It’s been a banner year for automotive sales. Industry sales are expected to top 17 million, the highest total since 2005, as the job market continues its upswing. That increase looks to be fueled in part by an unexpected number of millennials driving off with a new set of wheels. According to J.D. Power & Associates, millennials accounted for 27 percent of new car sales in the U.S. in 2014, up from 18 percent in 2010. They now represent the second-largest group of new car buyers after boomers.
Despite this success, car makers are preparing for a new era in which the traditional model of car ownership is transformed by the growth of ride-shares and the emergence of companies like Uber and Lyft. In one survey from research firm Penn Schoen Berland, more than half of millennials ranked cars second only to books as objects they are most open to sharing. So even as car buyers shift into a higher gear this year, car companies are testing new approaches to attract those who may want to rent out their personal vehicles instead of letting them sit idle for hours on end.
And the carmakers have plenty of reason to get ready, according to the Los Angeles Times.
Susan Shaheen, a transportation expert and professor of civil and environmental engineering at UC Berkeley, tells the Times that each vehicle that participates in a full-time car-sharing service supplants four to six new car sales and postpones the purchase of up to seven more. She says there are currently 23 car-sharing companies renting 19,115 vehicles. By 2025, 20 percent of the vehicles in urban centers will be dedicated to ride-sharing, according to research from Gartner Inc.
Related: Uber Revs Its Engines Against a Ride-Sharing Rival
This has auto manufacturers looking into other ways to sell — and rent — vehicles. Ford, BMW and Toyota are all exploring the issue of how to woo car buyers in a ride-sharing economy. By 2016, BMW plans to offer an optional equipment package for its Mini line, allowing owners to share their vehicles. Renters could unlock and drive the cars using a smartphone app or other device.
In a six-month test program, Ford’s auto-financing division, Ford Credit, is inviting 14,000 of its customers in six U.S. cities and 12,000 customers in London to sign up and rent out their vehicles for short-term use. Rates typically range from $7 to $12 per hour and include roadside assistance and customer support. San Francisco-based company Getaround will screen the drivers, collect funds, recommend rates and provide a $1 million insurance policy in exchange a 40 percent cut of that hourly fee. The program is being tested in three cities in California — San Francisco, Berkeley and Oakland — as well as in Chicago, Washington, D.C., and Portland, Oregon, through November.
We may not be hitting the brakes on car ownership any time soon — but the trend of generating income from idle cars through ride shares looks like it’s just revving up.
Top Reads from The Fiscal Times: