Car manufacturers in Japan get into sharing business as habits change

Nissan also is studying the feasibility of a pickup service using self-driving vehicles.
Nissan also is studying the feasibility of a pickup service using self-driving vehicles.PHOTO: AFP

TOKYO (THE YOMIURI SHIMBUN/ASIA NEWS NETWORK) - As the car-sharing market in Japan rapidly expands, major carmakers have been pressing down on the accelerator to get a share of the business.

Against a backdrop of consumers shifting away from owning their own vehicle to sharing one, the carmaker business model centred on vehicle production and sales has reached a turning point.

In an underground parking lot in Tokyo's Shinjuku area, three Nissan Motor vehicles used in the carmaker's car-sharing service are lined up together. By completing a membership registration in advance and reserving a vehicle through a smartphone, a car can be borrowed for fees that start from 200 yen (S$2.50) for 15 minutes.

"I like driving but maintaining a car is expensive, so I'd never thought about buying one of my own," said one user, 44, from Tokyo.

Nissan entered the car-sharing business in January. It has 44 vehicles available in Tokyo, Osaka, Kyoto and elsewhere, and plans to add to the fleet.

Although no earnings targets have been indicated for its car-sharing service, Nissan president Hiroto Saikawa said that a business that generates profit by having cars in use generates a large added value.

It is also a source of great appeal, he added.

Nissan also is studying the feasibility of a pickup service using self-driving vehicles.

According to the Foundation for Promoting Personal Mobility and Ecological Transportation, car-sharing services in Japan have more than 1.32 million registered members, about a fivefold increase from five years ago.

An official of Park24, which operates the nation's largest car-sharing service Times Car PLUS, said one reason for the rapid growth was the spread of smartphones, which have made it easy to search for available vehicles and make reservations.

In the greater Tokyo area where car-sharing has spread, there has been a notable drop in car ownership in recent years. In 2011, 71.2 per cent of households in the area had a private vehicle; in 2017, this figure fell to 64.6 per cent.

Expecting the car-sharing market to continue growing, Honda Motor also entered the business in earnest in November.

Toyota Motor has formed a tie-up with Park24 and is pushing ahead with a car-sharing trial in which rented vehicles can be returned to a different place from where they were picked up.

Outside of Japan, in addition to car-sharing, some ride-sharing services also are growing quickly. These services involve a regular person driving his or her private vehicle to pick up and transport customers.

Uber Technologies, a US company that developed a ride-sharing mobile app that links drivers and customers, is the poster child for this field.

In Japan, such services are, in principle, banned as unlicensed taxi operations. But Toyota has made an investment in Uber, and also announced it will acquire a stake in Grab Holdings, a Singapore-based company providing ride-hailing services in South-east Asia.

The trend has industry insiders worried.

"If more people share vehicles, sales will go down," one major carmaker official said.

However, behind these major carmakers' efforts to strengthen their presence in services, including the car-sharing business, lies a shared sense of crisis that they must avoid being left behind as the market expands.

Senior researcher Hirotsugu Sakai at Mitsubishi Research Institute said: "If self-driving cars become a reality, vehicles will change into just being one method for getting around, and the value of owning one will decrease."

According to the institute's calculations, the decline in new vehicle sales will cause a drop of 500 billion yen by 2030 in the added value generated through the production of cars by Japan's domestic auto industry. The added value in 2016 was 7 trillion yen.

On the other side of the coin, added value created by the transportation service industry, including car-sharing and self-driving taxis, is forecast to increase by 2.2 trillion yen.

"I have decided to 'redesign' Toyota from a car-making company into a mobility company," Toyota president Akio Toyoda said in May. "A mobility company is a company that provides services" related to the movement of people around the world.

Much attention will be focused on whether carmakers in Japan can build an earnings structure that includes service businesses, rather than just businesses centred on vehicle production and sales.

First launched in Switzerland in 1987 for purposes such as easing traffic congestion, car-sharing services have since spread to other European countries and the United States.

In Japan, Orix Auto started a car-sharing service in 2002. It became possible in 2004 to receive a car without a face-to-face interaction, thereby enabling the use of pay-by-the-hour parking lots in cities for car-sharing services. This prompted more businesses to enter the market.