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Is Thailand ready for car sharing businesses ?

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Car-sharing businesses that provide short-term car rental services have experienced continuous growth worldwide. The annual growth of the business-to-consumer type services is 39%.

The objective of car sharing is to reduce the number of cars on the road. There are two types of car-sharing services: peer-to-peer (P2P) services and business-to-consumer (B2C) services.

P2P services take advantage of the fact that cars are usually parked more than 80% of the day by matching car owners looking for additional income with members looking to rent a car during the same period.

Developed after the P2P type is the B2C type of car sharing. B2C services provide short-term car rental services without requiring their members to own a car. The competitive advantage of the B2C business model is its ability to provide one-way-trip services, thanks to multiple parking spots that allow members to rent cars at convenient locations without needing to return the car to the same spot.

Currently, the number of those engaging in car-sharing worldwide numbers about 6 million and is expected to increase to 26 million by 2020. Asia Pacific has the most car-sharing members at 2.3 million and enjoyed high annual growth of 65% between 2012-2015.

Europe has the second highest number of car-sharing members at 2.2 million persons, while North America follows with 1.6 million members.

The number of vehicles in car-sharing services have reached about 100,000 cars. Countries such as Australia and Singapore have adopted national car-sharing projects to help reduce CO2 emissions. Singapore even encourages bringing electric vehicles into car-sharing services.

Highlight

  • Car sharing businesses provide short-term car rental services and have been growing globally at more than 39% per year. The strength of car-sharing services is their ability to fill in the gaps between public transportation networks in densely populated cities with extensive public parking facilities.
  • The nature of car sharing is compatible with the lifestyles of Gen Y, a generation that will become major buyers in the future and that uses more public transportation than previous population cohorts. However, unlike in Europe and the US, car-sharing services in Thailand have a disadvantage in price competition compared to other travel options
  • EIC sees car-sharing businesses planting themselves in the tourism sector and flourishing there.
  • Car sharing companies can serve independent travelers who want more flexibility in their travel plans and at a lower cost than what daily car-rental services can offer. Moreover, the rise of car-sharing services will increase demand for parking businesses and allow insurance companies to offer new products

 

Countries experiencing substantial growth in car-sharing services have four similar characteristics;

1) High population density is an important factor in a car-sharing project’s worthiness. Areas with low population density usually have weak investment in public transportation systems as residents still enjoy a high level of convenience using personal cars.

EIC estimates that the population density appropriate for car sharing should be more than 500 people per square kilometer.

Currently, central Bangkok has a population density of more than 3,000 people per square kilometer and its metropolitan area has a density of more than 1,000 people per square kilometer.

2) Extensive public transportation coverage helps reduce the need for personal cars. If a personal car is needed it is only to travel to or from public transportation access points for short periods of around 10-15 minutes.

3) Environmental-friendly policies and campaigns from both the public and private sectors target the reduction of CO2 emissions from land transportation, involving both the supply and demand sides of public transportation. And

4) Public parking spaces dispersed in many areas help provide parking spaces for car sharing, especially if the government assigns spots specifically for car-sharing vehicles.

Author: Nantapong Pantaweesak

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