Ride-hailing companies were counting on Americans becoming less-enamored of that new-car smell. What they didn’t expect was the renewed value of only inhaling your own germs.
U.S. car sales are suddenly rising again after falling off a cliff early in the coronavirus pandemic. Part of that can be attributed to a catch-up of sales lost earlier in the year, including a horrific 33% annual decline in April. It is also likely bolstered in part by the continuing exodus from American cities to areas where personal vehicles are more necessary.
Data from the U.S. Census Bureau shows sales from motor-vehicle and parts dealers rose 11% year-over-year in September. Similar Web data indicates that traffic for online auto marketplaces such as Carvana, TrueCar and
has been up by double-digit percentages year over year since June, with strength continuing into the first week of October, according to Citi Research. And last Wednesday,
reported what Chief Executive Mike Jackson called “the best-ever [quarter] in the company’s history.” He attributed the success not only to recovering demand amid low interest rates and supply, but also “a significant shift toward individual mobility,” which he predicted would persist for the next several years.
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were already having a nightmarish year as customers had less reason, and less inclination, to use the companies’ services. If the pandemic has made at least some people squeamish about sitting in an enclosed space with a stranger, then its effects on the investment case could be far worse.
Lyft co-founder and President John Zimmer says that, while 2020 might be a unique year, “there is no doubt” in his mind that the trend toward ride-hailing will continue over the next three to five years.
While he is probably right about the long run, it could be that the “massive societal change” Lyft referred to in its public-offering filing either takes longer to play out or winds up being a little less massive. If the trauma of the 9/11 terrorist attacks depressed air travel for three years despite the layers of added security, it is reasonable to expect the effect of a prolonged and far-deadlier pandemic could weigh for some time, and for some people permanently.
And then there is the purely economic drag: In a recessionary environment compounded by widespread job losses, the daily-commute case for ride-hailing already looks less compelling. Lyft says the average American spends $9,000 a year owning and operating a car, but back-of-the-envelope math shows ride-hailing is a comparative luxury for those who now want to avoid public transportation or lack access to it. Add in the potential for rising prices in places such as California—Uber has said prices could increase as much as 100% if Proposition 22 fails in November—and more common-use cases such as airport rides could begin to lose their allure for consumers once travel returns.
Ride-sharing’s heyday is still coming—it just might be a bit late.
Write to Laura Forman at email@example.com
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