Why Commute carpooling has become such a hot segment in the San Francisco Mobility playfield?

Download the full document in pdf

Overview:

Commute carpooling is one of the main transportation means in urban areas. Total market volume is impressive (in the US, over 13 millions workers are carpooling to go to work every day, i.e. several billions rides in a year); but beyond informal and unorganized commute carpooling practices, the ‘commercial’ part is a small and low-profit segment with many roadblocks. Bearing this in mind, BlaBlaCar, one of the global ridesharing leaders, hesitated a decade before recently deciding to open its offer to short distance trips. Players face indeed structural challenges to balance offer with demand, with a lack of drivers willing to carpool for the regulated remuneration level (based on an average usage cost per mile).

However, several digital start-ups have recently entered the market, especially in the San Francisco Bay Area (the ‘laboratory’ for all new mobility models), with the ambition to unlock the full market potential. In addition, major players such as Google, Uber and Lyft have recently demonstrated a strong interest in the market.

To date, success is still uncertain as no commute carpooling player has emerged as the reference model able to structure the market. But beyond direct revenue and profit generation from carpooling, these players are pursuing other objectives:

• Global mobility players such as Uber and Lyft are looking at Commute Carpooling as a significant mobility segment to conquer to ensure their ‘last mile’ leadership (i.e. one of mobility key stakes: bringing customers up to their doorsteps, offering seamless door-to-door journeys beyond transportation hubs)
• Others, such as Google, are aiming at gathering customer data (i.e. for Google: enhancement of its Waze contextual advertising accuracy)
• Finally, all are preparing the emergence of the autonomous vehicle, which will totally disrupt the urban mobility segment

In the short term, some small players may be able to leverage distinctive local knowledge to emerge in specific locations. Along with micro-transit/vanpool players, they may represent attractive opportunities for large mobility operators or car OEMs to consolidate their positions on the last mile