COVID-19 and its aftermath will test the business sustainability and resilience of shared mobility companies. With the change in fundamental market dynamics as a result of the pandemic, stakeholders are already in the process of designing new strategies and roadmaps for growth.
Our research, which provides an insight into the mobility industry’s road to recovery till 2025, projects a robust market recovery. The rally will be spearheaded by e-hailing, segments like bike-sharing, demand responsive transit (DRT), traditional carsharing, and peer-to-peer (PRP) carsharing supported by intelligent technologies like contactless AI-based services, autonomous technologies, and fleet management.
The shared mobility market is estimated to almost double from $305.92 billion in 2020 to $608.86 billion in 2021, riding on a combination of new strategies, business innovation, and cutting-edge technologies.
Shared Mobility: Staging a Comeback
Such recovery rates are particularly commendable, considering the severe impact of the pandemic on the market. For instance, overall fleet utilization across mobility business models in the US dropped by 70-80%, while a similar story played out in other key markets across the world.
Even as select business models made a tentative comeback in the EU from Q3 2020, governments in many developed economies sought to revive public transit usage by boosting investments and digitalization initiatives in supporting infrastructure.
If public transit took a knock due to social distancing imperatives, business models based on active mobility like bike-sharing made substantial gains. During the pandemic, cities invested over $1 billion in building cycling infrastructure.
Another major trend was the emergence of multimodal mobility strategies promoting safe, smart, and seamless travel. Governments in the EU have already partnered with mobility as a service (MaaS) platform and infrastructure providers to offer more integrated and efficient mobility.
COVID-19 Impact across Cities, Business Models, and Growth Strategies
Our research examined the pandemic’s impact through three critical prisms: Cities, Business Models, and Growth Strategies.
For many cities, the dip in average monthly usage of public transit – the lifeline of city commuters – constituted a significant fallout of the pandemic. Frost & Sullivan does not expect the modal shift away from public transit to recover during the short-to-medium term. Over time, however, we anticipate ridership enablers like subsidized trip costs, reduced transfers between destinations, and real-time accuracy to support demand recovery.
In tandem with strategies to revive public transit users, city authorities have also focused on developing active mobility infrastructure, including bicycle lanes and pedestrian walkways.
Three business models – micro-mobility sharing modes, on-demand delivery, and DRT – will make substantial gains. Viewed as a safe and more sustainable transport model and backed by government support for active mobility, micro-mobility modes like bike-sharing will experience continued growth in the short-to-medium term.
While shared mobility service providers will continue to leverage opportunities created by thriving eCommerce activities, Frost & Sullivan believes two key trends will define this space in the coming years. First, hyperlocal approaches where local on-demand deliveries will become significant revenues spinners in the short-to-medium term. Second, increased government support for autonomous delivery solutions in the medium-to-long term. We are likely to see more partnerships forged between shared mobility operators and e-commerce operators in the future.
The pandemic has emphasized the importance of DRT in the mobility ecosystem. Amidst the waning appeal of public transit, DRT service providers have proactively assessed autonomous solutions and services that deploy various health, safety, and hygiene measures to assuage concerns over infection risks. Demand Responsive Shuttles (DRS) are, in the meantime, showcasing their potential as highly flexible and practical solutions that can bridge first- and last-mile gaps and bring long-overdue upgrades to aging public transit systems. They have also emerged as the go-to solution for corporate companies to ensure safe and reliable transport for their employees.
New Strategies and Roadmaps Emerge
So what revised strategies and roadmaps can we expect from shared mobility market shareholders?
For a start, our analysis indicates that mobility service providers (MSPs) will step up launches and expand services in high-potential locations, much like Turo relaunching its services in New York City. Cities will also ramp up mobility services, as illustrated by Moscow’s plan for a new P2P carsharing scheme. Avail’s launch in eight new cities and Ejaro’s in Saudi Arabia also indicates that carsharing services are rising.
Partnerships for extended services as an essential strategy to drive business growth is another potential pathway. This could take the form of partnerships with third-party services (such as Turo’s interest-free loans and partnership with GoodYear) or long-term contractual alliances with local authorities (such as DRT solution provider Keolis’ 5-year contract with the state of Virginia). It could also be partnerships centered on sustainability and environmental considerations (such as Eligo Car’s partnership with the Nature Conservancy, Canada).
Our analysis indicates that hyperlocal will emerge as the next big trend. We already see companies like Uber Eats come up with highly localized, demand-driven services. NextBike’s customized bike-share system tailored to individual, city, or business needs and P2P carsharing platform Moovby’s focus on domestic tourism reflects this highly differentiated strategic approach.
And, finally, we expect technology adoption and automation to accelerate. Technology-driven solutions will enable improved and intelligent mobility management (such as Cubic’s Umo platform), enhance the end-user journey experience (like Harman’s live interactive virtual experience), and facilitate the development of large, city-scale mobility operating ecosystems.
Business Model Flexibility will be Critical for the Future
As the shared mobility landscape transforms in response to post-pandemic realities, we recommend that market participants innovate toward multimodal service offerings such as MaaS and integrated mobility. These will better reflect evolving customer preferences.
Accelerated digitization and automation with a particular focus on the short-term opportunities presented by autonomous shuttles will open up new avenues for growth.
Developing flexible business models will also be critical to leveraging emerging growth opportunities.
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