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Uber deals with the 5%

Many miss a big point of the new ridesharing focus. While they encroach on the taxi business, it seems ridesharing has uncovered a massive need -- dealing with the 5%.

A recent Fortune magazine article revealed a staggering statistic,

The average American automobile is used only 5% of the time it is owned.

Wow, most of the life of a car (95%) is spent in a parking place or in a garage. We drive to work and park. We drive to school then park the car. We drive to the movies and park. On average it costs around $9000 a year to own a car (while using ridesharing to replace it is about half, $4500). Yet most of the time the vehicle sits somewhere waiting for the owner to use it. Drive by a shopping mall, an office park, a resort location and count the cars just sitting there in the hot sun for most of the day.

Public transportation is a help and taxis can assist in a city environment. But outside center city or an area without taxis what is the option? There was none, until now. I have met several young people recently who stated they will never buy a car. They plan to depend on public transportation, rides from friends and ridesharing then pocket the savings.

Young people are not alone. One city in Florida (Altamonte Springs) is conducting an experiment. Rather than buy more buses to transport their employees around town. It's subsidizing Rideshare rides for all. They don't have to maintain the buses and deal with driving and maintenance for employees and insurance. The rideshare drivers care for all the details and the city pockets the savings.

I am not saying ridesharing will replace all personal automobiles. But rather a family may be able to exist with only one car and let public transport, taxis and rideshare make up for the second and third vehicles. In the days of the middle class it was not unusual to see 3 or more cars parked in a family driveway. (we had 3) But those days are gone. It appears automobiles are way too expensive and wages have not kept up to allow this extravagance.

It's not good news for the auto industry. But they are way ahead of us. Already GM has partnered with Lyft to begin to build driverless cars. (and just announce plans to release them soon) Car rental companies are teaming with rideshare drivers to rent cars at low rates when their car is down for repairs, etc. Amazon is testing using the same drivers to deliver packages with Amazon Flex.

It all sounds great, but there are a few details that need resolution. Pay for the drivers. If the rideshare companies keep cutting rates, or the economy improves - there may be fewer drivers. And currently ALL the risk rest on the drivers. Insurance risk managers are still working to figure out how to price ridesharing insurance. And driver safety is always a concern. (Full disclosure - I once drove for Uber.) You think you are apprehensive as a passenger -- try being a driver. I never knew what was getting in my car. The only qualification for a rider was having a credit card.

What will be done to fill this uncovered need in the future? It may or may not be by Uber/Lyft, but some solution will be required to fill the gap. 5% usage seems unsustainable - it is a massive waste of resources. And with paychecks getting smaller - not larger - something has to give. We'll need to deal with the 5%.

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