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Berlin Carsharing Market: Exploring the Opportunities for Free-Floating Carshare to Enhance the Business Model

Apr 19, 2018

Reviewing the master thesis by Allycia Merkley and Christine Ruf, MBA students at HWR Berlin, we felt compelled to share the most impactful findings with you in a summarized article on the Berlin Carsharing Market. The thesis entitled: Exploring the Opportunities for Free-floating Carsharing to Enhance the Business Model in Berlin provides a detailed and extended framework of the components that contribute to the success of Free-floating carsharing, based on the Bermuda Triangle of Shared Mobility a concept developed by Sandra Phillips.

Elements contributing to the validity of Carsharing as a viable concept, begins with the adoption of the Sharing Economy, combined with the concept of Multimodal travel and shift of large OEMs from car manufacturers towards service providers. To enhance the Free-floating carsharing business model, the researchers have investigated the factors within the Bermuda Triangle of Shared Mobility and developed various recommendations for the vital subcategories within the area of: Physical Space, Vehicles and Members, with a concentration in the Berlin carsharing market. 

Berlin Carsharing Market: Opportunities for Free-floating Carsharing to Enhance the Business Model in Berlin

Physical Space:

  • Government Cooperation: Government invest in existing infrastructure such as walking and cycling paths and public transportation, which should be treated as complements to Carsharing. Cooperation of carsharing providers with local municipalities to establish a sustainable mobility landscape for citizens where carsharing is a normalized mode of travel. Carsharing providers should also work with the government to make car ownership less attractive to residents which in return would decrease the amount of traffic and congestion within the city.
  • Using Existing Infrastructure: Carsharing providers should target cities with well-established and dense urban public transportation system. Providers must promote multimodality to make carsharing work in conjunction with existing modes of travel which creates a sustainable transportation system within the city. In addition to promotion, this builds public awareness of the service offerings and inserts carsharing into typical travel patterns.
  • E-mobility: Carsharing can help to increase the number of Electric Vehicles (EV) in all cities. In Germany, specifically, the government holds a goal of having 1 million EVs on the roads by 2020, which we see reflected within the Berlin carsharing market. If carsharing providers cooperate with local municipalities and align their goals and initiatives with theirs, not only will it strengthen the relationship with law makers, but it serves as a catalyst to meet emission targets.
  • Extend into suburban areas: Providers should use a combination of one-way station based and Free-floating carsharing, which will bring access to the underserved suburban areas.

Vehicles:

For carsharing providers to be profitable, a critical factor for reaching increased utilisation rate is by properly managing the existing fleet. Therefore, the optimal fleet size which can fully satisfy the demand must be determined. Further, the usage rate can be increased through multiple service offerings within the same fleet or increase of the usage time by providing weekend packages.

  • Fleet management: Free-floating carsharing creates an imbalance of the location of vehicles. Therefore, providers should use the following relocation strategy: User-based relocation to decrease services rendered through a third-party service operator, as well as “empty” transfer trips. Incentives should be offered to users, to encourage them to park or relocate the car into needed areas. The researchers also recommend for OEMs to take advantage of their existing car dealership network, as opposed to a third party, as the fleet manager provider. This scheme has multiple benefits as the dealership networks are within the city, they possess specific knowledge of the car and maintenance capabilities, and are on brand with the OEMs. 
  • Vehicle Maintenance: From the focus group the researcher revealed that the cleanliness of a vehicle plays a major part in retaining customers, as it can lead to a poor customer experience and further non-usage of the service. Therefore, a direct feedback connection from the customer to the fleet management should be provided.

Members:

For carsharing to reach optimal utilisation rates, subsequently covering existing cost, acquiring a large active customer base is imperative. Furthermore, increasing the average usage rate of existing customers is equally essential. Carsharing providers must deliver a Member Journey that is convenient, quick and flows smoothly. This includes excellent customer service, a user-friendly application and vehicles that fit consumer’s needs.

  • Potential Customer: Carsharing users value the flexibility and convenience of using a vehicle without the burden of ownership. By educating current vehicle owners of the carsharing benefits, the customer base will increase. Additional customers can be obtained, by attracting the traveller segment through ensuring vehicles are available at all times, at mobility hubs such as airports and train stations. In Berlin, there is a large group of foreigners residing in the city, which is a large opportunity for carsharing providers. By aiding in obtaining a German Driver’s License, Carsharing providers can target this demographic.
  • Customer experience: The researchers conducted two Carsharing Focus group in the Berlin carsharing market. The participants mentioned that damage reporting on the application must be improved, as it is time consuming to check the vehicles in the interior and exterior, and document them each time. Another identified area that Carsharing providers should offer is increased flexibility in the drop-off location of vehicles, and attractive offerings for weekend rentals. Carsharing providers should also consider offering a pay per kilometre pricing scheme as it would reduce the stress and frustration of trying to use the least amount of time possible. This scheme could also prevent safety issues caused by speeding or rushing. Carsharing providers should also provide carsharing options as it can increase the occupancy rate which will lead to a more sustainable model.

About the Authors: Both authors live in Berlin and have graduated from the Berlin School of Economics and Law. They have both gained international working experience in Europe and India and both interested in the development of mobility as a service and the future direction of the automotive industry.

If you want to learn more about the Bermuda Triangle of Carsharing, please contact movmi. For contacting the authors: Allycia Merkley and Christine Ruf.

 

Photo credit: e-carsharing.net.

 

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