The Covid-19 pandemic has led to an increase in the demand for a wide range of goods and services. For example, e-commerce saw a huge boom as many Singaporeans chose to shop online instead of going to physical stores.
Another industry with enormous growth in demand is car sharing. This refers to private owners leasing their vehicles for others to drive or when a company has a fleet of cars that can be used for short term rentals.
According to a report released last year, car sharing companies saw a surge in demand once movement restrictions were lifted.
During the first phase of the economy reopening in June 2020, Tribecar's sales rose 40 percent, while Whizzcar grew 20 percent. On the flip side, BlueSG rebounded from its loss during the breaker with rents increasing by 50 percent.
For Drive Lah, sales during Breaker in April and May rose 20 percent from the previous month, and the number of active users rose from about 5,000 in April to 7,000 in June.
In addition, Statista states that the user penetration of car sharing services will be 6.8 percent in 2021 and is expected to reach 8.5 percent by 2025.
Although the car sharing boom is clearly visible, will this demand continue in the long term?
Car sharing may not be the cheaper option
Image credit: UCars
One of the main reasons for car sharing is that it is touted as a cheaper option for transportation in Singapore.
It takes away the long-term liabilities associated with a depreciating asset like a car. This is especially the case in Singapore, where high cost of vehicle ownership over time may not be practical.
In addition to paying the upfront cost of a car and its Certificate of Entitlement (COE), car owners can expect an average of S $ 1,591 per year for auto insurance, S $ 621 for maintenance, and S $ 742 for vehicle tax and pay gasoline costs of S $ 2,434 per year.
A current finding by the Car Club shows that most cars are underutilized and 80 percent are idle in parking lots. Drive Lah's research also confirmed that Singapore has 11,520,548 idle hours of driving per day.
If you don't drive regularly, it is definitely a more economical option for Singaporeans to use car sharing services.
However, we also need to take public transport into account. Singapore has a very well connected public transport system that is cheaper than renting a car through car sharing platforms.
Additionally, there are a number of ride-hail options in the country, from Grab to Gojek, and even smaller players like TADA and Ryde. Here's how the different car sharing options in Singapore fit public transport:
Price comparison for car sharing services versus hail drives / Photo credit: Vulcan Post
According to the table above, car sharing is the most cost-effective option, especially with companies like Shariot, which offer extremely competitive rates starting from S $ 1 an hour.
One point of criticism, however, is that many car sharing platforms require users to pay a monthly membership fee or registration fee, or to cover the cost of gasoline.
Convenience as a key drawing
Photo credit: CarBuyer Singapore
Singapore is an extremely fast-paced city and convenience is valued by most Singaporeans.
While car sharing may be affordable, it is not the most convenient option available. In fact, it probably takes longer than booking a cab or hail service.
Although Tribecar has a wide variety of rental vehicles such as motorcycles, vans, and trucks, users must return the car to the exact parking lot where they picked it up. If the user did not pick up the car in a parking lot near their home, they would have to make every effort to return it after the lease ended.
Electric car sharing company BlueSG is using a more convenient 'point A to B' model that eliminates the need for users to return the car to the location where it was picked up. However, you still have to return the BlueSG car to a designated parking space.
Although the company currently has a fleet of 667 shared Bluecar electric vehicles and 1,487 charging stations, it is still difficult to find a car, especially in areas of high demand.
For Drive Lah, it is the first peer-to-peer car sharing platform in Singapore that private car owners can use to rent out their vehicles. To pick up the car, you will need to meet your host at a designated pickup point. After the time is up, you will need to drive the car back to your host.
Car sharing works as a short-term solution
It is unlikely that Singaporeans will use car sharing as a common mode of transport such as trains, buses and even hail trips.
According to transportation economist Walter Theseira of the Singapore University of Social Sciences, car sharing will only work well in countries where "car capital costs are low and driver costs are high".
However, in the case of Singapore, public transportation and even hail rides are relatively affordable, making car sharing a less attractive option.
The demand for car sharing is likely to fall as Singapore's borders gradually open and Singaporeans can go abroad again.
Although Singaporeans occasionally use car sharing services for family outings or special long-distance travel, it is unlikely to become a daily mode of transport in the meantime.
Selected image source: GetGo