Ride sharing could increase vehicle utilization

Keeping capital equipment running is a cornerstone of the lean production philosophy pioneered by automakers. The longer you can keep a $2 million machining cell in operation, the faster you can amortize production costs.

Ironically, the cars produced by that strategy would fail lean-process capital allocation tests. Our cars tend to sit unused for most of the day – taking up space in parking lots (and generating extra costs for cleaning if you park too close to the trees).

Internet technologies could change that equation. Since its inception, the Internet has squeezed waste and inefficiency out of many industries. Retailers have eliminated massive amounts of product-stocking costs by getting rid of physical stores and filling customer orders from warehouses. Internet-based data sharing allows components suppliers to coordinate deliveries to OEMs just in time, allowing OEMs to slash parts inventories.

Internet-based services could revolutionize vehicle ownership, allowing cars and trucks to be used at rates closer to the equipment that produces them. Instead of being something that one person owns, a car could become a transportation resource constantly in use, going from one user to the next.

So far, the primary use for this concept has been taxi-like services such as Uber and Lyft, a company that recently won a $500 million investment from General Motors (http://goo.gl/zrzkib). Ford recently announced plans to a use ride-sharing-like technology to extend the reach of mass transit systems in Kansas City with tech company Bridj (http://goo.gl/vsNdtn).

And car companies and investors are studying models similar to European bicycle-sharing services, where a subscriber would grab the closest available vehicle in a parking lot, drive it for a few hours, then leave it in another location for the next driver.

So will we go from buying vehicles to paying a monthly fee to use a shared pool of cars and trucks? Possibly. Many of the lifestyle changes that the Internet has created were unthinkable before they happened – investing in the stock market without a broker, booking international travel without an agency, or buying a used pickup from someone in another city without taking a test drive.

But wholesale change isn’t likely. The goal of car ownership isn’t capacity utilization, it’s freedom and flexibility. People don’t buy cars to get from Point A to Point B. In many places, mass transit offers that function for a lower cost. People buy cars to go from Point A to Point B to Point C, whenever they want, and that’s not a generational distinction.

Ignore the stereotype of the cellphone-obsessed teen who couldn’t care less about driving. Recent research from the Insurance Institute for Highway Safety shows that declines in youth driving were more about unemployment in that age group, not an assumption that mobile apps will replace physical transportation (http://goo.gl/2BybQj).

Ride sharing could influence automotive designs in the near future. I wouldn’t be surprised to see sharing trim packages that offer more-durable interior materials, quick-washable surfaces, and wireless data transponders. So even if the Internet doesn’t change ownership practices, it’s worth keeping an eye on the trend to see what sorts of materials and equipment OEMs will be considering in the future.