Why big automakers are launching new car-sharing programs

As a New Yorker living in midtown Manhattan, just steps from Times Square, Melody Ewing is probably among the Americans who are least likely to drive a car.

But over the past few months, Ewing, 32, has been cruising around the city with her boyfriend as beta testers for GM’s New York City car-sharing program, which launched on Thursday.

“We’ve been able to do everything from a spontaneous dinner in the city to going to a concert in New Jersey that wouldn’t have been possible by other transportation,” she said. They’ve even gotten used to driving to far-flung grocery stores to escape the crazily crowded midtown Whole Foods. “You can go in and shop, and feel like a human,” she said.

GM’s new car-sharing program, Let’s Drive NYC, is only the latest example of automakers betting big on car-sharing in an attempt to cater to city-dwellers who don’t want to own a car themselves. (It’s more Zipcar than Uber—customers rent the cars for a few hours or a day and drive it themselves—and has similar prices to Zipcar.)

BMW has been growing a similar program called DriveNow for the past four years in the Bay Area and in Europe. Audi has its own car-sharing feature in San Francisco. Fiat has started one in Italy. GM’s European unit is running a free smartphone app in Germany to let drivers rent out their own cars. And Ford is testing a peer-to-peer rental program in several U.S. cities.

The auto industry is adapting to a new reality where more young people are living in cities and getting around by public transit, observers say. Vishwas Shankar, an auto industry analyst with the firm Frost & Sullivan, said that car-sharing projects were a “huge opportunity” for big car companies.

“Almost all automakers have started to invest/grow their interest in shared mobility services,” he said in an email. “While the likes of Zipcar and Uber have already conquered a big chunk of the first wave of drivers and members, carsharing, which is seen to be a multi-billion dollar opportunity, has plenty to offer new entrants as well.”

A McKinsey report on the industry last week found that most cars sit idle 90% of the time; if more cars are shared, that could reduce the number of cars needed overall. In the U.S., there were 1.3 million car-sharing users and about 19,000 shared vehicles last year. By 2020, those numbers are projected to grow to 3 million members and 51,000 vehicles.

That’s not to say that the traditional idea of car ownership is going to disappear anytime soon: Car sales reached their highest level in a decade this August. But GM and its competitors are trying to catch up to new players in the industry like Google and Uber, and are betting that in the long term just selling cars to individual owners won’t be enough.

“We’ve come to the conclusion that our industry within the context of today’s traditional vehicles and today’s traditional business model is not sustainable in its current form,” GM executive David Tulauskas told the Detroit News.

The company’s NYC program caters to a certain type of New Yorker tired of subway delays and longing for the grip of the steering wheel. Right now, it’s available only to Ewing and several hundred other residents of a single high-end apartment building near Times Square. The company is planning to expand the program around New York and to at least one other city.

The rates of GM’s pilot program are similar to Zipcar’s, which is probably its closest competitor: GM charges $10/hour and $75/day, compared to Zipcar’s $9.25/hour and $89/day (in addition to a $70 annual membership fee in some plans). Residents in the building get three free hours a month—enough for the odd trip to Ikea. Maybe the biggest perk is not having to worry about parking; the automaker has partnered with a car garage chain in the city to give its users free parking across Manhattan.

Ewing said she’s used the car about once a week so far, for when she needs to make a big purchase or for trips upstate and to Atlantic City. While she was scared to drive in city traffic at first, she’s now hooked.

“It’s one of those things where the more you use it, the more it, at least for me, influences the way I wanted to get around,” Ewing said. “It’s nice not to have to always deal with the frenetic craziness of the city. You’re in your own little bubble, and it’s calm.”