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The Auto Industry Gets On Board With Car and Ride Sharing-Services

While the battle over the right of UBER, LYFT and other on-demand ride-sharing services to operate in Philadelphia rages on in the courts — with Taxi interests demanding they submit to the regulation and fees that govern their industry or be barred — the relationship between car-makers and new transportation tech models is the longer term question.

The whole concept of ride-sharing is based on the disruptive proposition from Silicon alley that personal car ownership is doomed because most cars parked 95 % of the time — which is just an inefficient way to move people and a waste of financial resources.

The convergence of autonomous or driverless cars and ride-sharing technologies certainly poses a lot of uncertainly for the auto industry, just off a 6 year run pumping up US sales to 17 million units annually.   

Because of the obvious collision course this scenario represents major auto players moved aggressively to be in the game with General Motors investing $500 million in LYFT at the beginning of this year and Toyota following in March announcing a partnership with UBER. Now Mercedes, BMW and Audi are starting their own car sharing companies.

For the relatively conservative car industry to move into this totally uncharted territory is somewhat surprising, given the strong recent sales and legitimate questions about the volume and profitability threshold of the car and ride sharing models.

Sustainable Demand for Ride-Sharing Services?

According to some surveys some 57% of Americans have never used a car or ride sharing service and 23% have only used them once or twice. The demand is obviously mostly concentrated in urban areas … and while much has been made of the decline in car buying among younger people, other studies show that as those people move from post college to marriage and starting families and moving to the suburbs … they still buy cars.

This coupled with recent investment analysis conjecturing that companies like UBER and LYFT may never be profitable, suggests that eventually the auto industry might be in the drive’s seat of the car and ride-sharing business as majority owners.