As we recently discussed, there are strong indicators that shared mobility services haven’t peaked yet. Although ride hailing clearly dominates the market, car sharing still garners billions of dollars in investments, showing potential for expansion. The business model itself isn’t as clear cut as one may think and offers a number of paths you can explore. The direction you choose will affect the main focus points but regardless of that, you’re looking at balancing efforts in the spheres of regulations, market assessment, financing, and tech. Don’t be scared, be prepared – here are all the things you need to consider if you want to build a car sharing app that will take the industry by storm and leave traditional car ownership in the dust.
Brief introduction to the car sharing industry
Shifting demographics, rapid urbanization, and powerful economic factors has paved the way for the remarkable expansion of car sharing on a global scale. The rise of the Millennial generation has brought about a transformative shift in transportation behaviors.
With fewer young adults behind the wheel, increasingly concentrated in urban areas, and grappling with financial challenges despite employment, the need for innovative solutions has never been more evident. Car sharing rises to the occasion, providing this dynamic population with a convenient and cost-effective means of accessing a vehicle whenever they need it.
Benefits of car sharing
Aside from this combination of socio-economic conditions, the car sharing business has also emerged because the model offers a number of benefits and addresses particular problems in itself. Granted these benefits won’t all apply in each and every case discussed further in the post but in general, they’re what makes car sharing a viable approach to modern transportation.
Cost efficiency
Car sharing offers a cost-effective alternative to ownership. By splitting the expenses of owning a vehicle with others, users can significantly reduce their transportation costs such as maintenance, insurance, and fuel. This is a wallet-friendly solution that lets you enjoy the convenience of a car without breaking the bank.
Convenience and flexibility
Another advantage is the freedom to access a vehicle whenever you need it, without the hassle of ownership. Whatever your intended journey may be, car sharing platforms provide convenient and flexible options that fit your schedule. Reserve a car in advance or find one nearby at a moment's notice and enjoy the comfort of four wheels without the long-term commitment.
Less impact on environment
As all forms of shared mobility do, car sharing contributes to a greener future by reducing carbon emissions and environmental pollution. With a shared fleet of vehicles, fewer cars are on the road, resulting in lower greenhouse gas emissions. On top of that, many car sharing companies also incorporate electric or hybrid vehicles into their offers, further minimizing the environmental impact.
Access to specialty vehicles
Car sharing provides you with the opportunity to do and experience more by granting access to a diverse range of specialty vehicles. Need a pickup truck for a DIY project, a luxury sedan for a special occasion, or maybe a spacious van for a group weekend getaway? Car sharing platforms offer an array of options to help you achieve your unique goals without having to make major investments.
Car sharing business models
Choosing a successful car sharing business model involves looking at various approaches tailored to different market segments. There are four primary models to consider.
Private car sharing (B2C)
B2C includes round trip, A-B, and free-floating models. Round trip car sharing, widely adopted globally, allows members to pick up and return a shared vehicle at the same station. It requires a low capital investment and has been successful even in small communities. The A-B model provides more flexibility, allowing members to pick up a vehicle at one location and drop it off at another designated spot. Free-floating model, pioneered by car2go, enables users to end their trips anywhere within a specified home area.
The dominant global players include car2go and DriveNow, currently merged into a single company. Other smaller players employing this model are Evo in Vancouver, Gig in San Francisco or EMov in Madrid.
Corporate car sharing (B2B)
Corporate car sharing primarily employs station-based models and replaces traditional corporate fleets. Companies like Alphacity and Sunfleet, supported by automakers such as BMW and Volvo, offer station-based solutions to corporations. Real estate developers are also exploring car sharing amenities for their tenants, including the BMW's ReachNow program.
Peer 2 Peer (P2P)
P2P car sharing platforms like Turo, Getaround, and Drivy, which have been dubbed the Airbnb for vehicles, allow owners to rent out their personal cars to other drivers on a short-term basis. An interesting aspect of this model is that it increases vehicle utilization, as privately owned cars often sit idle for extended periods of time. While P2P car sharing has potential in lower-density communities, addressing liability, insurance, and trust issues is crucial for its success.
Non-profit
Not-for-profit car sharing originated from community-based organizations. Examples include Modo in Vancouver and Mobility in Switzerland, which up until now have actually grown significantly. These organizations prioritize community-driven and environmentally friendly mobility solutions, operating on a not-for-profit basis. Other smaller communities offering carsharing through charitable organizations include Capital Carshare in Albany, NY, CarshareVermont in Burlington, VT or EGo Carshare in Boulder, Colorado.
How to start a car sharing business
Step 1: Define your business model
Determine the specific type of car sharing service you aim to offer, whether it's B2C, B2B, P2P, or not-for-profit, while taking factors such as market demand and target audience into consideration. Then proceed with selecting a suitable business model for your venture, which may be station-based, free-floating, or A-B. Analyze aspects such as capital investment, operational logistics, and the needs of your target market.
Step 2: Conduct marketing and competitor research
Conduct thorough market and competitor research, including product analysis, to gain insights into customer needs, trends, and competitive landscape. This information will guide your business strategy and help you identify unique selling points and areas of opportunity.
Step 3: Define a marketing strategy
Incorporate marketing strategies into your business plan from the get go. Define your target audience, develop a strong brand identity, and devise marketing tactics to create awareness, attract customers, and differentiate your car sharing service in the competitive market.
Step 4: Ensure legal compliance
Address the legal aspects of your car sharing business. Familiarize yourself with local regulations, permits, and licenses required for operating a car sharing service. Ensure compliance with insurance requirements, liability protection, and data privacy laws to protect your business and customers. Seek legal counsel to navigate through the complexities and mitigate any potential legal risks.
Step 5: Plan software development
Determine whether to develop your car sharing platform in-house or opt for outsourcing your software development. Consider factors like budget, expertise, and time constraints. Evaluate the benefits and drawbacks of each approach to make an informed decision that aligns with your business goals and resources.
Step 6: Build an MVP
Start by developing a Minimum Viable Product for your car sharing app like car2go. This approach allows for a faster time to market and enables you to gather user feedback early on. Focus on essential features, intuitive app user onboarding, and a seamless booking experience. Learn how to build an MVP effectively to validate your concept and iterate based on user input.
Also of interest to you may be this guide on how to build an app like Uber or, if you’re more into taste than travel, this post about how to develop a food delivery app.
Tech behind successful car sharing apps
They say behind every great app is even greater tech and they’re not lying. Surviving cut-throat competition requires you to have the technological aspect of infrastructure and daily operations figured out to a tee. What follows is a breakdown of areas you should consider when aiming to launch a successful car sharing app.
Electric vehicles
One exciting trend in the industry is the integration of EVs into car sharing fleets. These eco-friendly and efficient vehicles not only align with sustainability goals but also appeal to the growing number of environmentally conscious consumers. As the adoption of EVs continues to rise, incorporating them into your fleet can position your business at the forefront of an emerging trend.
Precise GPS tracking
GPS technology plays a crucial role in car sharing by enabling accurate vehicle tracking and location services. Users can easily find available cars nearby, ensuring a seamless experience and efficient fleet management.
Payment gateways
Secure and reliable payment gateways are vital for seamless transactions. Integrating trusted solutions allows users to make convenient and safe payments directly within the app, instilling trust in the service provider.
Effective marketing software
To effectively market your car sharing service, leveraging marketing promotion software is key. A carefully selected tool enables targeted campaigns, customer segmentation, and comprehensive analytics to optimize your marketing efforts and attract a wide user base.
Customer management and support software
Managing customer interactions and bookings is made easier with a robust Customer Relationship Management and ticketing software. This system centralizes customer support, helps resolve issues promptly, and ensures exceptional service is delivered.
Telematics
Telematics, including advanced geospatial fleet tracking, provides real-time data on vehicle location, usage, and performance. This valuable information optimizes fleet operations, allows you to monitor vehicle health, and enhances overall efficiency.
Fleet management software
Fleet management software is instrumental in consolidating control over your car sharing fleet. It facilitates seamless reservation management, maintenance scheduling, and intelligent vehicle allocation, optimizing the use of resources.
Accurate geospatial data
Lastly, incorporating reliable map data providers or exploring the possibilities of custom digital map development ensures accurate navigation, precise routing, and a visually appealing user interface. You can check our comparison of best map APIs here.
Mistakes a car sharing app founder should avoid
Considering how unique and trailblazing the car sharing niche still is, there are a number of things to consider outside of technology, which may not be obvious at first. Having all your tech issues sorted only to step on an administrative mine would be such a bummer. So, what else is there for you to take care of? What mistakes should you avoid in the process of launching a car sharing platform?
Lack of permissions
Failing to obtain the necessary permits and licenses can lead to legal complications and operational setbacks. Ensure you adhere to local regulations to avoid unnecessary hurdles.
Lack of market and competitors analysis
Conduct a thorough analysis of the market landscape and your competitors. Learn from past industry experiences, such as Uber's failure in China, to identify potential challenges and opportunities, and refine your business strategy accordingly.
Lack of sufficient budget for development
Building a profitable car sharing app requires substantial investment. Ensure you have a realistic budget that covers not only initial development but also ongoing maintenance, updates, and scalability to provide a seamless user experience.
Lack of customer-centric approach
Put your customers at the forefront of your strategy. Understand their needs, preferences, and pain points, and design your app and services in line with them. Provide intuitive interfaces, responsive customer support, and personalized features to enhance customer satisfaction and retention.
Lack of proper strategy for electric- and fuel-powered fleet proportions
As the industry shifts towards sustainable practices, striking the right balance between electric and fuel-powered vehicles is crucial. Develop a comprehensive strategy that considers market demand, infrastructure support, and the availability of charging stations to optimize your fleet composition and meet evolving customer and regulatory expectations.
Our expertise in location-based app development
We hope you're still pumped to make your mark in the car sharing industry after reading this post in which we've covered all the crucial steps to building your own app – from choosing the right business model, to tackling legalities, to creating a stellar MVP. One key element that still needs to be mentioned, which is indispensable in making your app work, is location-based services.
RST's team specializes in crafting customized GIS and mapping solutions that will set your app on the path to success. We'll help you select the ideal mapping provider and tailor it to your specific needs. With our extensive experience in over 100 international projects, we're the trusted partner who can bring your vision to reality. Contact us today via hi@rst.software and we’ll take it from there.
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