How Car Sharing is different in Asia because of dense urban environments

by Nicole on November 20, 2017

The average car is only in use 5% of the time, with the number of megacities set to grow from 31 to 41 by 2030, which will house 9% of the global population. The time has come where we need to rethink the concept of car ownership.

Hong Kong is the 4th most densely populated city in the world. Public transportation is convenient and when you use a car it’s activity based not a part of your daily commute. The tax on owning a car is high however, car sharing services have been slow to roll out in Asia.

Car sharing has been around in Germany for a decade, the concept is proven but it’s yet to roll out in Asia because the challenges are different due to the density of the urban population. For comparison Berlin has a population of 3.5M and has a density of 3,944 inhabitants per km², Hong Kong has a population of 7.25M and a density of 6 690 persons per square kilometer, and Kwun Tong, with 57 250 persons per square kilometer.

Traditional methods of car sharing aren’t working well in Hong Kong, let’s take a look at why.

Free-floating car sharing is popular in most US and European cities where street parking is possible and the price of parking tickets is somewhat reasonable. In Hong Kong parking is at a premium, making it difficult to find a place to leave the car when you get to your destination.

Hong Kong competitor employs Peer to Peer car sharing and they are having a hard time with supply and demand. Most people in Hong Kong don’t use their car during the week, but mostly on weekends which is when most people are also looking to use a car. Peer to peer is a great idea but it would need to be in combination with a fleet of cars.

Audi has an active program in Hong Kong called Audi at Home, though it’s not exactly car sharing. It’s a concierge service where they bring a car to you. They are monetizing the floating stock of the car dealership. It’s smart, cars sit in dealerships sit idol nearly 100% of the time.

Porsche and Cadillac are offering a subscription model in the US, where you pay a monthly fee and you can access to cars. This model is too progressive for the current state of car sharing in Hong Kong. Right now, XT Cove is in the education phase explaining to people that you can unlock, start or stop the car with your phone is very new. Let’s not forget Zipcar has been in the US for 10 years, so the access to the concept is already widely accepted.

Owning a car rather than having access to it is a different mentality.

Another interesting difference to western markets is that most people want 7 seater cars not small cars to get around the city or sporty cars for a night out. Sports cars aren’t meant for a family, in Hong Kong you often live together as one big family, from grandma right down to the babies. When you head out for the weekend, you have to take your grandparents as well.

Uber is struggling to have a large enough supply of cars, the price of Uber is almost always significantly more expensive than a regular taxi. Driver incentives have to be quite high as there aren’t enough cars in their fleet. Uber has overcome this problem in other cities by buying cars and leasing them to drivers. This isn’t possible in Hong Kong because the price of adding a car to their fleet is twice the price of the car.

Services like Zipcar have been around in the US for a decade, the concept is proven but it has yet to take hold in most of Asia.

In a city that has no parking spots and a tax that doubles the price of cars Cove Drive is entering the market looking to be among the first to bring car sharing to Asia.

Cove Drive is starting their pilot project by partnering with property management companies to place cars in their parking garages. With virtually no public parking garages finding space for the cars is the biggest and most expensive challenge.

The initial idea is simple, you share a gym and pool and now you can share a car. They’re starting in a mall in Hong Kong with a fleet of their own vehicles with plans to add in user vehicles in the future.

You pick up and drop off the car in the parking lot of your building/mall.

Currently, they’re working with Land Rover Jaguar and Infinity cars, but they’re ready to work with all types of cars with their platform.

In order to unlock the doors and start the car through their app, they needed to create a workaround because no car maker was going to give them access to their BIOS or unblock their ODB2 port. It’s important that they are able to immobilize the car in case it gets stolen.

Having access to car information means access to driving data, they are looking to be ready to incorporate Peer to Peer car sharing into their model. For peace of mind if you’re going to allow strangers to drive your car you will want to know that they are good drivers. The workaround would allow them to gauge your driving, if you are too reckless you’ll get a warning and possibly banned from the service.

Since they have created a workaround to access the cars driving data they could also work with insurance companies and sell them driving data.

Though their model is not peer to peer car sharing, they are ready to incorporate, in conversation with Founder XT Khaw mentioned the success of Food Panda, a food delivery service that typically uses scooters to shuttle food around the city. However, in order to grow to the default service in most Asian markets, they partnered with their logistics competitors rather than trying to buy them out and own all aspects of the service.

This Singapore startup entered had a soft landing in Hong Kong through the Infiniti Innovation Lab, whose current group of startups were focused on the future of retail. In an interesting twist Cove Drive’s first round of funding came from InMotion Land Rover Jaguar’s venture fund who has proven to be a strategic partner as they’ve provided all the cars for the pilot program.

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