The author believes dealers have the inventory, proximity, and infrastructure they need to capitalize on the growing demand for ride-hailing units from an increasingly part-time (and lower-mileage) workforce. 
 - Photo by freestocks-photos via Pixabay

The author believes dealers have the inventory, proximity, and infrastructure they need to capitalize on the growing demand for ride-hailing units from an increasingly part-time (and lower-mileage) workforce.

Photo by freestocks-photos via Pixabay

Some say that sharing is caring. As a car dealer, I’ve often said “Carsharing is daring.” But today, I’ve changed my religion.

Along with many in the retail dealership world, I had a real fear about how the new sharing economy would affect my retail business. I associated carsharing and ride-hailing as something that accelerated mileage and depreciation on vehicles, along with increased wear-and-tear, all while losing retail customers to “on-demand” transportation.

I envisioned more people taking advantage of these options and buying fewer personal cars. Frankly, I had good reason to fear those things.

Early drivers for the rideshare industry tended to be disenfranchised taxi and limo drivers. They were used to driving 12 hours a day and 5,000 miles a month or more. Several companies entered this new mobility or transportation as a service (MaaS or TaaS) economy early and lost big. Bank and OEM captives suffered large losses on long-term loans with high-mileage owners.

Things were not pretty in the early days of the shared world in automotive, especially if you owned or financed the vehicles used on rideshare platforms.

Today, it’s a different story.

It’s Just a Part-Time Thing

Data submitted with Lyft and Uber’s IPO filings validate what I’ve been experiencing lately: The vast majority of ride-hail drivers are now part-timers supplementing their income.

In fact, Lyft reported in its S1 filing that 91% of its drivers drive less than 20 hours per week. In most metropolitan areas that ridesharing serves, it takes about one hour to drive 16 miles. Bottom line, Lyft drivers are averaging about 1,400 miles a month, plus the driver’s personal mileage.

So, what’s the opportunity for the dealer? Everything!

Your proximity to the ridesharing marketplace allows you to best serve and engage with rideshare drivers and the MaaS/TaaS community. You already have the infrastructure, resources, and service department in place. You can enter the MaaS/TaaS business at the lowest cost. In fact, a dealer can start with not one dollar of additional capital investment.

Every day, you have idle inventory sitting on your lot, not earning income but costing bundles in real estate, flooring, depreciation, and marketing. The airlines learned a long time ago that, if the plane is on the ground, it’s the money that’s flying away.

Driver Accountability Is Improving

One of the myths of the MaaS/TaaS industry is that rideshare drivers do not take care of their vehicles. Many equate rideshare vehicle wear-and-tear risk with experience from the taxi industry. My recent experience, backed by extensive data, tends to prove the opposite.

Today, rideshare drivers for companies like Uber and Lyft are incentivized for higher client experience ratings. Rideshare drivers strive to gain five-star ratings to earn a variety of benefits in addition to income. In order to earn stellar ratings, drivers must have clean and well-maintained vehicles.

It is not rare to see a rideshare driver clean a windshield, replenish complementary water bottles, or even apply tire dressing. In many cases, drivers have seat covers to preserve the interior and all-weather floormats. The vehicle is their office, their income, and they earn more providing a better environment for the client.

Another positive trend is that the quality of rideshare driver applicants is appreciating quickly. Any stigma of being a “rideshare” driver is nonexistent in conversations I have today. Some friends are now comfortable posting “Uber dude” as a job status on LinkedIn.

Many part-time and retired professionals (including law enforcement and military veterans) are supplementing income with ride-sharing. Some very qualified people drive for TaaS services because they find it interesting to meet new people, or even just to get out of the house!

If we do experience anything close to a recession in the future, I think the quality of rideshare drivers will only improve further.

Headwinds and Tailwinds

I strongly believe the dealer is closest to the MaaS/TaaS customer and enjoys the competitive advantages to serve them best. You have a chance to earn incremental revenue from assets you’ve already invested in, and many of your new customers will strive to buy the vehicles they’re driving. Carsharing means car-selling.

More importantly, if headwinds are approaching for traditional retail sales, dealers who leverage the shared economy will have the beneficial tailwinds to offset them.

My new religion? Miles used to be the measure of a vehicle’s value; today, it’s revenue.

Brian Allan is senior director of strategic partnerships for HyreCar, the company he joined after a 30-year executive tenure with Galpin Premier Automotive Group (div. Galpin Motors).

Originally posted on Auto Dealer Today

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