5 Things to Consider When Launching Free-Floating Carsharing

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From choosing the number of cars to roll out at first to figure out adequate insurance policies or a best-in-class marketing strategy, there are many decisions to be made when rolling out a free-floating carsharing service.

December 15, 2017 Perhaps the most obvious and glaring question is “Where to launch the service?” The answer, unfortunately, isn’t one-size-fits-all, as there are many variables to factor into the equation.

1. Free-floating carsharing projects potential User Base

To provide a guide to potential operators, we isolated what we believe are the most important drivers in the success of free-floating carsharing projects. Here they are:

The number of potential users in a city and the demographics (average age, occupation, and income level) are both among the top things to be on the lookout for. For this purpose, it should be known that the average age of members typically ranges between 30 and 35.

In addition to population and demographics, there is a third factor to consider, which we will call “Free-Floating Readiness.” In a nutshell, will the average person be willing and able to use a one-way service immediately? The answer to this question will considerably impact marketing spend for the project.

As opposed to a reservation-based service, one-way carsharing typically means users can instantly access a vehicle. These services typically have much faster uptake than reservation-based round-trip services.

However, new services must still account for an educational period — a non-recurring portion of the marketing budget — when entering a market. This period typically involves a mix of on-street initiatives and online promotions. Obviously, the longer the education period, the larger the marketing spend.

2. Is the City “Free-Floating Compatible?”

When checking “Free-Floating City Compatibility“, the first thing to look at is population density. Simply put, the higher the density, the better. After that, other characteristics come into play. For example, a city with three universities will typically yield more users than a city known for being a tourist haven.

Finally, look at parking availability to determine whether a city could become a good home for a fleet. If there is a lot of available parking, then it should make it easy for users to park the cars, making the service more convenient and desirable.

3. Competitive Landscape

It should first be said that it is extremely unlikely that mobility would become a winner-takes-all market. It never has been and most likely never will be, especially not in cities.

The obvious competition to a new entrant would be an existing carsharing service or e-hailing services such as Uber or Lyft. As mentioned earlier, a few services co-existing in a city could actually end up benefitting a new entrant, notably by reducing the education of potential users.

The biggest competitor to carsharing is individual car ownership. A survey of free-floating carsharing members in Seattle revealed that 14% of them had given up a vehicle since joining a service and half of them confirmed that the availability of free-floating cars played some part in that. Again, the combination of three or four services would augment the coverage of a city, most likely increasing the users’ reliance on the services.

4. Municipal Support

Regulation and support from the city come in different forms, the most important of which is parking. Ideally, a city will agree to provide parking spots to a carsharing operator either for rent or for free (under certain conditions). In any event, municipal support can be a major contributor to the success of a project, or an important obstacle if lack thereof.

Public infrastructure is even more important for a fleet of electric vehicles. Cities can encourage charging station operators, as is the case in Copenhagen where Green Mobility users can park at charging stations. Otherwise, they can place the burden on the operators of the carsharing service themselves to manage their own charging stations, as is the case in Madrid for Emov.

5. Synergies

If a carsharing operation is tied to an existing organization that sells X, Y, and Z products or services, it is important to determine whether a given city offers cost advantages. For example, a network of car dealerships can benefit from operational synergies from service and parking locations for no incremental cost.

In addition, every subscriber to the service represents an additional pair of eyeballs that can be marketed to. If a given market is more strategic on that front, then it should be moved closer to the top of the list.

Vulog is the world’s leading tech mobility provider: we are committed to building a greener future, one city at a time.

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