Progress is all around us, boosting performance and industry success rates at every corner. Tech advances give people a range of gadgets, products, and services that make their lives easier on a daily note. While these novel business models may be economically efficient, it is equally important to keep things eco-friendly and sustainable, and the ride-sharing industry is one great way to do so.
The practice of accessing a website or app in order to call a car for transportation, and sharing this car with other individuals by making stops along the way is what the industry is all about. While it may seem a bit overwhelming, it has actually turned out to be a rather convenient concept. Open-mindedness and awareness are key factors that support such endeavors and promote further use in different transport situations. Hence, the best strategy is learning more about the industry, understanding any underlying issues and discovering different ways to use it to each one’s advantage.
Ride-Sharing Industry Overview — Crucial Statistics
- At a 20% CAGR, the ride-sharing market value should reach $220 billion by 2025.
- Smartphone penetration into the market is the key to industry businesses’ success.
- A quarter of the US population uses ride-sharing for transport at least once a month.
- There are great differences between drivers in different segments of the industry.
- Safety risks and insurance expenses are great impositions for all ride-sharing drivers.
Ride-Sharing Market Size
1. Market size is projected to surpass $220 billion by 2025, at a rate of nearly 20%.
The estimated size of this segment of the transportation market for 2018 amounted to an impressive $61.3 billion. Just the year before that, the estimated value used to be $10 billion less, showing how exponentially things can change in this vibrant environment. By 2025, it is bound to reach somewhere between USD 218 and 220, at a Compound Annual Growth Rate (CAGR) of 19.87%.
2. The ride-sharing market is a little over 1% of the total VMT in the USA.
Despite the substantial growth and positive projections, this market was only 1% of the total vehicle miles traveled (VMT) in the United States for 2016. While this percentage has certainly grown until the present date, it will definitely take a lot more to overcome major obstacles that keep this mode of traveling at a considerably lower rate in comparison to car ownerships.
Source: McKinsey & Company
3. Using a ride-sharing app is as convenient as it gets, yet not convenient enough to overcome constraints.
People ordering their transport via a simple app or instant website prove this model to be much more convenient. However, in terms of the industry’s growth, it is still largely restrictive. The obstacles in the current model mainly revolve around the model’s limitations in regards to specific customers (shoppers, families, people with disabilities or delivery service options, for starters).
Source: McKinsey & Company
Ride-Sharing Industry Analysis — Growth and Projections
4. Rising vehicle and fuel prices are some of the main drivers of this industry’s growth.
The research and analysis performed by Orbis Research have shown that many of the people sharing their ride for regular transportation do so due to increased vehicle and fuel prices. Cars, in particular, pose a heavy financial burden, especially when purchased with a car loan or other financial assistance. Therefore, people across the USA are turning to alternative methods that cost less but would deliver the same personal and convenient transport service.
5. The ride-sharing market analysis shows smartphone integration as another industry boost.
Ever since smartphones and tablets have been released, they have enjoyed great popularity among users of all types and ages. Portability, pricing, easy and interactive access, as well as customizability to different circumstances are just some of the reasons for this boom. What is more, much of the same reasons have contributed towards spreading the idea of sharing a ride with other individuals, with the regular mobility conveniences available all the while.
6. The ride-sharing market share could benefit from more user-friendly ride designs.
As of yet, the standard cars with regular design models are not as well-fit for all the diverse types of users. The best way to go about this matter is to consider the most common circumstances under which people need cars. Recommendations include maximizing storage space for packages, fitting user-friendly seats (especially for families with small children), or even recreating a pleasant workplace environment with Wi-Fi, power outlets and privacy options for commuters in particular, seeing as numerous stats indicate a growth in the gig economy, with more and more Americans inclining toward freelance opportunities.
Source: McKinsey & Company
Ride-Sharing Statistics About User Behavior
7. Up to 25% of people in the US use a ridesharing service (Uber) once a month.
The frequency of their use may vary depending on individual needs and circumstances, but the minimum of once a month is still present across a quarter of the United States’ population. The most common reason for the use of Uber was transportation from a dinner or a party, which further speaks to these services’ convenience factor.
8. Ride-sharing industry analysis shows ride-sharting as a remnant of the past — 1 in 5 commuters carpooled to work.
Back in the days, especially in the 60s and 70s, carpooling was particularly popular, especially in suburban areas. However, the practice has changed drastically in the following couple of decades, reaching up to average two-car families of the new millennia. Now, up to 77% of US residents drive to work alone in a vehicle, and less than 1 in 10 commuters carpool to work.
Source: Deloitte Insights
9. Some ride-sharing apps come with complete logistics to match user behaviors and profiles for optimal transportation routes.
These apps have advanced greatly from their initial form, and nowadays include complete ride logistics to better optimize transportation services. Some of the apps feature schedules, while others simply compare and combine closely related user profiles, offering them a pooling option. Others, yet, include notifications and other features, all of which additionally are in favor of the service providers, as they get a clear insight into the business day-to-day activities.
What Drivers Think About the Ride-Sharing Industry
10. Drivers of taxis and ridesharing vehicles stand just as much risk of dangerous passengers.
The more debated issue about traveling with a stranger is the one about passenger abuse — the headlines are filled with news about passengers experiencing violence or other trauma under such circumstances. The much less debated issue is that of driver abuse — the risks they run and the trauma they sustain are generally ignored.
11. Measures intended to keep up with ride-sharing industry growth can be damaging for drivers.
The rise and growth of the industry have been pushing such transportation network companies to enforce all kinds of measures to keep up with the prolific progress. This often includes a focus on attracting and retaining as many drivers as possible, thus putting an emphasis on the race to quantity rather than paying attention to safety, as well as quality.
12. Great differences are noted between drivers in separate ride industries segments.
Sharing a ride or getting a taxi may not be too hard of a choice for the passenger, as they only experience a slight difference in charges. Taxis do calculate the speed and traffic into their fee, while Uber, per se, doesn’t. Drivers also get various treatment when employed in one or the other segment, especially since those working for services like Uber could make twice as much as a taxi drivers’ hourly net earnings in the same city or area.
13. High-hour drivers prefer taxi to a ride-sharing market.
It may be strange for some, but it turns out that most of the latter type of drivers only do this as a part-time gig that isn’t their primary source of income. This is so because taxi companies are a bit more regulated and stable forms of employment, which practically considers their drivers as independent contractors. Still, it all comes down to personal preference.
Ride-Sharing Companies and Self-Driving Cars
14. People are just as afraid of shared rides as they are of self-driving cars.
One research conducted in August, 2019 on passengers’ willingness to travel by a self-driving car shows that up to 53% of the surveyed individuals would prefer the self-driving option. There is a general fear surrounding the concept of riding solo with a human driver, and many of the horror stories related to attacked passengers confirm it. Willingness to ride in a driverless car was greater among the younger population (ages 18–24) than older ones (age 55+).
15. Uber ride-sharing service is running tests on promising features of self-driving.
The Uber transportation company decided to release and test run one of their self-driving cars back in 2018, and additionally put Rafaela Vasquez in the driver’s seat as the autonomous assisting driver. Regardless of the precautions, it ended in the death of one Elaine Herzberg due to system settings irregularities and later brought about a lawsuit on everyone. Nowadays, about a year and a half following the accident, Uber is back on track with the first self-driving cars being taken out once again — autonomous drivers included — in Dallas, TX, for city map out and other such procedures so far.
16. Robotaxi is the Tesla ride-sharing solution, estimated to be publicly available by 2020.
The public is expected to see the launch of Tesla’s Robotaxi solution which is intended to provide fully autonomous and driverless shared rides. This opens a lot of opportunities, especially in terms of interior design, but also in economic terms, since experts present this first truly autonomous car from Tesla to be the most viable solution for financial investment.
17. Google adds ride-sharing, as well as cycling and ride-hailing, to their latest Maps itinerary features.
The major tech giant Google is looking to keep up with the latest innovations, as evident from an official statement by the end of the summer ’19. The company is looking to get more involved in the sustainable modes of transport — cycling, hailing or sharing rides — and has therefore developed a respective feature, firstly across 30 states, and then available worldwide.
Source: Business Insider
How are Car Insurance and Ride-Sharing Services Correlated
18. Insurance policies for these service providers differ from the regular auto insurance you are used to.
As a matter of fact, people who choose to become part of a major ridesharing app in their neighborhood can likely even lose their existing car insurance policy. This is so due to the diverse risks that this type of occupation entails, and the types of insurance correlate to them — commercial, hybrid, personal policy, or phase 1, per se.
Source: The Balance
19. Out of the list of ride-sharing companies active nowadays, the majority only provide phase 2 and 3 insurance.
The driver of the shared vehicle providing the ride goes through three phases — phase 1 where they are waiting on a passenger, phase 2 where they are traveling to the pickup point, and phase 3 where they take the passenger from one place to another. The issue of phase 1 insurance remains pivotal, just as much as the hefty deductibles that companies of this kind tend to impose onto their drivers in order to insure them for the greater part of their workload.
20. Back in 2016, up to 90% of drivers working in the ride on industries didn’t have any specific insurance.
Some of the drivers would hold a regular auto insurance policy, whereas most would practically hope for the best and simply avoid getting specific insurance. A major reason for this is the fact that up to 92% of examined individuals deliberately didn’t tell their insurance companies about their positions in TNCs, or just didn’t know any better.
The realization that air pollution is contributing to global warming and the greenhouse effect, as well as the reorientation towards more sustainable solutions, is potential in itself. Proof of this is the points rewards programs related to cycling and other eco forms of transport, our present topic included.
The ride-sharing industry allows great opportunities for personal financial sustainability, as well as business growth, development and service advancement. And with the numerous benefits that the practice of sharing rides is expected to offer, all it takes is a better understanding of the concept to reach optimal results. And with all the conveniences that come along, the odds are a win-win for all!
People Also Ask
The practice of asking for a car in the area for transportation purposes via an app or website, and sharing that same car with other prospective passengers in the vicinity towards your and their location is known as ride-sharing.
An estimated 2 million drivers are currently working in this industry on a global level, with about half of them located in the US alone. However, considering that about 2/3 of them work for more than one company and that Uber alone is projected to have surpassed the 2 million mark of drivers, the global estimate is definitely moving closer to 3 million.
The Lyft ride-sharing company generated quite a bit of revenue in 2018, over $1 billion, however, the company is not yet profitable in the true sense of the word.
Uber’s essential business model is responsible for the major hardships towards profit. Before the end of the first half of 2019, it suffered a major loss, and will most likely end 2019 as one of few unprofitable companies which are worth over $50 billion.
New York City is arguably the number one city when it comes to the number of Uber drivers and this is largely so due to the massively potential market and customers.
According to the latest estimates, for 2018, the industry was worth a massive $61.3 billion, with the prospect of reaching more than triple this amount by 2025 — $220 billion.