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Car Next Door Report

AMB200 Word Count: 2877

AMB200 Consumer Behaviour

Lachlan Price - 10407685

Table of Contents

1.0

Context and Problem/Opportunity

2

2.0

Literature Review

3

2.1

Introduction

3

2.2

Carsharing Industry

3

2.3

Benefits

4

2.4

Users

4

2.5

Limitations

5

2.6

Conclusion

6

3.0

Theory / Model / Framework

7

4.0

Recommendations

8

4.1

Recommendation 1

8

4.2

Recommendation 2

8

4.3

Recommendation 3

9

5.0

References

10

6.0

Appendix

14

1.0

Context and Problem/Opportunity Page 1 of 15

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One of the major problems Australia is facing is the over pollution of unused and unutilized motor vehicles with 90% of a car’s lifespan spent in park [ CITATION The19 \l 3081 ]. This can because of various reasons yet fundamentally because of the various way's people can get around these days through numerous different transport services. Car Next Door is one of the companies that offers a carsharing service in Australia, which provides its 210,000 members a peer-to-peer car sharing service, giving them access to a range of 1,300 cars to choose from [ CITATION Car20 \l 3081 ]. The goal of car next door is to “free people and the planet from the ‘one person, car’ mentality” in an effort to help evoultionize the ways Australians get around [ CITATION Car20 \l 3081 ]. Car Next Door is a major player in the carsharing market in Australia, with an annual revenue totalling to $18.5 million per year. However, the enterprise is still struggling with consciousness and exposure concerning their service with the majority of Australians unaware they have option in each renting out their car and the use of it as a means to get around. With low numbers of members compared to other transport alternatives, Car Next Door are provided with three recommendations to get further people to rent their vehicles out with the enterprise. Car Next Door needs to progress Australians attitudes towards carsharing through advertising techniques, provide parking alternatives and promotion of electric car rentals. This will be first understood through the review of relevant academic literature on the carsharing industry and further development will be understood via examining Abraham Maslow’s theory of motivation.

2.0

Literature Review: 2.1

Introduction Page 2 of 15

AMB200 Consumer Behaviour

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Private car ownership provides individuals the luxury to use their car whenever or wherever they please. But as Australia continues to grow into a more urbanized country, the challenges individuals face with owning private cars will continue to grow, with cities already dominated by individual’s motorized vehicles causing congestion, noise, road accidents and air pollution [ CITATION Wor20 \l 3081 ]. Due to this, companies have sought other alternatives to this problem including carsharing. Whilst carsharing isn't an innovative idea due to it being around since the 1940’s in other parts of the world, it is a relatively new endeavour in Australia with the first carsharing service introduced in the early 2000’s. At the current stage there are three different models of carsharing services in Australia: stationary (fixed car stations), peer to peer (using other individuals privately owned cars) and temporary (using the car and returning it for a short period). Besides carsharing there are other alternatives; traditional renting services, ride sharing and ride-pooling. While different companies offer different versions, they all share the same aim to provide individuals with a transportation solution that is cheaper and gives less responsibility than owning a private vehicle (e.g., insurance, fuel, maintenance, registration, etc.), while still providing all the conveniences [ CITATION Zho18 \l 3081 ]. As the car industry continues to evolve, so does the importance in research. This paper examines research journal articles and statistical data around the key concepts of ride sharing to develop a foundation of knowledge about the carsharing industry.

2.2

Carsharing Industry

Carsharing has been around since 1948, with its first endeavour in Switzerland and decades later forming in other major European countries including France, the Netherlands, and Germany. The carsharing industry to date is now operating in 21 countries worldwide [ CITATION Pre19 \l 3081 ] and according to a study by Navigant Research, in 2015 the global carsharing services had a revenue of $1.1 billion and is estimated to increase to a total of $6.5 billion by 2024. This is attributed to the 7 million users who signed up globally to various carsharing platforms in 2015, with this forecasted to reach 36 million by 2025 [ CITATION Nav15 \l 3081 ]. The carsharing industry has expected growth potential with the ongoing urbanisation of the world, development of technology for automotive and phone, rising costs of car ownership, environmental concerns, and cultural change [ CITATION Sta20 \l 3081 ]. Along with the rest of the world Australia has shown growth since starting in the early 2000s in particular from 2015 to 2019 growing by 26% year on year, to hit a Page 3 of 15

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valuation of $54 million in 2019 [ CITATION IBI20 \l 3081 ]. Whilst new development in the car renting industry has shown growth potential, the traditional car renting industry has seen a decline over the past 5 years and has witnessed great financial impacts as a result of the recent Coronavirus (COVID19) outbreak impacting operation proceedings [ CITATION IBI201 \l 3081 ] As well as the car renting industry, the car buying industry has suffered in recent years with a decline in new car sales[ CITATION IBI202 \l 3081 ] and the impact of coronavirus (COVID19) yet to be fully known. 2.3

Benefits

Carsharing has shown great potential in the past years due to the clear benefits it brings for the greater society with less traffic and congestion, lower wear for roads, less air pollution, and lower need for parking. But the main reasons for why individuals utilize the service is due to granting people access to a wide range of cars without the responsibilities related to owning a car such as, registration, maintenance, insurance, depreciation and depending on your financial situation, repayments on the car. The average cost per year to own a car is $10,000 according to the RACQ running cost report [ CITATION RAC19 \l 3081 ]. While the average Australians pay for these costs each year, an average of 90% of a car's day spent in park [ CITATION The19 \l 3081 ]. Due to this a study looked at the routines and distance travelled by people with their own private cars and found that 28.6% of respondents use their car only a few times per week (2 days or less), along with noting that 37.6% of respondents travel less than 10,000km per year. [ CITATION Fil15 \l 3081 ]. The top reason why people use their own private car was that ‘it is more comfortable (36%), ‘faster’ (36%) and ‘can control my schedule’ (30%) [CITATION Lis17 \l 3081 ]. Whilst all these reasons can be covered by carsharing use, it still is an underutilized service to most individuals. 2.4

Users

A study in the United States of America displayed that the main users of carsharing services are males between 35-45 years old, who are educated, above average income (middle to upper class) and are living in a smaller than average household (one or two people) [ CITATION Ing14 \l 3081 ]. A similar survey in North America indicated that the main demographic was highly educated individuals. With 35% of members having a bachelor’s degree and a further 48% having some sort of post-graduate work or advanced degree, majority are in their late 30’s or 40’s, and are middle to upper class income earners Page 4 of 15

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[ CITATION Ada05 \l 3081 ]. Both of the survey participants indicated that the members are environmentally concerned people. A different survey with Millennials (born between 1980-2000) showed similar feelings with the main reasons they would consider carsharing services being the environmental benefits and car ownership costs [ CITATION Pen20 \l 3081 ]. In the same study by Ingrid Ballús-Armet on non-members in the San Francisco and Oakland area, noted that they would consider renting vehicles through a peer to peer situation but mostly were unaware of the businesses that operate these luxuries. A similar study in Australia showed similar findings with 64% of the people surveyed being unaware of the services available [ CITATION Roy17 \l 3081 ]. Even though the car haring service is not known to the majority of people, in 2017 there was an estimated 3000 carsharing vehicles which was available for the 300,000 users in major cities across Australia [ CITATION Sam20 \l 3081 ]. A report by Phillip Boyle & Associates found that the main users were consumers who lived in higher density, inner metropolitan areas of Melbourne and Sydney [ CITATION Phi16 \l 3081 ]. 2.5

Limitations:

Although the carsharing services have shown growth potential, limitations have been raised which could result in the downfall of the service. As carsharing has shown great potential in inner city areas, concerns have been raised about the regional and outer suburban areas which could face difficulties adopting the stationary and temporary type services. Of the carsharing models the peer-to-peer model provides the most promise for this problem as it solely relies on private car ownership. Besides that, a study in America which surveyed people in the San Francisco and Oakland area displayed that 25% of vehicle owners wouldn’t be willing to utilize a peer to peer carsharing service over concerns of labiality and trust issues [ CITATION Ing14 \l 3081 ]. Whilst the peer-to-peer service has shown greater potential for the Australian landscape, the stationary and temporary type services provide car parking spaces for individuals to utilize around the major cities whereas the peer-to-peer model doesn’t. Although these services provide benefits and disbenefits depending on the service, the greatest downfall for carsharing seems to be the lack of awareness, with a report from Roy Morgan displaying that 64% of respondents (n=1,104) were unaware such services existed [CITATION Roy \l 3081 ]. While majority of Australians don’t know about the different carsharing services, there is worries over other sharing services which have been destroyed by public use in the past. With the implementation of the bike sharing in 2010 in

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major cities becoming a controversial topic with the ongoing vandalism and theft causing Obikes and Ofo to pull their bikeshare out of Australia [CITATION Sha191 \l 3081 ]. 2.6

Conclusion

The purpose of this review was to evaluate the literature and statistical data around carsharing. It is clear from the research that there is evidence to suggest that carsharing will be evolving the car renting industry and how individuals think about transportation in the future. While there are benefits for the carsharing industry there are clear limitations that may come into play if society acts the same way with previous public sharing services. Nevertheless there has been clear growth over the last five years that supports the idea and substantial evidence to suggest that carsharing will play an important role in the way Australians travel in the future. Although there is a clear gap in the marketing side of the carsharing industry, this will hopefully be undone in time with more companies expanding into this market and the current companies putting more of a focus on further outreach and education in hope to raise awareness about the innovation of the mobility service in Australia.

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AMB200 Consumer Behaviour

3.0

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Theory / Model / Framework

According to motivation theory, motivation is the reason individuals act a particular way or are inclined towards a specific behaviour [ CITATION Par90 \l 3081 ]. Abraham Maslow’s theory of motivation (Appendix 1) is broken down into a five-part priory system which includes, psychological, safety, love, esteem and s elf-actualization. In order for Car Next Door to be successful with their goal of attracting more people to list their car for rent, they must establish their place somewhere on this hierarchy of needs, as consumers are motivated to prioritize purchases in line with this hierarchy. Safety will be discussed in detail due to the importance of Car Next Door’s success with its goal and how it best relates to the consumers it is trying to attract. Once an individual’s physiological needs are satisfied (food, water, health etc) the need for safety and security takes priority [ CITATION Lum201 \l 3081 ]. With the recent events of the pandemic, this has been the major motivator for many individuals, with the Australian Bureau of Statistics recording since April 2020 roughly 594,00 people who have lost their job. That number continues to rise as the situation continues with the disruption of operation proceedings for businesses [ CITATION Aus20 \l 3081 ]. Because of this it has put increased pressure on individuals to seek other alternatives for income due to Australia being one of the most expensive country to live in [ CITATION The201 \l 3081 ]. Due to this, it has put increased pressure on Australians for security and safety, and becomes a great opportunity for Car Next Door to help the 92.5% of households who own a car [ CITATION Ale20 \l 3081 ] to lease it out for extra income. With Car Next Door providing those who own a car to lease it out to others through their website, it allows the cost of owning a car to minimise with fuel, registration/licencing, insurance, maintenance/servicing and dependant on your situation car loan repayments. While all these costs vary with the type of vehicle you own the average cost per year to run a cost is $10,000 according to RACQ running cost report [ CITATION RAC19 \l 3081 ].

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AMB200 Consumer Behaviour

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Recommendations 4.1

Recommendation 1

As Australian’s cars sit idle for majority of the day[ CITATION The19 \l 3081 ], carsharing in theory becomes a worthwhile choice for many individuals seeking extra income for getting paid to rent out their vehicle. According to Car Next Door individuals can get paid up to $750 per month depending on the vehicle they own [ CITATION Car20 \l 3081 ]. This provides additional income for many individuals that don’t utilize their car that much, with research indicating a sizeable portion of people to be true [ CITATION Fil15 \l 3081 ]. While there is a considerable amount of income to be made there seems to be a lack of awareness about the carsharing services out there for the public to use, as a report from Roy Morgan indicated that 64% of respondents were unaware such services existed [CITATION Roy \l 3081 ]. Due to such lack of awareness a recommendation for Car Next Door can be to make Australians aware of the services they provide through different social platforms. Car Next Door has many options in the way they can showcase their services to consumers through different platforms. As Car Next Door provides users with a car experience, they will want to inform users who drive cars currently or use similar apps. Car Next Door can provide awareness of their services through Spotify ads, Radio ads and billboards. All these types of platforms are in use of people who drive or use cars.

4.2

Recommendation 2

Roughly 85% of Australia's population already live in urban areas which creates a perfect market for carsharing services to develop and thrive in, as seen in other similar parts of the world[ CITATION Wor20 \l 3081 ]. Due to that urbanization it means less space for car parks and when even found can range from $5 to $25 an hour. While other carsharing services don’t have to worry about this due with owning carparking spaces with their fleet of cars, this is a major factor in Car Next Door success. Therefore it is vital that users of Car Next Door are able to use the car for whatever they please. With Car Next Door already partnering with major companies Hyundai, Caltex and GreenFleet other alternatives may need to be explored to help improve operations for users. Page 8 of 15

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Car Next Door can look at partnering with Wilson Parking or Secure Parking, as these two companies hold the largest carpark holdings in Australia. With offering customers upon checkout options of cheaper parking, the gap in peer-to-peer carsharing with no designated parking will be minimised. As customers only have access to a vehicle for a short period of time the user wants to be able to maximise their benefit with reducing their need for other deterrents of looking for parks. Another option is for Car Next Door to approach the local governments to see if there can be any policy incentives for carsharing for individuals and Car Next Door itself with car parking spaces. As different countries have implemented this and has shown to be a key factor with users. As a survey in San Francisco showed that out of the people they surveyed (n=425) most people supported the idea of converting some types of car spots for carsharing use [CITATION Sus20 \l 3081 ]. 4.3

Recommendation 3

Due to the development of technology, it has allowed for individuals to drive electric cars opposed to the traditional version powered by fossil fuels. In recent years there has been a massive push towards sustainability with the government promoting the use of electric vehicles due to the environmental benefits they bring. As such this would be a good market for Car Next Door to invest into as many carsharing users still keep the car they own [ CITATION Ell11 \l 3081 ] and utilize the service when needed (because someone in the household is using it). Along with having electric cars in the fleet it would give access to people who have doubts with electric vehicles for private ownership. Electric cars have become more and more popular with 2,284 electric cars sold in 2017, which was an increase of 67% from 2016. Along with a 64% increase in the number of charging stations from 2017 to 2018 [ CITATION Par18 \l 3081 ]. This provides an indication of where Australia is heading with car utilization. Although Car Next Door is already leading the way with a sustainable future with the partnership with GreenFleet, more can be done with offering owners of electric cars special deals with their cost-efficient cars. This will be the right move with it estimated by 2030 that one third of all car sales will be electric cars [ CITATION NRM20 \l 3081 ]. By providing incentive for electric car owners this will motivate owners to list their car for rent and market themselves to the main demographic of carsharing users (environmentally concerned individuals).

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AMB200 Consumer Behaviour

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Lachlan Price - 10407685

References
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