The Rise in Car Sharing and Ride Hailing Services
Car sharing and ride hailing services have both changed the way we get around. As the need for convenient transport on demand increases, so does the popularity of these services. Increased use of smartphones and mobile apps, the expansion of services like Uber and Lyft into new cities and towns as well as increased affordability of these services have also contributed to their growth. So, what exactly is car sharing, how does it compare to ride hailing and how are these services affecting the way that we travel?
In this article, we provide an overview of the key differences between ride-sharing and ride hailing, as well as how the rise in popularity for these services is changing attitudes towards public transport and car ownership. This article will cover:
Car sharing vs Ride hailing: What are the key differences?
Car sharing, also known as carpooling or ride-sharing, usually refers to a service where multiple people traveling in the same direction share a car. This service is typically used for commuting or long-distance travel, and it’s often more cost-effective than taking a taxi or renting a car. Examples of ride-sharing services include Liftshare and BlaBlaCar.
Ride hailing usually refers to individuals hiring a personal driver to take them to a destination. In the past, this used to be a traditional taxi service. Now, there are many more ride hailing platforms available, such as Uber and Lyft, to hail a ride from practically anywhere.
It’s easy to get confused, so we’ve outlined below the key differences between them:
1. Type of service
Car sharing allows multiple riders to reach their destination sharing a vehicle, as long as the ride is going in their direction. The car stops at different locations to allow passengers to drop off at their destination. Unlike carpooling, where riders need to have a prearranged arrangement before sharing a vehicle, car sharing allows different riders to share a ride on-demand.
On the contrary, ride hailing involves a rider engaging a personal driver to take them to their destination. A rider doesn’t necessarily have to go the driver’s way to get this service. The driver takes the rider’s route to meet their needs.
Over time, technological innovations have been integrated into ride hailing, making it more precise and efficient than ride-sharing. One major innovation is the use of apps. App-based ride hailing allows riders to locate and connect with drivers more efficiently. As a result, there’s a quick and more straightforward match between drivers and ride hailers. Digital maps also make things easier by enabling drivers to locate even unfamiliar routes not to miss their way.
This level of technical precision is not always the case with ride-sharing. Since most ride-sharing drivers are independent, they may be less eager to embrace certain technologies. On the contrary, ride hailing drivers work under third-party companies that leverage technology to drive more sales.
3. Driver Employment
Ride-sharing services are usually provided by drivers not contracted or employed as professional drivers. Most times, drivers pick up passengers while going about their daily activities.
On the flipside, ride hailing services engage proficient drivers employed or contracted by ride hailing companies to offer their driving services. This means you’ll most likely get more professional services from a ride hailing service driver than from a ride-sharing service driver. This doesn’t imply that drivers who offer car sharing services are not well trained. However, you cannot remove the extra touch of competence when working as an employed professional.
Owing to the nature of their operation, ride hailing companies have their vehicles heavily insured. When a driver begins a ride to their destination, they’re under insurance cover. What’s worth knowing is that this insurance package covers the driver, passenger, and passersby.
However, this coverage doesn’t apply to ride-sharing services. Although conversations are going on about ensuring ride-sharing companies provide insurance coverings, many haven’t started providing such.
5. Environmental Impact
Because ride-sharing can accommodate different passengers at a time, there will be no need to have too many cars on the road transporting individual passengers simultaneously. Hence, this will help manage the volume of carbon emitted into the environment.
On the contrary, ride hailing services may not offer anything helpful for the environment as vehicles can only transport one passenger per time. Ultimately, as the number of passengers demanding ride hailing services increases, more cars will need to get on the roads causing a threat to the environment through air pollution.
6. Business Structure
Typically, ride hailing services have a more structured model of operation. Most ride hailing service drivers have to be registered and licensed before commencing operation. In many cities, the application process for becoming a driver is costly and strict. Specific standards must be met and kept by drivers.
It’s a different case with ride-sharing drivers as they don’t need to undergo tedious application procedures before commencing operations. Drivers work as independent contractors and operate a quasi-franchise business model. This difference in business structure can make drivers offer different prices for their services and attract more riders.
What are the different types of car sharing?
Car Sharing vs. Traditional Car Rental
Car sharing is a type of car rental that’s different from traditional car rentals in that it’s aimed at those who want to rent cars for short periods of time (for example, a few hours) and only pay for their usage (how long you have the car and how far you’ve travelled).
Additionally, it differs from traditional car rental in that car sharing gives you access to a car at any time, not just during business hours. Cars are usually spread around towns in reserved parking so it’s quite likely you’ll be pretty close to one of these car parks.
There are two main types of car sharing available: commercial schemes that are a little like short-term car rentals and peer-to-peer car sharing where other people are allowed to use your car and vice versa.
Commercial Car Sharing
Commercial car sharing schemes are like short-term car rentals, currently available mainly in urban areas. They differ from traditional rental schemes in that you’ll usually have to collect the car from a street rather than a specific car-hire branch, and rental periods are also usually shorter.
In the UK, the largest commercial car-share provider is Zipcar, operating in London, Oxford, Cambridge and Bristol. Zipcar allows you to rent cars and vans by the minute, hour or day. If you’re in one of these locations, you’ll be able to rent a Zipcar for almost anything — a weekend away, a shopping trip or just your weekly supermarket shop.
Peer-to-Peer Car Sharing
There are two types of peer-to-peer car sharing: one type (pooling) connects people with drivers making similar journeys to one another. The other type allows you to rent other people’s cars or rent out your own car to other people.
So as well as being cheaper than a traditional car-hire firm, peer-to-peer char sharing could also make you money.
Commercial car pooling simply takes a concept we’re all familiar with — getting a lift to work with a colleague or having your child taken to school by the parent of a friend who lives nearby — and makes it official, allowing you to connect with people making similar journeys to the ones you want to make. This also makes car pooling far cheaper than taking a train or traditional car rental.
Naturally, you’ll need to be a little more flexible with your travel plans, pick-up and drop-off locations as this will depend on the driver offering the car-pooling service.
Peer to Peer Rental
Peer-to-peer car sharing allows private individuals to rent out their own cars to other individuals, with a company acting as the middle man to connect drivers.
Renting a car this way can often be less expensive than the traditional car-hire option, also with a wider range of vehicles available.
Turo is one of the largest companies operating in this space which allows you to either rent a car using the service, or rent your own car out. According to Turo, hosts make an average of £442 a month by renting their cars, keeping around 65-75% of the car’s rental price. Car owners are also able to set their own price or use the company’s recommended pricing.
Most popular ride hailing services in the UK
In a survey carried out by Lantana in three UK cities (London, Glasgow and Birmingham), Uber came out top with 91% of respondents (out of 1,050 respondents) having previously heard of them. 32% claimed to have heard of Addison Lee, which was followed by 18% for Gett. MyTaxi came in just behind with 14% while both Grab and Bolt / Taxify were known by 6% of participants. The bottom two were Ola and Blacklane with 4% and 3% respectively.
Most popular ride hailing services in the UK. Responses from survey carried out by Lantana in London, Glasgow and Birmingham. Source: lantana.com
How is car sharing and ride hailing affecting car ownership?
Ride hailing services like Uber and Lyft have had an impact on car ownership in the UK. As people have more options for on-demand transportation, they may be less inclined to own a car. A study by the RAC Foundation found that in London, where Uber is particularly popular, the number of licensed cars on the road fell by 3% between 2014 and 2017. Additionally, a survey by the same organisation revealed that one in five Londoners have sold a car or avoided buying one because of ride hailing services.
As ride hailing becomes more affordable and accessible, it may also lead to a decrease in the number of cars on the road, which can help to reduce traffic congestion and air pollution. Looking ahead, if ride hailing continues to affect car ownership in such a way, it could also affect the way that cities are planned and developed with fewer requirements for vehicle infrastructure.
However, it’s worth noting that the impact of ride hailing on car ownership varies depending on the location, and it may be more pronounced in urban areas where public transportation is more developed and ride hailing is more widely available.
As car sharing becomes more accepted in the UK, it also has the potential to reduce car ownership in the UK, making it more convenient and cost-effective for people to travel without needing to own a car.
Some studies have suggested that ride sharing can help to reduce the number of cars on the road, and therefore decrease traffic congestion, air pollution, and parking problems. For example, a study by the University of California, Berkeley found that every car sharing vehicle in the US eliminates the need for up to 11 privately owned vehicles.
Additionally, as ride sharing becomes more popular, it may encourage people to rely less on personal car ownership and more on public transportation, bike-sharing, and other forms of shared mobility. This is particularly true when it comes to the younger generation who have shown a preference for the sharing economy and the environmental impact that it creates.
Graph showing ride sharing / hailing / online taxi usage by brand in the UK in 2022. Source: statista.com
What does the future look like for car sharing and ride hailing?
Ride hailing companies, such as Uber, have been operating in the UK for several years, and have become a popular transportation option for many people. Car sharing companies, such as Zipcar, have also been operating in the UK for several years, but have a smaller user base compared to ride hailing.
Car sharing in the UK however is becoming increasingly popular for various reasons. For example, car sharing can provide a cost-effective alternative to owning a car, as users only pay for the time they use the vehicle. It also has the added benefit of increasing access to transportation for those who may not be able to afford a car or live in areas with limited public transportation options. Finally, car sharing companies are making it easy and convenient for people to find and rent vehicles through mobile apps, making the process quick and hassle-free. According to Statista, the number of users in the car sharing segment is expected to rise to 2.1 million by 2027 (currently 1.8 million).
As for ride hailing, this has gained popularity in urban areas for similar reasons — particularly for its ease and convenience through the use of mobile apps. With substantial investment into technology (such as GPS tracking, real-time demand forecasting) and the ability to offer more competitive prices along with a wider range of options, ride hailing has become the preferred option for many. According to Statista, the number of users in the car sharing segment is expected to rise to 18.8 million by 2027.
Thinking about a longer-term electric option?
If you’re looking to drive an electric vehicle on a longer-term basis but aren’t ready to face the costs of buying an EV outright, subscribing to one could be the right alternative for you.
By subscribing to an electric car on elmo (rather than leasing or buying), you enjoy all the benefits of using your own personal car without the risk and hassle of actually owning it.There’s no high upfront cost to pay – like when you buy or put down a deposit on a lease – and all the insurance, maintenance and breakdown costs are covered in the price.
You can choose your contract term from our flexible monthly subscription (just a 60-day minimum term), or our 12-month option for a reduced rate. Browse all our available electric cars here.