Car sales rise and car-share companies boom as pandemic upends transportation

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Car sales rise and car-share companies boom as pandemic upends transportation

August 12, 2020 Syndicated 0

Like many people in recent months, AnnaLiisa Ariosa-Benston of Brooklyn has seen her primary sources of income transform in the wake of the coronavirus pandemic. An arts event producer, she now is picking up odd jobs in renovation and design to make money. And to do so, she has found – for the first time in her ten years of living in New York City – that she needs a car.

Despite having used Uber and Lyft in the past, Ariosa-Benston now says she wouldn’t feel as comfortable sharing space with a stranger in a small vehicle. She recently tried to rent a car in New York City and found all the rental locations near her were booked out in advance or extremely expensive. In another attempt to find a car on a work trip in Atlanta, she checked at the desks of every single car company at the airport – all were sold out.

“I ended up renting a 14-foot U-Haul and drove that around all weekend,” she said. “It was ridiculous.”

Since the coronavirus pandemic first hit the United States, many people who previously relied on buses, subways, or ride-hailing services are opting for other ways to travel to avoid sharing space – and germs – with strangers. As public transportation and ride-hailing companies see deep cuts in their profits, car sales are on the rise. The pandemic could also ultimately benefit vehicle sharing companies like Gig, Turo, and Zipcar, said Maite Bezerra, an analyst at the global tech market advisory ABI Research.

Even as some states approach reopening, consumers will remain wary of public transportation and the demand for rental vehicles and bike-share services will probably increase, Bezerra added.

Tough times for public transit, Lyft and Uber

Public transportation has been pummeled by the pandemic. The Bay Area transit system Bart is losing $37m a month from decreased ridership and a decline in sales tax revenue and the MTA in New York City saw up to a 90% drop in ridership in the weeks following the coronavirus lockdowns. About 47% of consumers plan to reduce usage of public transport in the future, according to data from the market research firm Euromonitor, even in a post-coronavirus world.

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Ride-hailing firms such as Uber and Lyft, too, are facing growing threats. Analysis from ABI Research has forecast up to a 70% decrease in demand for ride-hailing services over the course of 2020. The plunge in numbers is a huge hit to Uber’s goal of profitability – one it was supposedly on track to reach in 2020 after losing $8.5bn in 2019.

Uber in its earnings last week reported its core ride-hailing business was down 73% from the same time last year. The company is now scrambling to bulk up its investments in other forms of revenue, increasing the size of its delivery operation Uber Eats and attempting to purchase the food delivery platform Grubhub.

Lyft, which releases its earnings on Wednesday, is expected to report revenue 60% lower than it was this time last year. In July, the company reopened its car rental service in the Bay Area, which allows users to rent cars for days or weeks at a time. It has since expanded that rental business to Las Vegas, Miami and Seattle.

While the pandemic represents a hurdle for public transportation and ride-hailing startups like Uber and Lyft, it has brought a rise in care sales among those who could afford it.

The pandemic has created challenges for Uber and Lyft. Photograph: Gene J Puskar/AP

A third of consumers surveyed by consulting firm McKinsey & Company said they valued having their own car more now than they did before Covid and 93% were using cars more in the era of social distancing, according to a Google consumer insights study.

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About 44% of consumers under 35 surveyed by the consultant firm Capgeminiare are planning to stop using ride-hailing services for health reasons and 13% plan to permanently shift to a personal car as a primary means of transportation, even after the pandemic ends.

Eugenie Grey, an influencer based in New York City, said she had abruptly stopped using public transportation and ride-hailing companies when the city implemented its shelter-in-place order this year. She ultimately returned to Los Angeles to retrieve a car she had left there when she moved to the east coast.

“When I originally moved here it was so annoying having a car I paid to ship it back,” she said. “I didn’t think I would ever bring it back again, but I’m bracing myself for a second wave in a few months and don’t want to rely on public transportation.”

A boon for car-sharing services

But just 18% of American households have enough money to buy a car in cash, and amid the pandemic, unemployment is on the rise.

For Americans who can’t affordto outright buy a car or don’t want to commit to car payments, car sharing services such as Gig, Turo and Zipcar have presented a different option.

Zipcar has seen a “drastic increase” in reservations in recent weeks as some shelter in place measures lift, a spokesman told the Guardian. Riders in New York City and the Bay Area reported Zipcar being booked out weeks in advance.

“We’re adding hundreds of cars back into our fleet each week to meet this growing demand,” the spokesman said.

Zipcar sent out a mass email to users in mid-July apologizing for “frustrating” issues with its service as it struggled to meet the soaring demand for vehicles “from current and new members”.

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The peer-to-peer car sharing service Turo has also seen business that fell off early in the pandemic rebound as more people became comfortable with taking shared cars to travel, a spokesman told the Guardian.

“People now want a car more than ever, but the economics don’t always work,” the spokesman said. “We are seeing Turo being used by people who don’t want to take the plunge to buy a car yet but want to take a trip or two.”

Uber did not respond to request for comment. Lyft declined to comment.

As for Ariosa-Benston, after her struggles to find rentals in both Atlanta and New York, she has purchased her own car after moving in with a friend to save money.

“It involves some sacrifices, and everyone is really going through a lot,” she said. “But if you don’t have a vehicle, you feel really, really disconnected.”

“I feel I’m kind of going back to the American dream,” she said, “returning to this ideal of a teenager, where when you have a car, you have freedom.”

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