The car sharing has become a significant trend in the automotive industry. It is economical and can address the green house emission challenges. However, still a large number of drivers prefer to own a car rather than sharing it with other co-passengers. The young people prefer owning a car due to the status reasons as the middle-class consumer prefers owning a car a status symbol. There are several benefits of the car sharing concept such as it reduces the overall parking size of the cities and states. There is high potential of the car sharing business, and it can cannibalize the public transportation system. The primary competition of the car-sharing business is the personal car or self-owned vehicle. Therefore, the car-sharing need to match the independence, convenience and comfort of the car-sharing business (Habibi, Sprei, Englund, Viktoria, Pettersson, Voronov and Nimling, 2017). The business enterprise should ensure that there is ample availability of the cars, pick-up and drop facility, and competitive prices to attract the customers.
The car sharing is an innovative technology which can be used increase the mobility of the passengers and reduce the car utility. In the present times, the car sharing business is becoming increasingly popular add daily new cars or vehicles are added to the existing and the new operators. The car-sharing business has become the key mobility alternative. With this, competition among different business organizations is also increasing and the companies are looking for different sources of differentiation to give distinctive services (Ferrero, Perboli, Rosano and Vesco, 2017). In this essence, the present report conducts a feasibility analysis of the car sharing business in Riyadh.
Global Car sharing Market
In the present, the global car sharing market is expected to grow from 7.9 million users to 36.37 million users from 2015 to 2025. The car sharing market is present in 1790 cities all across the globe and the car sharing companies are trying to expand in other parts of the world. There are several major companies operating in the industry of car sharing, namely, car2go, Eduo Auto, Times Car Plus and Careco (Frost and Sullivan, 2016).
Market characteristics
The ride sharing market is a broad level of business, in which the internet companies bring together the passengers and the drivers. It creates online platforms for the seamless interaction of drivers and the riders. Several times, it includes transportation and passenger companies, which offer travelling to the customers at the private passengers companies. When a passenger requests a ride, the mobile application finds the drivers in vicinity and connects them with the users. There are several additional facilities of the ride sharing services, such as the consumers get uniform and reasonable price and the amount of traffic at the busiest roads, will be less. These online platforms charge a specific commission for helping the passengers in identifying the passengers, who are going in the same direction and organizing car-pooling services for them. In these services, the booking and the payment services are organized through online platforms. The car sharing services can be characterized by urban trips, short duration, and occasional need. The car sharing services has been recently launched in Dubai.
Consumer Characteristics
The car-pooling services have high potential in Riyadh market. The potential users of the car-pooling services are:
Students: The students are potential consumers of the car-pooling services as they have limited budget and high urgency. The transportation budget of car-pooling services is minimal; further, the students can reach on time with the car-pooling services.
Business professionals: There is high potential that the business professionals will use the carpooling services as they have a high level of work pressure and prefer to invest their time in productive activities. The driving time can be used to organize telephonic meeting with different stakeholders. There are certain benefits of the car-pooling such as car parking pressure, recruitment and retention, sustainability and financial cost savings.
Market characteristics of Riyadh
There are certain characteristics of the consumer market in Riyadh, such as there is average cars per family, and almost half of the Saudi families own one persona car. In the present Saudi transportation system is struggling with shortage of the parking space and excessive congestions at the busy localities (Boyac?, Zografos and Geroliminis, 2015). The consumers can book the consumer cars in advance. The car sharing services is quite popular in Dubai, UAE too. Careem and Uber are commonly used car-sharing companies in the country. There are significant differences between both the places. Firstly, Saudi has a huge land and trying to develop the business and trade.
The market analysis of the following market is analyzed through PESTLE analysis.
The PESTLE analysis is a macro-environmental tool, which can be used to analyze the external factors, which may impact the business operations of the companies in the car-pooling industry:
Political Factors: The legal policies and the law impact different industries. In the Saudi Arabia, the government prevents the women to drive. As a result, a large number of women rely on existing car sharing services like Uber and Careem (Dubai based service). On the contrary to other countries, the revenue of the company is higher on week-days and on the office hours. Most of the women use the car sharing services for daily commute to the office or other works (Zavis, 2015). Although the cost is higher than the regular taxi services, women prefer it as they are more reliable and safer than a taxi service.
Economic Factors: Since the exploration of the oil, Kingdom of Saudi Arabia is enjoying a healthy and strong economy. However, currently, the country is trying to diversify its economy to reduce its reliance on the oil. Several different policies have been introduced as part of the government vision for reimagining the Saudi economy for a post-oil future. The country has a special significance in international economy as it can bring or cut the oil production; therefore, it has a high significance in the crude-oil market. However, there has been significant decline in the oil market, which is the biggest challenge for the Saudi Arabian economy. As a result, the country is trying to encourage other industries and foreign trade and commerce. The increased commercial activities will have a positive impact on the car-pooling services (Fanack, 2015).
Social Factors: In Saudi Arabia, the average income of the household is higher than other countries. Therefore, people prefer to avail the services of personal drivers rather than using the car sharing services. It is considered that the car sharing services will negatively influence of the status quotient of the people.
Technological Factors: The technology will significantly impact the car sharing or pool services. The car sharing services are based on the digital adoption and the use of smartphones. The digitalization is booming in the country and the government is also focusing on developing the telecommunication sector to establish a robust infrastructure in the country (Euro Monitor, 2018).
Legal Factors: The government has made regulations, which prevent these foreign companies from directly hiring drivers. Rather these companies have to contact the local transportation agencies for hiring drivers (Nagy, 2015).
Environment Factors: The car sharing or carpooling services will have a positive impact on the environment of the country. It will reduce the greenhouse emission and also address the challenge of availability of the parking space.
The business model of the business outlines the main activities of the organization. The company will offer several services such as service models, car-sharing, point-to-point station based services between locations. The business model of the company is proposed by the utilization of Business Model Canvas (BMC). It is a strategic entrepreneurship tool which proposes the manner, in which the organization creates, delivers and captures its value. With the business model, it is proposed that the company becomes the biggest player in the car-sharing market. There are a few competitors in the market; therefore, it is important that the companies build strong brand recognition and create a pioneer position in the market. The business model canvas comprises of nine different building blocks such as:
Customer Segment: The Company will operate in large scale in the city of Riyadh. It assures that the company covers the business and the business areas during the demand of transportation. It manages the travel fluctuations during high or low level of demand. The most important customer segment of the business organization is the students and the business professionals. The students are attracted towards low cost and timely services. These users are charged fees for per minute utilization of the services, which includes the charges of fuel cost, parking and maintenance. In demographic segmentation, the company is focusing its marketing efforts on the young adults. They are more aware of the innovative technology and high awareness of the environmental issues (Jung and Koo, 2018). The corporate clients are an important customer segment of the company as they are can afford high expenses; however, require timely services. They also regularly avail the services for daily commutation to office.
Value Proposition: The value proposition of the company is to offer environmental-friendly and cost-effective services to the customers. The services should complement the other available transportation services and addressing the consumer demands, which cannot be addressed by the public transportation of the city. The company will offer driver-based services to the customers and drive them according to their comfort. The company will promote or advertise its value proposition through its website and mobile application. There main value proposition of the company, which distinguish the company from others are accessibility, flexibility, practicality and environmental friendly characteristics (Meyer, 2014). The company can develop a smartphone applications, which will allow them to access the information, make reservations and they can access the call center of the organization without any additional charges.
Channels: The Company will create a marketing campaign to advertise its services at the high circulation points of the company. The main channels through which the company can access the customer are the website of the organization, mobile application and the call center. The company should provide a detailed discussion regarding different services, registration services and option to change the account (Kopp, Gerike, and Axhausen, 2015). The customers can make reservations through website, mobile application or the call center.
Customer Relationships: The communication with the customers is based on website or app of the company. It is a self-service model; therefore, all the necessary means will be provided so that the customers can easily operate the system (Dias, Lavieri, Garikapati, Astroza, Pendyala, and Bhat, 2017). The customer relationships will be automated; however, customer executives will communicate users, if they are not getting satisfactory services.
Key Resources: There are several key resources, which are required so that the business can operate successfully. The main resources are, namely, the parking models, service teams, relationships with customers and supervision of business. The company will conduct all of its business through its application and website. The service team will maintain its relationships with customers and supervise different services or activities through information system. There are other key activities of the organization, such as, maintenance of vehicle, managing the inflow of the customers and the customer services.
Revenue Streams: The primary revenue stream of the organization is the revenue earned by the transportation companies. The company will make alliance with these companies to hire drivers and charge small fees from the users as well as the drivers of providing timely transportation services (Clark, Osterwalder and Pigneur, 2012). It will also charge an additional fee from the customer base to create an active profile. The users can pay the annual fee at one go or in installments.
Key Activities: There are several business activities or the key operations of the organization. The company will manage the fluctuation in demand and create a dynamic pricing model, which can address the pricing of the companies. The business organization also has to disturb the traffic so that the car rentals remain available at the time of high demand.
Key Partnerships: The Company has to establish key partnerships with the car rental companies, fleet management and logistics. The companies also have to create partnerships with the marketing and advertising companies. The company has to establish partnerships with its drivers for the maintenance and refueling of the cars. The company should establish partnerships with vehicle cleaning services (Campbell, Gutierrez and Lancelott, 2017). It will create uniform cleaning services. The company will create partnerships with the local municipalities for the service regulation, and providing parking facilities to the services.
Cost Structure: The cost structure of the company encompasses several different resources. There are several aspects of the cost structure, namely, acquisition of vehicles, maintenance cost, advertising cost, cleaning and refueling cost and insurance cost.
|
Key Partners · marketing companies · drivers · vehicle cleaning services · local municipalities · car rental companies · fleet management · logistics |
Key Activities · dynamic pricing model · Analysis of traffic and congestion · Establishing partnership with drivers |
Value Proposition · cost-effective services to the customers · customer relationships will be automated · environmental-friendly services · accessibility · flexibility · practicality |
Customer Relationships · website or app of the company · automated |
Customer Segments · Students · Business professionals · young adults · Corporate Clients |
|
Key Resources · parking models · service teams, · relationships with customers · supervision of business |
Channels · website or app |
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Cost Structure · acquisition of vehicles, · maintenance cost, · advertising cost, · cleaning and · refueling cost and · insurance cost (Osterwalder and Pigneur, 2013) |
Revenue Streams · primary revenue stream · company will make alliance with transportation companies |
Conclusion
Conclusively, it can be stated that there are several benefits of the car sharing concept such as it reduces the overall parking size of the cities and states. In the Riyadh market, there is high potential of the car sharing business. It has been analyzed that the primary competition of the car-sharing business is the self-owned vehicle. Therefore, the car-sharing business has to adopt the independence, convenience and comfort of the car-sharing business. The business enterprises should ensure that there is high availability of the cars and competitive prices, which attract the customers. In this regard, the present report will conduct a feasibility analysis of the car sharing services. PEST Analysis has been conducted to analyze the external environment of the organization. Along with it, business canvas has been proposed for the introducing car sharing services.
References
Boyac?, B., Zografos, K. G., and Geroliminis, N. 2015. An optimization framework for the development of efficient one-way car-sharing systems. European Journal of Operational Research, 240(3), 718-733.
Campbell, A., Gutierrez, M., and Lancelott, M. 2017. Operating Model Canvas. Van Haren Publishing.
Clark, T., Osterwalder, A., and Pigneur, Y. 2012. Business Model You: A One-Page Method For Reinventing Your Career. John Wiley and Sons.
Dias, F. F., Lavieri, P. S., Garikapati, V. M., Astroza, S., Pendyala, R. M., and Bhat, C. R. 2017. A behavioral choice model of the use of car-sharing and ride-sourcing services. Transportation, 44(6), 1307-1323.
Euromonitor. 2018. Digital Consumer in Saudi Arabia. . [Online]. Avaialable at: https://www.euromonitor.com/digital-consumer-in-saudi-arabia/report [Accessed on: 19 May 2018].
Fanack. 2015. Economy. . [Online]. Avaialable at: https://fanack.com/saudi-arabia/economy/ [Accessed on: 19 May 2018].
Ferrero, F., Perboli, G., Rosano, M., and Vesco, A. (2017). Car-sharing services: An annotated review. Sustainable Cities and Society.
Frost and Sullivan. 2016. Future of Carsharing Market to 2025. [Online]. Avaialable at: https://www.frost.com/sublib/display-report.do?id=MB4D-01-00-00-00 [Accessed on: 19 May 2018].
Habibi, S., Sprei, F., Englund, C., Viktoria, R. I. S. E., Pettersson, S., Voronov, A., … and Nimling, A. B. 2017. Comparison of free-floating car sharing services in cities. In European Council of Energy Efficient Economy (ECEEE) Summer Study, Presqu’île de Giens, France, 29 May–3 June, 2017.
Jung, J., and Koo, Y. 2018. Analyzing the Effects of Car Sharing Services on the Reduction of Greenhouse Gas (GHG) Emissions. Sustainability, 10(2), 539.
Kopp, J., Gerike, R., and Axhausen, K. W. 2015. Do sharing people behave differently? An empirical evaluation of the distinctive mobility patterns of free-floating car-sharing members. Transportation, 42(3), 449-469.
Meyer, M. 2014. The Business Model Canvas Playbook: Design and Advance Your Personal Business Model on 100 Blank Canvases to Evolve Your Lean Startup Into a Successful Company. Createspace Independent Pub.
Nagy, E. 2015. How Uber Is Changing Life For Women In Saudi Arabia. Fast Company. [Online]. Avaialable at: https://www.fastcompany.com/3048461/how-uber-is-changing-life-for-women-in-saudi-arabia [Accessed on: 19 May 2018].
Osterwalder, A., and Pigneur, Y. 2013. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. John Wiley and Sons.
Zavis, A. 2015. Banned from driving, Saudi women turn to Uber and other ride-share apps. LA Times[Online]. Avaialable at: https://www.latimes.com/world/middleeast/la-fg-saudi-women-rideshare-apps-20150507-story.html [Accessed on: 19 May 2018].
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