As the sharing economy expands, consumers now have seemingly endless options for borrowing cars, bicycles, housing and furniture without the hassle of ownership.
Sharing is becoming second nature to consumers armed with mobile phones and constant connections to the Internet. But it’s not just limited to individuals.
Collaborative consumption is also becoming more important for large corporations looking to make their operations more efficient and less costly. Some of the products used by companies are a natural extension of the web: document sharing, project management tools and sales software are just a few. But sharing is also extending to physical assets.
Transportation is one of the most promising places to start. That’s where California-based startup Local Motion says it can use mobile technology to substantially cut the required size of corporate vehicle fleets – potentially saving companies millions of dollars on investments in new cars and trucks.
“Companies are getting used to sharing things. They share calendars, schedules, and other things – why not share mobility?” asks John Stanfield, chief executive of Local Motion.
Local Motion is somewhat similar to consumer-focused car sharing services. Corporations with large fleets hire Local Motion to install small boxes in their vehicles’ computer systems, allowing them to monitor driving data, remotely lock and unlock doors and track location in a company-wide sharing calendar. Employees can then use the mobile app to easily find a vehicle, while employers can see how they’re being used.
The result: nearly every Local Motion customer has been able to reduce the number of cars in their existing fleets by double digits.
“They are able to get much more out of every vehicle,” says Stanfield. “Through optimization, scheduling and sharing, we are reducing vehicles by up to 30 per cent.”
Since launching in 2011, Local Motion has secured a few high profile customers, including Google, Verizon and the City of Sacramento. It has also raised $6 million from venture capital firm Andreesen Horowitz to expand its sales team.
One might think that Google already had the technology and insight to track the hundreds of cars around its campus. But until Local Motion came in, Google was as blind as any other company. Over the last 18 months, however, Local Motion has been able to take dozens of vehicles out of Google’s fleet.
The search giant also faced another challenge that Local Motion helped solve. Before installing the tracking service, Google’s plug-in hybrid fleet was almost always low on charge. By monitoring how the cars were being used, it found that plug-in rates were extremely low – sometimes only five per cent. Local Motion used its software to remind drivers to plug the cars in after use, and that rate climbed up to 90 per cent.
Sacramento has seen similar results. Over the past few months, the city’s electric vehicle fleet has seen a 10 per cent increase in use, providing 30 per cent more employees with access to shared cars. The increase is a double win: it gets more workers driving electric cars and will allow Sacramento to use them more effectively, thus preventing the city from overbuilding the fleet.
Keith Leech, the city’s fleet manager, now wants to expand the service to a wider range of vehicles. “The City of Sacramento plans on expanding our vehicle sharing beyond routine passenger vehicles to several of our specialized vehicles that are considered to be low usage, yet mission critical to city operations,” he says.
Google is also expanding its relationship with Local Motion by adding the application to vehicles used for its new express shopping service, an offering designed to compete with online retailer Amazon.
There are a number of other companies providing tracking services for corporate fleets. The most direct competitor to Local Motion is Zipcar, which has used its considerable size and first-mover advantage to break into the corporate market. Others provide tracking services for safety or fuel optimization, but don’t have the same focus on sharing, says Stanfield.
There are 10s of millions of vehicles operating in corporate fleets around North America. Local Motion only has around 500 automobiles under management to date, so it has barely begun to tap the market potential.
Research consultancy Frost & Sullivan estimates there could be between 75,000 and 100,000 fleet vehicles being shared across enterprises by 2020.