From vehicle ownership to Mobility as a Service
In many markets, we see a clear shift in the way consumers view mobility, not least in their views towards vehicle ownership. This trend is particularly pronounced within urban areas, where people have greater mobility choice. In KPMG’s Global Automotive Executive Survey 2019, the opinion of decreasing ownership of vehicles is also shared by 39% of surveyed consumers, which shows that half of car owners know today they will no longer want to own a personal vehicle by 2025.
Similarly, UK Department for Transport figures show the percentage of men in England aged 17-20 with a full UK driver’s licence has fallen from 51% in the mid-1990s to just 29% in 2017 (and from 81% to 69% for men aged 21-29) (Department for Transport National Travel Survey, 26 July 2018).
These shifts can be partly attributed to the demand for consumer 'mobility-as-a-service’ as an alternative to ownership. Most notably through the emergence of on-demand private car hire firms such as Uber and Lyft, which have rapidly become commonplace in cities worldwide.
Mobility-as-a-Service (MaaS) is an evolving concept of how consumers and businesses move away from vehicle ownership towards service-based transport. In this sense, MaaS includes multi-modal aggregation of transport modes as well as on-demand mobility.
In the overall landscape of mobility we highlight four areas where organisations are innovating to create new business and service models.
The emerging mobility services landscape
There are many examples around the world where customers can travel on different modes of transport (from different providers) via one payment platform.
Although such services are typically restricted to public transport, new, integrated private/public versions are emerging. MaaS Global operates a MaaS platform in Helsinki, Finland, and is also trialling a scheme in other countries including the UK. The company h as developed a travel product called Whim with a monthly subscription. Customers can plan and pay for individual journeys via train, bus, taxi, car-rental and bike-share on a single app, or purchase an ‘all-in’ subscription covering all their transport needs in the city for a fixed price.
And Helsinki is not alone. Denver, Los Angeles, Las Vegas, Singapore, Barcelona, Hanover, Vienna, Montpelier, Gothenburg, Paris and Eindhoven have all piloted some kind of MaaS solution at the time of writing. Despite these exciting developments, public authorities still struggle to balance the user experience offered by MaaS, with policy objectives of economic growth, social inclusion, space optimisation, environmental benefit, and citizen health and wellbeing.
There is also a huge opportunity for MaaS to replace company cars, although this will require significant shifts in tax policy. (20 million journeys in its first 4 years. KPMG’s MaaS Requirements Index enables operators and authorities to understand the optimum level of regulation and policy needed to achieve their objectives, while balancing the commercial needs of operators.
Over the past year, we have seen innovation in new car subscription services. Traditional personal contracts or long-term leasing arrangements are being replaced by more flexible monthly contracts bundling insurance, maintenance and other costs within an all-inclusive price, accessed online. With consumers increasingly tempted to forgo personal vehicle ownership for more flexible access, subscription services could be a ‘middle ground’ for those who still want full-time access to a vehicle and flexibility to change models or ‘pause’ their usage.
OEMs and independent platforms are both introducing new subscription schemes, and testing out new business and operating models. Importantly for OEMs, these schemes represent an opportunity to maintain relationships with customers and wrest back control from on-demand platform providers.
Demand-responsive, private hire car providers are growing in popularity. They offer customer connectivity, account-based payments, intelligent routing algorithms and a large pool of drivers (often prepared to work in the so-called ‘gig-economy’), and can be paid for in arrears and on account. The most prominent example is Uber, introduced to the UK in 2012, which recorded over (20 million journeys in its first 4 years. By early 2017, half of the UK population had access to Uber services.
However, ride-hailing is not the only on-demand model. We have seen sustained interest in car-sharing schemes, such as BMW’s DriveNow. Another innovation is dynamic shuttle services, also known as demand responsive transit (like ViaVan) that combine elements of mass transit with dynamic routing.
Penetration of such services is only expected to grow further with the advent of autonomous vehicles (AV), with an associated pronounced decline in vehicle ownership, particularly in urban areas. Roughly half the cost of on-demand private hire vehicles relates to the driver and as a result, we estimate that AV MaaS provision could be up to 40 percent cheaper than private vehicle ownership by 2030 (KPMG mobility analysis).
Cost per mile – UK nodes
While passenger transport is often the focus when considering the benefits of mobility, commercial vehicles and logistics should not be forgotten, given the significant economic and sustainability impact. There is widespread innovation in business models – with the rise of peer-to-peer logistics platforms and consignment sharing – as well as new modes like drone delivery (as tested by several large technology players).
While alternative fuels, connectivity and automation should eventually impact most of the supply chain, we expect an initial focus on lower emissions for heavier vehicles and innovations in last-mile deliveries.
Companies such as Starship Technologies – with autonomous robotic delivery pods – are shaking up the future urban logistics landscape. We shall address each of these topics in more detail in a forthcoming series of articles on the commercial vehicle market.
In these four focus areas, we expect to see increasing innovation and experimentation in new business models, which should attract venture capital and investment. However, we believe true step-change will come as mobility services are coupled with driverless technology (discussed in the following chapter) that enables an integrated and automated transport ecosystem.
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Partner, Head of Public Sector Mobility and Trade Lead Partner
KPMG in the UK