Tuesday, September 22, 2015

TRANSPORT SPECIAL...................... Mobility over ownership

Mobility over ownership


Emerging threats to the automobile industry such as Uber and driverless cars provide mobility via access rather than ownership. Research shows that this can lead to greater savings, less traffic, less pollution and a better quality of life

India has become a regional hub for the manufacture of small cars. We produce more than three million passenger cars annually.
The automobile industry, which includes scooters and motor cycles as well, accounts for about eight per cent of the GDP (that's roughly Rs 8 lakh crore), and contributes one fifth of all excise duty collected. It provides jobs to 2 crore people. It is also considered the single largest job creator every year, employing ten lakh new drivers. Naturally, it is a darling of both the government and investors.
Most of the famous foreign brands of automobiles are already manufacturing in India.Their Indian competition comes from companies like Tata, Mahindra, Bajaj, Hero, TVS and others. This week, while unveiling new models of cars, Chairman Anand Mahindra said that the car industry was facing a threat from the emergence of Uber and Ola. This was not meant to add to the already negative sentiment against these companies from taxi unions. It was meant to be a factual statement of the disruptive force of mobile app-based taxi services. He said that society was moving away from the concept of ownership to the concept of access. What the youth want is mobility, not a car. Uber and Ola have unleashed the sharing economy which makes it possible to have comfortable mobility without owning a car.
Before internet there was always the share-ataxi. When you get down at Dadar station or CST, four people get into a kaali-peeli. Because of high occupancy, this reduces the number of taxis required. But this arrangement works only at peak hours. During non-peak hours, many taxis just hang around waiting for passengers. Now imagine that all taxi services are `Uberized' and all vehicles are fitted with GPS enabled mobiles. That includes the black and yellow, the blue, the Merus and Easy Cabs as well as the Uber and Ola. And now imagine that all access is through mobilebased apps, which locates the nearest vehicle, and optimizes the routes. This enlarges the scope of the share-a-taxi phenomenon. Such an “imag ination“ of city-wide Uberization was carried out in a detailed research project conducted by Columbia University in 2012. The researchers applied their study to Manhattan. They also included the possibility of driverless cars. Manhattan has 1.6 million people, about 0.4 million trips per day, with an average trip lasting 11 minutes and stretching to two miles. Their research finding was simply astonishing. They concluded that costs would come down by 90 per cent due to savings from fewer taxis, lesser “empty miles“ and lower labour costs. The savings have a domino effect. Less cars means less traffic, less delays and less real estate required for parking. This translates to less demand for cars, and that's what Mr. Mahindra meant, when he said Uber and Ola can reduce demand. This also means lesser demand for car loans and falling real estate prices.Less demand for loans means falling interest rates. This chain of reasoning could go on.
And if driverless cars catch on (such cars are already being tested on California highways by Google), then demand for drivers will also fall drastically.
For the automobile industry, this sounds like ascary scenario ­ declining demand, and less employment for drivers. But society will benefit immensely. Less traffic congestion on its own eliminates wasted human hours. Then there is less pollution and better air quality. Maybe real estate prices will fall enough for homes to become affordable. People will have shorter commutes.The cities will become walkable. Using renewable energy like solar on dedicated point-topoint mobility services will also enhance quality of life. As time is released from commuting, traffic or even driving, it could be channelled to other creative and recreational services. A smart city might emerge.
The change of paradigm is from demanding a car, to demanding mobility. The possibilities are endless.
AJIT RANADE

MM12SEP15

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