The global ride sharing market is projected to grow at a CAGR of 16.6% during the forecast period, from an estimated USD 85.8 billion in 2021 to USD 185.1 billion by 2026. Increase in urbanization, internet and smartphone penetration and increase in cost of vehicle ownership are the major factors driving the growth of the ride sharing market.
The ownership of a vehicle is cumulative of multiple factors such as finance, fuel, maintenance, registration/taxes, and maintenance & repair, along with depreciation. With each year, the cost of vehicle ownership increases. Though, according to American Automobile Association (AAA), depreciation contributes to ~43% of the ownership cost, the other costs, such as maintenance cost and fuel cost, contribute ~25% together. Fuel prices and maintenance costs have increased multifold in the past few years, and the same trend is estimated to continue without any decline. As cities are getting increasingly cramped with people and cars, owning an automobile has become more of a liability than an asset. According to AAA, the average cost to own and operate a new car increased by USD 279 in 2020, as compared with 2019, to reach USD 9,561.
Car sharing segment is projected to grow at a faster rate during the review period
Car sharing will grow rapidly in the ride-sharing market at a global level. It is a convenient and affordable mobility service where multiple participants commute together and share costs. It significantly reduces travel costs, traffic congestion, and lower emissions. Car sharing is primarily designed for shorter time travel and one-way commute trips. The growth factors are the rising daily commute to workplaces and an increased need to save fuel, which gets wasted during congestion. Providing a ride to colleagues and commuters heading along the same route is expected to fuel the demand for car sharing. Some key players in the car-sharing market are BlaBlaCar, Togo, Talixo, Car2go, and DriveNow.
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As the millennial generation has little-to-no interest in owning a car, the rate of car ownership among people aged between 18 and 35 has declined over the years. Other reasons for the decline in car ownership are poor connectivity by public transportation in key cities and the increasing trend of online shopping, among others.
Though the trend of car ownership has grown during the pandemic, it is expected to return to the pre-pandemic trend after 2021. Hence, ride sharing service providers can capitalize on these demographics as the new tech-savvy generation constitutes one of the largest user bases of these services.
The electric vehicle sharing market is projected to grow at the highest CAGR during the forecast period. This growth is attributed to the existing lower penetration of such vehicles in the ride-sharing fleets, favorable government policies, improving charging infrastructure, and growing awareness about CO2 emissions. In the initial stage, ride sharing with electric vehicles is estimated to be costly; however, in the future, as the awareness among people to use electric vehicles is growing, the market for ride sharing services by electric vehicles would ultimately enhance. The service providers can leverage this opportunity by providing a suitable sustainability model of ride sharing with electric vehicles, which could attract drivers and people to opt for the same. For instance, Uber has started paying extra dollars per trip to drivers who want to use electric cars.
Navigation technology dominates the data service segment for ride-sharing
Navigation guides drivers and passengers regarding location and route. Also, mapping and traffic data provide a better user experience. Availing and maintaining these services is costly, and ride-sharing companies are working toward increasing profitability; it would be beneficial for them to develop their own services to save costs. For instance, Uber has its navigation app, called Uber Nav, built for its driver application. Uber aims to simplify the process for its drivers with its built-in GPS app. Uber Nav is compatible with any smart device that can run the Uber app. The use of navigation services is imperative for ride-sharing. Thus, the increasing number of ride-sharing service users influences the demand for navigation data services in future
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North America is estimated to be the second-largest regional ride-sharing market
North America is dominated by counties such as US and Canada. The North American ride-sharing market is growing because of the increasing collaborations between OEMs and ride-sharing service providers across the region, surging internet penetration, increasing millennials preference for these services, and developing semi-autonomous and autonomous vehicles. Some other factors that would positively impact the market are rising concerns over air pollution levels and growing investments by several major players in the market. The major organizations in the region, such as the US Department of Transportation Research and Innovative Technology Administration (RITA), are focusing on R&D in the field of smart public transportation. With the increasing population, the dependence on public transit is very high in North America, resulting in a huge requirement for an effective ride-sharing management system. North America has the presence of many major ride-sharing players, such as Uber, Lyft, Waze, Bird, Lime, and Avis.
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