Car Clubs / Car Sharing Research Project

Car Share and Car Clubs: Potential Impacts
(Final Report)

3. The Operating Environment

3.1 Cost Comparisons

Tables 3.1- 3.3 compare the costs per journey for different modes of transport under various assumptions. The costs for owner-drivers is compared with that for car club members, hire car users and public transport users. Different calculations are presented for different types of car and for public transport users with and without a season ticket. Four usage scenarios are presented; short and long journeys by people with a low or high annual mileage respectively.

We have included the full costs of car ownership and have allocated these costs to individual journeys on the basis of annual mileage. This allows a fair comparison with other modes even though most drivers ignore the fixed costs of ownership when thinking about individual journeys.

The detailed assumptions behind the calculations are outlined in Appendix IV. Clearly there is room to question some of the assumptions used. For example:

• Should the costs of all modes except car be increased to allow for the costs of getting to the pick-up point?
• Is it realistic to assume that car owners will take out breakdown cover (as per AA website)? - some drivers will obviously choose not to do so and their car cost should be decreased accordingly.
• Are our assumptions about the cost of car-rental realistic? What allowance should be made for CDW etc?
• Are our assumptions about the costs of car club membership and car rental rates realistic for the scenarios in which car purchase costs change (they should change at less than the change in car purchase cost to allow for fixed costs of administration, but by how much less?)

Given these uncertainties, the figures in tables 3.1-3.3 must obviously be treated with caution. But some interesting patterns are clearly apparent.

The patterns which emerge from table 3.1 are as follows:

• Public transport is always cheaper than any of the other options (The fact that it is not everyone's preferred mode serves to emphasise that cost is not the only consideration);
• Car sharing, based on two people sharing the petrol costs, is only marginally cheaper than driving solo;
• Ownership and use of and old car is much cheaper than using a car club car regardless of the length of journey or annual mileage;
• Short journeys using a car club car are cheaper than owning a large new vehicle;
• Long journeys using a car club car will be more expensive than ownership and use of a car;
• Typical car rental is more expensive than a car club except where a person who does a low annual mileage rents a small car for a long journey;
• A cheap car rental is cheaper than a car club except for short journeys by a person with a high annual mileage;
• A cheap car-rental is less expensive per journey than owning and using a new car, regardless of size;
• A cheap car-rental is more expensive per journey than owning and using an old car for short journeys except for long journeys by someone with a low annual mileage;
• A typical car rental is more expensive than owning and using a car.

A number of comments should be made at this stage. Firstly these figures suggest that a current owner of an old car will not save money by becoming a car club member. He might of course want to join a car club in order to enjoy the greater comfort and reliability of a new car, but he could achieve this at lower cost by using a cheap rental car. Secondly, owners of large new cars could save money on short journeys if they sold their cars and became car club members. Our figures confirm that there is scope for car owners to save money by joining a car club, but not if they own and run an old car. This latter point suggests that there may be limited scope for the environmental gain associated with attracting people away from inefficient and polluting vehicles.

Table 3.2 shows the effect of decreases in the costs of car purchase and fuel. The relativities are broadly the same as in Table 3.1 except, of course, that the cost advantage for petrol-cost sharing and for public transport are eroded somewhat (although the fact that cheap car hire is less expensive than holding a season ticket and using it only for a few journeys is quite artificial - one would not buy a season ticket in such circumstances). There is a slight tilt away from car rental and car clubs relative to car ownership. This is due to the fact that their costs will include items which do not decrease in line with car purchase and running costs.

Table 3.3 shows the effect of an increase in the costs of car purchase and fuel. The changes mirror those shown in table 3.2. The main effect is to increases public transport's cost advantage and to increase the savings to be made by sharing petrol costs. There is also a slight tilt in favour of car clubs and car rental relative to car ownership.

Table 3.1 cost per journey (£) at current prices

	Car Ownership - driving solo and (sharing)			Car Rental			Car Club	Public Transport With (without) season ticket
	New large car	New small car	Old car	Cheap	Typical small car	Typical large car
Short journey High user	11.87 (11.37)	8.60 (8.23)	3.66 (3.29)	11.66	40.30	57.22	10.10	2.36 (4.05)
Short journey Low user	19.99 (19.50)	14.37 (14.00)	9.72 (9.35)	11.66	40.30	57.22	17.07	5.89 (4.05)
Long journey High user	29.22 (23.39)	23.02 (18.65)	19.11 (14.74)	19.66	48.30	67.89	41.82	7.73 (11.85)
Long journey Low user	37.35 (31.52)	28.79 (24.42)	25.78 (21.41)	19.66	48.30	67.89	51.54	19.33 (11.85)

Table 3.2 cost per journey (£)-assuming a 20% reduction in the cost of car purchase and petrol cost

	Car Ownership - driving solo and (sharing)			Car Rental			Car Club	Public Transport With (without) season ticket
	New large car	New small car	Old car	Cheap	Typical small car	Typical large car
Short journey High user	11.39 (10.68)	8.28 (7.98)	3.51 (3.21)	11.51	40.15	57.02	9.95	2.36 (4.05)
Short journey Low user	18.67 (18.28)	13.55 (13.25)	9.57 (9.27)	11.51	40.15	57.02	16.93	5.89 (4.05)
Long journey High user	26.61 (21.95)	21.10 (17.61)	17.36 (13.87)	17.91	46.55	65.55	40.08	7.73 (11.85)
Long journey Low user	33.90 (29.23)	26.37 (22.87)	24.04 (20.54)	17.91	46.55	65.55	49.62	19.33 (11.85)

Table 3.3 Cost per journey (£) Assuming that car purchase costs and petrol costs are each increased by 20%

	Car Ownership - driving solo and (sharing)			Car Rental			Car Club	Public Transport With (without) season ticket
	New large car	New small car	Old car	Cheap	Typical small car	Typical large car
Short journey High user	12.39 (11.80)	8.92 (8.47)	3.81 (3.36)	11.81	40.45	57.41	10.25	2.36 (4.05)
Short journey Low user	21.50 (20.91)	15.20 (14.76)	9.87 (9.42)	11.81	40.45	57.41	17.22	5.89 (4.05)
Long journey High user	31.88 (24.89)	24.94 (19.69)	20.86 (15.62)	21.40	41.49	70.22	43.57	7.73 (11.85)
Long journey Low user	40.99 (34.00)	31.22 (25.98)	27.53 (22.29)	21.40	41.49	70.22	53.29	19.33 (11.85)

3.2 Key Trends in the Operating Environment

A number of key trends in the operating environment are likely to affect the popularity of car sharing and car clubs:

• Car ownership has been increasing fairly steadily. If this trend continues it will reduce the potential role of car clubs and car sharing as means by which non-car owners can gain access to a car.
• An increasing proportion of the population have a driving licence. This increases the pool of non-car owners who might want to join a car club as a means of gaining access to a car.
• It is becoming increasingly difficult and expensive to park cars in city centres and, more latterly, in residential areas. This should favour car clubs and car sharing.
• Changes to the taxation of company cars are likely alter the number of people with subsidised car ownership (the introduction of "green" criteria from April 2002 onwards should reduce the number of large company cars but might result in an increased number of small company cars). If the net result is a reduction in the number of people with subsidised car ownership this may encourage car clubs as a means of accessing a car for occasional use (the contrary effect would be expected if the net effect is to increase the number of people with subsidised car ownership).
• The environmental and safety standards required via the MOT test are rising. This results in the removal of many old cars from the vehicle stock. Other things being equal this reduces the availability of cheap access to car ownership. If it continues, this trend will tend to favour car clubs.
• The costs of car purchase have been falling. Harmonisation of UK prices with those of cars elsewhere in the EU would intensify this trend and tend to result in increased car ownership and thus reduce the pool of potential car club members and potential passengers in car sharing arrangements.
• The Ten Year Plan envisages a 20% reduction in motoring costs by 2010. The freezing of the fuel tax escalator and the EU's call to harmonise fuel taxation levels across Europe suggest an end to the trend towards increased fuel taxation. A reduction in motoring costs will reduce the advantage to be gained by car sharing. Its effect on car clubs is less clear cut although, since the mileage payment in a car club is more obvious than that in a privately-owned car, it may work in favour of car clubs.
• Significant increases in the cost of public transport relative to that of car ownership and use have been apparent in recent years. Although, as shown in Table 3.1, the cost of public transport use is still lower than the true cost of car use, the perceived marginal cost of public transport use exceeds that of car use for many journeys. Continued decrease in the attractiveness of public transport will tend to favour car sharing but will reduce the attractiveness of car club membership as part of a multi-modal lifestyle.
• Priority measures for high occupancy vehicles are increasingly on the agenda. The success of the HOV lane in Leeds may lead to wider adoption of the concept. Such measures provide a clear incentive to car sharing.
• The introduction of road user charging in nine urban areas, and in a number of rural areas, is envisaged in the Ten Year Plan. If this happens, the cost of car use will increase and this will tend to lead to an increase in car sharing.
• The introduction of workplace parking levies in twelve urban areas is envisaged in the Ten Year Plan. If this happens it will lead to an increase in the cost of car parking and this should favour car sharing and, depending on the interpretation of the regulations, may also favour car clubs (see discussion in sections 2.2.6).

3.3 Policy Scenarios

This section of the report develops some of the themes introduced in section 3.2 by discussing some potential policy developments which might have a positive impact on the prospects for car sharing and car clubs. With few exceptions, the impact of these potential developments on car sharing and car clubs is likely to be a minor consideration in the minds of the responsible policy makers but may nevertheless help to swing a decision at the margin.

3.3.1 Changes in the operating environment which might favour car clubs:

• Increasing the taxation on company cars. If this led to a reduction in the number of company cars more families would be left with one (or zero) cars and would thus stand to gain from belonging to a car club.
• Establishment of work place parking levies. The establishment of employer-based 'car clubs' might be encouraged by the introduction of levies on employees' parking spaces - depending on the interpretation of "employees' cars".
• Increasing the costs of private car ownership (for example via increases in VED). This would obviously tip the balance of advantage, albeit quite marginally, away from car ownership and towards car clubs. However, such a move would disadvantage those who can only just afford car ownership and so might be seen as having a negative effect on social inclusion. Also, any increase in the costs of car ownership might, for political reasons, have to be accompanied by reductions in the cost of car use - such as by reducing fuel tax. The net effect of such changes might be to increase car use by car owners.
• Reducing the costs of car use (eg by reducing fuel tax). Since the (reduced) cost per mile is likely to be more clearly perceived by a car club member than by a car owner the net effect might be to encourage car clubs. (But note, as above, that this is likely to lead to increased car use by car owners and that, to preserve the income of the Exchequer, the final costs of car ownership might need to rise - a move which could disadvantage the low-income car owner and so increase social exclusion).
• Improving the provision of public transport and the attractiveness of taxis and of hire cars. These would all tend to encourage car owners to consider reducing their car ownership in preference for a mixture of modes of which car clubs might be one.
• Reducing the maximum allowances for parking spaces in new developments. The resulting pressure on parking space would make multiple car ownership less attractive and so might encourage investigation of alternatives such as car clubs.
• Increasing the severity of the MOT test. As outlined in section 3.2, this would reduce access to cheap car ownership and so favour car clubs. This could be an important development because car clubs cannot compete with the ownership of cheap old vehicles. It would have beneficial effects on safety and the environment but might reduce social inclusion.

3.3.2 Changes in the operating environment which might favour car sharing

• Introduction of priority measures for high occupancy vehicles. This could have a significant impact on the amount of car sharing. The introduction of these measures is further discussed in section 5.2.4.
• Introduction of work-place parking levies. If employers pass on the fee to their employees there is a direct encouragement to share or to use public transport. If they do not pass it on they will themselves want to reduce their outgoings by charging their employees to park on the premises or by reducing the number of spaces - either of which would tend to encourage car sharing.
• Increased levels of fuel taxation (and, perhaps payment of third party insurance liability via a levy on fuel usage). This would increase the cost of car use and would thus provide drivers with a greater incentive to share. However, as was clear from table 3.1, the saving to be gained by sharing is not great. Also, since an increase in fuel price is unlikely to be politically acceptable without a corresponding reduction in the costs of car ownership - such as by abolishing VED, the net effect might be to encourage car ownership and this might in turn lead to a reduction in the number of potential passengers..
• Introduction of road user charging - (particularly on commuter routes). This would increase the cost of running a car and so provide more incentive to share cars.
• Improved public transport, more/cheaper taxis and more accessible/cheaper car hire services. Such changes might lead to an increase in car sharing since they would tend to reduce the benefit to be derived from car ownership and, if this were followed by a decrease in car ownership, there would probably be some increase in car sharing. Also, the knowledge that these modes would be available as a back-up service in the event that a lift was not available on a given occasion, could make people more ready to enter car sharing arrangements. However, improvements in public transport and taxi services could tend to lead to reduced car sharing in as much as they provide an alternative. (The net effect is difficult to assess!).
• Reducing the maximum allowances for parking spaces in new developments. The resulting pressure on parking space would make multiple car ownership less attractive and so might encourage car sharing.

3.4 Types of Community in which Car Sharing and Car Clubs might be encouraged

3.4.1 Car Clubs
The populations which appear most likely to adopt the concept are:

• residents in newly built residential areas* (if the club is offered as part of the 'welcome pack' to new arrivals it might be possible to introduce people to car clubs before they developed other travel habits).
• occupants of new developments of start-up offices and businesses*
• occupants of newly built mixed developments* (as above but offering a more promising profile of usage throughout the day)
• residents in 'car-free' or 'low car' developments*
• students/staff/employees at out-of-town campuses or business parks*
• environmentally/socially aware, high/medium density, middle class neighbourhoods with a strong sense of community*

(* In all these cases success is likely to be greatest where the level of service provided by public transport is good and the availability of parking is restricted).

The greatest potential for environmental benefits (reduced car use) from car clubs is to be found within areas of high car ownership.

The greatest scope for reduced social exclusion as a result of car clubs will be among the following groups:

• the young (but there are problems with insurance for such groups);
• the elderly (but they may be reluctant to accept so novel a concept);
• disabled or mobility-impaired groups (but some would resent being stigmatised in this way);
• ethnic minorities (but support of ethnically orientated groups might create dissension);
• the urban poor (but there may be insurance problems in some neighbourhoods); and
• low/zero car ownership households in rural areas (but sparse population makes it difficult to find critical mass).

It is clear that the populations to which car clubs offer the prospect of reduced social exclusion would, for one reason or another, be most difficult to service. It is also probable that a concomitant of reduced social exclusion would be increased car use. Not only would this conflict with environmental objectives but, if reduced use of public transport were to reduce the income to some marginal services, and if access to cars caused people to abandon their local shops, the eventual net effect on social exclusion might also be undesirable.

The high car owning, environmentally/socially aware, middle class seem to offer good prospects for success and for environmental benefits but clearly would not feature in a list of those who are socially excluded.

Although the considerations outlined above might lead one to target particular communities as potential sites for car clubs, experience suggests that the key factor in determining the success of a scheme is the presence of a champion within the local community - schemes cannot be imposed from above.

3.4.2 Car sharing
The populations which are most likely already to be engaged in informal car sharing are:

• Close-knit communities (well-established networks, stable populations, large families, high proportion of people employed by one employer);
• Areas with low car ownership which have poor public transport and an absence of local facilities (making it difficult to function without a car);
• Areas where trip patterns are amenable to lift giving (significant amount of travel from areas with a relatively dense pattern of origins to other areas with a relatively dense pattern of destinations);
• Areas where high parking charges, or HOV facilities, offer an effective incentive for car sharers.

The populations which offer the greatest scope for organised car sharing are:

• Areas which have the characteristics noted above, but which do not already have a well developed network of informal car sharing. Potential reasons for there being no established networks include:
• the population includes a large proportion of newcomers or visitors;
• the travel patterns are relatively new (e.g. new development, changed patterns of employment, recent loss of local facilities); or
• the public transport services have only recently been withdrawn.
• Areas where a change in transport policy is likely to favour car sharing (e.g. introduction of HOV facilities, reduced availability of cheap parking facilities).
• Areas where an employer, or group of adjacent employers, is motivated to encourage car sharing (e.g. to reduce the need for on-site parking spaces, to attract non-car owning employees, or to comply with planning regulations).

The greatest scope for reduced social exclusion as a result of car sharing will be among non-car owners and among those car owners who feel unable to use their cars (e.g. because of concerns over safety or security or because they do not have access to parking facilities at the destination). There is thus likely to be a particular relevance for low income groups, the young, the elderly and the disabled or mobility-impaired - note, however, that elderly people are generally more concerned about security issues and may be reluctant to share journeys with "strangers".

The greatest potential for environmental benefits (reduced car use) from an increase in informal or organised car sharing will be within areas of high car ownership. Any increase in car sharing, particularly among low car ownership groups, may reduce revenues to public transport and increase overall levels of car traffic. Not only would this conflict with environmental objectives but, if reduced use of public transport were to reduce the income to marginal services, or if improved access to cars caused some people to abandon their local shops, the eventual net effect on social exclusion might also be undesirable.

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