Car sharing heats up amid high COEs, generational shift in ownership mindset

Singapore

CAR sharing is looking more and more attractive to drivers, as certificate of entitlement (COE) prices skyrocket and a generational shift away from car ownership takes hold.

Recent COE bidding saw category A COEs surge past S$71,000 for the March tender exercise, on a constant upward trend from S$57,599 in January 2022.

These costs are guiding drivers such as 41-year-old Nicholas Leong to use car sharing platforms rather than buy a car. Outside of running costs, a car sitting idle is steadily depreciating year to year, and that premium is not worth the convenience to Leong.

"While I use car rental service daily, I only use it for 2-2.5 hours to fetch my daughter to school and back. So I spent less than S$30 a day, which works out to be S$600-700 a month as I don't use them on weekends," he said.

Leong's thinking and behaviour is a far cry from the past. The business of car sharing in Singapore hasn't seen quite the same level of adoption and growth compared to other countries, and casualties surfaced. Car sharing startup Smove was acquired by Drive Lah in December 2020, while NTUC Car Coop - one of the first car sharing companies - was acquired by Japanese corporation Mitsui & Co in 2010 and renamed CarClub.

Car sharing platforms are now looking to capture new demand with their larger fleets. Tribecar, launched in 2016, acquired CarClub on Mar 3, making it one of the largest car sharing platforms with over 1,400 vehicles. Other platforms aren't far behind. Newcomer GetGo, launched in February 2021, now has over 1,300 vehicles for hire. On an average day, close to 100 per cent of their cars are on the road, according to GetGo.

BlueSG, an electric car sharing platform launched in December 2017, currently has 740 electric vehicles in service after being acquired by Goldbell Group from French logistics company, the Bollore Group.

Tribecar declined to disclose their user numbers, while GetGo says it currently has over 100,000 users on its platform. BlueSG has sold over 140,000 subscriptions to date.

"Convenience and access to car sharing platforms around my neighbourhood is the biggest factor behind the consideration of selling my car and switching to car sharing," said Nicholas Booi, a car owner for the past five years. He has yet to sell his car, but has recently signed up for an account on a car sharing platform.

No car, no problem

There is a generational shift in car ownership at play too. BlueSG's biggest customer segment ranges from 20 years old to 30 years old. Tribecar's biggest customer segment is in the 18-40 age range, while GetGo's average customer is between 35 and 36 years old.

"It's a generational shift. Now, owning a car doesn't mean as much to the younger generation. They are getting more financially savvy and what they can do with the money for a car has led to the rise in demand for car sharing services," said Toh Ting Feng, co-founder of GetGo.

The shift in mindset is one of a few factors that is making car sharing a viable business now. More importantly, technology and new business models are making it more sustainable.

Technology has evolved to bring much ease of use. Users can now book and unlock a car with their phones, rather than wait for a card or key to arrive. Cars also have more electronics for platforms to monitor usage without physically looking at the dashboard for fuel levels.

"That allows you to more tightly integrate a car sharing service with the car. Now we can control the car using bluetooth and gauge the fuel levels," said GetGo's Toh.

Users are racking up the rental hours on car sharing platforms, with Tribecar and GetGo seeing an average rental of 3 to 4 hours per use, while BlueSG sees an average rental of 20 to 40 minutes. The difference in hours is due to the business models that the car sharing platform use.

"BlueSG took almost 3 years to reach its millionth rental, but in just over a year we celebrated exceeding the 3 millionth rental mark," said Kevin Tay, managing director of Goldbell's future mobility group.

Only BlueSG owns their fleet, made up of proprietary vehicles inherited from the Bollore Group. Tribecar and GetGo lease their vehicles from rental companies. Tribecar started out with providing an option for private hire drivers to rent cars for ride hailing, while GetGo is soaking up excess capacity from rental companies who have seen private hire drivers returning their vehicles.

The oldest operator, Tribecar, was profitable in 2020 and 2021, turning a profit of S$276,038 and S$782,294 respectively according to regulatory filings. This bodes well for car sharing operators in this market.

Tribecar and GetGo have a point A to point A model, where cars have to be returned to the car park they came from. BlueSG has a point A to point B model, where cars can be parked at any BlueSG lot to end the rental. Tribecar and GetGo have stuck with the A-to-A model to prevent hotspotting, where the only available cars for hire are gathered in particular spots.

"Singapore is not a country where people are happy to move vehicles all day as income and the cost of labour are very high," said Adrian Li, co-founder of Tribecar.

Ride hailing too has set a price ceiling on point A to point B car sharing services, because they compete with Grab and Gojek as alternatives.

BlueSG's Tay admits that there are challenges to running an A to B fleet. Investment into research and development will be key.

"We'll be looking at things like fleet rebalancing algorithms, dynamic pricing algorithms to incentivise users to move vehicles where the next user will need them," he said.

According to Tay, BlueSG is now making data-driven decisions to enable the 100 new vehicles added to the service to perform as well as or better than its existing 600-over vehicles in the fleet.

But a challenge that all the platforms face are bad users. These customers soil the inside of the car or cause damage to it while driving. Education and community are big parts to how platforms are trying to encourage good user behaviour.

Data can also track if users are violating the service, according to GetGo's Toh. Denial of service is a powerful stick to warn users to take care of the vehicles.

"One bad user will probably cost us 10 good users. We aren't after every user, we want users who enjoy the service and play their part in making the service enjoyable for everyone," said Toh.

Fuel and expansion

Rising fuel prices have been a cause of concern for all drivers, and for car sharing platforms, the impact depends on the business model. Tribecar requires users to top up the fuel tank after each rental.

While BlueSG runs an entirely electric fleet, it also now faces higher power prices. "The rising cost of electricity is a concern for everyone, but we are unable to discuss the specifics," said BlueSG.

This leaves GetGo feeling the pinch of rising pump prices. Their model includes petrol in the rental costs, with the platform topping up the tanks as they run low. By not increasing prices so far, GetGo saw a discernible increase in people using their service after the recent taxi fare increase, which was a reaction to rising petrol prices.

"We are still holding things level because we hope the higher fuel prices are transitory," Toh said.

Both Tribecar and GetGo have plans to add more electric cars to their fleet and eventually go all-electric. But with the high COE prices and early adopter penalty, where current electric vehicle technology quickly becomes obsolete within three years, making the switch is tough.

"Even with the government rebates, it doesn't make economical sense and the customers are not willing to pay more for greener cars," said Tribecar's Li.

All the platforms are looking to add more vehicles to their fleet, with a vision of having a couple of their cars in every public housing car park in Singapore.

All this means that drivers like Leong can continue to rent rather than own a car.

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