The ugly market participation in the field of ground transportation.
Rideshare companies are shaking up the car rental industry and taxi industry in the US. In at least one segment we can track – company-delivered ground transportation – both the rental car and taxi industries will be smashed.
With decades of consolidation, three car rental companies, which now control 95% of the $ 28.6 billion annual US rental market, each have a number of national brands in their wake, following decades of consolidation.
- Hertz Global Holdings (HTZ) with Hertz, Thrifty and Dollar Rent A Car
- Avis Budget Group (CAR) with Avis, Budget, Payless Car Rental and Zipcar
- Enterprise Holdings (privately owned) which owns Enterprise, National Car Rental, Alamo and Enterprise CarShare.
The total rental car fleet in the US (all operators, including independent companies) declined by 5% year-on-year to 2.1
While there are segments of the rental car business that are doing well, there is one segment where passenger companies take their lunch: reimbursed ground transportation.
And Rideshare companies are completely eliminating the market share of taxis in the field of repatriated land transport.
These trends are reflected in data from Certify, a provider of online travel and expense management for businesses, based on its analysis of over 10 million business travel revenues and expenses.
Uber and Lyft's share of the three ground transportation business reimbursement segments – carpools, rental cars and taxis – reached 72.5% in the second quarter, according to Zertify. That's from 0% not too long ago!
In the first quarter of 2014, when Certify began reimbursement of shared rides, their combined share was 8% (almost all Uber).
At the same time, the rental share of the repurchased transport costs fell from 55% in the first quarter of 2014 to only 22% in the second quarter of 2018. The share of taxes dropped from 37% to only 5%:
Rideshare companies have a tremendous competitive advantage: they lose huge sums of money, and their investors like it and reward them – or rather themselves – with elaborate valuations. In fact, the investors are eager to give them more billions to blow, and so they eagerly subsidize each ride.
Rideshare companies also have the advantage in many countries that they are not regulated as a taxi company and thus able to avoid some expenses and rules.
Most importantly, passenger companies offer a service that drivers value and appreciate. This came about as the reputable taxi industry overslept the arrival of smartphones – and what an app-based system could do. While there are now apps for taxi services, it's not too late.
In terms of competition with rental cars in the segment of reimbursable ground transportation: it is logical. If you get off in a city you do not know, there is nothing better than to skip the car hire desk and be picked up by chauffeurs who will be at your disposal day and night throughout your stay. And the company willingly pays everything. This is a breeze for many business travelers – see above.
But within the ride-sharing universe of reimbursable ground transportation, it's a tumultuous battle for market share between Uber and Lyft. Uber was the first and had the little pieces that he initially carved out of rental cars and taxis. Then Lyft came and gradually began to immerse in Uber's market share. But both took a staggering share in taxis and rental cars, and Uber's market share loss for Lyft was not a big deal.
At the end of 2016, Uber's self-inflicted fiasco series led to a sudden shift in passenger numbers to Lyft, with Lyft increasing its market share from 7.7% in the fourth quarter of 2016 to 21.1% in the second quarter of 2018. Over the same period, Uber's share rose from 92.3% to 78.9%:
While Uber loses shares in Lyft as part of its rides, business travelers spend more money per trip with Uber than with Lyft, according to Certify. In Q2 2018, average per trip:
- Uber: $ 26.00
- Lyft: $ 22.37.
In many industries, newbies with a leaner product or good service can win a good share of the market until the established companies get the hang of it and fight back successfully, stopping their own market share losses. This does not seem to be the case if Uber and Lyft continue to smash the rental and taxi industry in the area of repatriated ground transportation, which has not yet shown a visible pushback effect.