local market is that there are suburban neighborhoods where residents tend to travel additional miles using their vehicles, which increases the level of pollution and negatively affects the transportation market in general.
In addition, San Francisco is one of the leaders in terms of the development of the electric vehicle market, as there are numerous limitations associated with alternative means of transportation, albeit the numerous advantages (Goodall et al., 2017). The idea of multi-modal traveling took over the Bay Area and also made it evident that public transit became a much more viable option for the local population, causing car rent companies and such organizations as Uber to regroup and adjust their operations to consumer demand.
Under the condition where the number of locations in the Bay Area that support car-sharing and similar transport solutions continues to grow, it may also be safe to say that the number of members of car-sharing initiatives is going to go up across San Francisco as well. With approximately 40% of all trips in the Bay Area being completed with the help of public transport and rented vehicles, it may be concluded that there is a serious inclination toward the further popularization of car-sharing companies and their vehicle-based alternatives (Veerapanane et al., 2018). The percentages of car ownership and driving behaviors continue to decrease.
This situation hints at the idea that San Francisco is going through a phase where an even bigger number of individuals give up on their vehicles and chooses to utilize transportation options offered by car-sharing companies or any other MaaS infrastructure representatives (Veerapanane et al., 2018). Accordingly, San Francisco residents gain access to car-sharing services to step away from merely having a car to redefine their transportation habits on a larger scale.
Speaking of Seattle, the market of MaaS-based solutions is not as developed because there are more suburban areas where people simply do not realize the value of car-sharing initiatives and tend to side with the idea that a personal car is a better companion (Vaddadi et al., 2020). There is a lower percentage of drivers in Seattle as well, which makes the advent of new MaaS service providers a rather questionable investment opportunity due to car-sharing members driving slightly less on average than their vehicle-owning counterparts. This finding has been mentioned by Barreto et al. (2018), who saw that occasional nuance as a distinguishing factor separating the states where individuals tend to drive more miles on average from less vehicle-dependent regions.
Even though it was much more characteristic of Seattle to benefit from occasional car-sharing opportunities, today, the majority of these individuals settle for a different set of behaviors intended to increase their car-sharing utilization rate (Vaddadi et al., 2020). Compared to San Francisco, Seattle is exclusively prone to the impact of low-density neighborhoods where MaaS has not yet developed into a fully-fledged industry.
This suburban aspect of the Seattle area significantly affects the willingness of the local population to contribute to the growth of MaaS-related companies. It ultimately slows down the deployment of electric and hybrid vehicles and creates obstacles for service providers, notwithstanding the increasing popularity of car-sharing and vehicle rent companies (Barreto et al., 2018). The lack of evident advantages for people living in Seattle slows down the progress and not only averts them from owning personal vehicles but also outlines the issue with car-sharing vehicles and their unavailability in certain localities.
For Vaddadi et al. (2020), a barely visible lag in the utilization of car-sharing options became larger due to the environmental preferences of local citizens and their attitudes toward MaaS in general. Compared to San Francisco, the MaaS market in Seattle is much more often aiming at promoting alternative transportation solutions instead of extending the existing fleet and ensuring that it is in line with the needs of the target population. The MaaS infrastructure could be hard to implement in Seattle, but the future looks promising, especially with Gig Car Share improving its performance viciously over the past year.
Competitive Analysis of ZipCar, Turo, GetAround, Lyft, and Uber versus Gig Car Share
The company benefits from a rather friendly business model where the key assets are accessibility and flexibility. The management tends to locate the best spots for establishing effective communication with customers, which allows them to move closer to where people work or live. ZipCar membership also unlocks unique features that would not be available otherwise, which motivates users to establish a closer partnership with the company. Existing statistics show that ZipCar can increase membership fees without suffering from a decrease in loyal customers (Matyas & Kamargianni, 2019). Therefore, there is a strong demand that the company masterfully turns into profit.
The company suffers from thin gross and operating margins, as these also increase the costs of running the business. The costs of fleet maintenance also went up by a notch, creating a situation where ZipCar would have to spend approximately 25% more on its physical assets to retain customers (Matyas & Kamargianni, 2019). When the organization decides to penetrate a new market, it has to spend relatively more resources than any other car-sharing company due to the exceptionally heavy expenditures linked to external markets.
The level of penetration is rather low, which makes it important for the company to look for smaller markets first, as their bigger counterparts could negatively affect the organization. The company recurrently tries to expand its operations and reach out to Europe in an attempt to strengthen its influence on the car-sharing market. Even though the European market does not show as much profitability as the domestic US market, it may still be crucial for the organization to promote the possibility of renting a car instead of purchasing a new one from the dealership. This may be especially vital under the condition where the recovery period for the company tends to be rather short and does not pose any issues linked to monetary investments.
Numerous additional players in the market could damage ZipCar and its relationship with the customers (such as Avis or Hertz, for example). Given their history of serious market penetration attempts, ZipCar could be affected by their actions to an extent where the management would not be able to respond to the probable changes promptly. Despite fuel prices continuing to increase, and more people resorting to rent-a-car solutions, ZipCar might be most likely to suffer from stumbling profit margins.
The biggest strength of this company is that it solely follows the car-sharing model based on the P2P relationship. The management often comes up with innovative ideas that are not to be found in their competitors. Their fleet of cars does not have to be supported with monetary investments, as their vehicles are maintained solely based on consumer interactions. There are no covert costs linked to the fleet and the company’s services. It tends to attract even more end-users to the organization over time.
Multiple car hosts might unexpectedly become unavailable, making it harder for customers to find the right vehicle for them. This solution might have negative consequences for both TURO and its customers. According to Shaheen et al. (2019), the biggest weakness is the incredible exposure to financial issues in the case of problems caused by rented cars and user-led interventions.
When looking at its operations, TURO has to consider expanding its market and going forward with its car rental offers, as the customers might be interested in increased mobility. The impact of COVID19 showed the industry that an increased level of connectivity is a must that cannot be underestimated or ignored completely. There could be numerous geographical locations benefiting from the business model proposed by TURO, as technological advances make it easier for the organization to communicate with existing and potential consumers.
The competition in the US area continues to increase, so the company might be exposed to reduced profits where some of the organizational resources would be spent on maintaining a higher position in the market. Another problem for TURO is the abundant nature of Lyft and Uber which forces TURO to spend more money on taxes. The company cannot respond in a reasonable way to the industry moguls, as it would strip it of the majority of its resources and give its rivals a valuable competitive advantage. Ultimately, car rental services such as Avis and Hertz are also going to pose a significant threat to TURO due to their strong market penetration and a much more diverse approach to consumers.
The biggest strength of GetAround is its approach to managing human and financial resources, as there are numerous opportunities for them to increase flexibility in terms of how they approach the market and potential customers. Another advantage is the presence of growth and development initiatives aimed at the promotion of products and services popular with the target audience of GetAround (Wells et al., 2020). The US-based portfolio of the company represents a diversified set of assets intended to make the best use of employee skills and customer demand.
The biggest weakness of GetAround is the relatively weak name in the industry, which forces the customers to benefit from other offers. With a meek market share, GetAround does not represent the most effective solution in the market. Therefore, consumers often tend to overlook this car rental company, as there are more vivid solutions available where the price-quality ratio is higher, and the brand is stronger in general.
Despite the lack of exposure, the company might still be able to ride the wave of car rental trends and benefit from the developing local market. The growing number of internet users is a positive sign as well because it contributes to quicker information dissemination. With the help of technology and a consistent marketing approach, GetAround might be looking into overcoming the barriers related to the cost of maintaining its fleet. The crisis caused by the pandemic could be mitigated with the help of additional car rental solutions intended to separate GetAround from its competitors.
As well as an opportunity, the pandemic also remains a crucial threat that cannot be underestimated, especially under the condition where the competition is growing daily. GetAround is a relatively small organization that could suffer from rising fuel prices and strict governmental regulations. For instance, the administration could release new leasing or vehicle age restrictions and damage the company’s approach to the target audience. The amortization rate related to vehicles is another important concept that cannot be ignored, as it is also paired with multiple substitutes and stronger infrastructures deployed by other car rental companies.
Over its years of activity, the company was able to deploy a broad transportation network and increase the number of available mobility options for the US population. The company’s vigorous technology infrastructure is the essential advantage that numerous other MaaS organizations are trying to replicate, often to no avail (Hensher, 2017). Every stakeholder involved in Lyft’s operations gains strong, dynamic advantages that contribute to improved monetization and the growth of the customer base.
The essential weakness of Lyft is that it continuously suffers from net losses. Even though the latter is not caused by any exclusive factor, the presence of many competitors and their strong initiatives avert Lyft from taking over. Given that the situation with net losses is improbable to be resolved, it may be stated that the ultimate problem that Lyft has to cope with is the presence of internal conflicts that make the company inferior to its competitors such as Uber.
The car-sharing space becomes stronger, leaving room for Lyft to expand its network and ensure that it could develop strategic partnerships with smaller companies as well. There is a chance to increase the value of proposed instruments as well due to the different transportation offerings that set Lyft apart from its competition. According to Hensher (2017), one of such improvements is the introduction of automated vehicles and electric (hybrid) cars intended to benefit the environment and passenger safety.
The amount of competition in the area of MaaS is incredible, so Lyft could experience issues related to market penetration and adherence to the general guidelines. Despite the size of the company, it could be affected by the pandemic just like any other car-sharing organization. Differences in regulations could make it harder for potential drivers to perceive Lyft as the best employment offer, especially under the condition where there are novel companies such as Gig Car Share that offer more exclusive benefits than their larger counterparts.
This company is currently the largest solution available to customers, so its valued reputation might be the biggest asset. With more than 40 million active users, the company is not fazed by any other competitor, regardless of its size or budget (Ho et al., 2020). On the other hand, Uber offers several flexible pricing strategies that can be seen as immaculate compared to rival companies.
The first thing to mention is that Uber is recurrently involved in all kinds of scandals, from inappropriate communication to sexual harassment. For the most part, it leads to substantial corporate losses. Knowing that the company depends on its workforce, it may be hard for Uber to improve its hiring procedures and avoid public backlash at all times.
Despite the challenges linked to the workforce, the company could still preserve its image through the strong sense of accountability included in the company’s organizational culture. The increasing rate of digitalization is another opportunity for Uber, as the management could appeal to a broader customer base and utilize smartphones to share the latest updates. There is also an opportunity to establish a new service based on driverless technologies, as Uber has enough resources to strengthen its research and development.
Despite the numerous upsides characteristic of Uber, the organization has a hard time retaining employees. One of the reasons why it is so hard for the company to cope with it is the increasing number of lawsuits filed against the business and a questionable wage policy that damages the public image of the company (Ho et al., 2020). Ultimately, numerous new competitors are entering the market, which is not a good sign for Uber.
Gig Car Share
The company established a strong name for itself, with customers relying on its services even though Gig Car Share is a relatively young startup business. According to Fesler (2020), the organization does everything to get in line with customer preferences and appeal to the competition as well. Even though the fleet size is relatively average, the company has the potential to overcome its rivals in the nearest future with the help of adequate marketing and consistent innovation.
The essential weakness linked to Gig Car Share is the lack of fleet diversity that yet has to be reduced with the help of adding more SUVs and family cars to the roster. Without a larger car park, the company is not going to achieve sustainability and develop a stronger relationship with the target audience. Therefore, it might be crucial for Gig Car Share to evaluate the possible impact of governmental regulations and address the flexibility of its pricing strategy.
Gig Car Share could follow the trend of eco-friendly solutions and extend the fleet of electric or hybrid cars. The number of individuals with driving licenses increases relentlessly, so it might also be crucial to develop additional marketing strategies intended to cover more potential target customers and motivate them to choose Gig Car Share above any other similar company. Environmental awareness is yet the leading cause of improving the company’s standing in the market.
Diverse income levels of the local population might cause some of the options to become unavailable, turning them into unreachable values. The lack of scalability would, therefore, damage the company-customer relationship at the end of the day. In addition, green technology is a rather expensive asset that could be unavailable to Gig Car Share due to the lack of resources obtained by the company.
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