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How Does Car Sharing Interact With Sustainable Product Design?

Authors

Ioannis (Yannis) Bellos, George Mason University
Mark Ferguson, University of South Carolina
L. Beril Toktay, Georgia Institute of Technology

Research Questions Addressed

How does providing car sharing affect an auto manufacturer’s product line design strategy in terms of fuel efficiency as well as its ability to meet the Corporate Average Fuel Economy (CAFE) standards?

What are the economic and environmental benefits (if any) of an auto manufacturer’s involvement in car sharing?

Which “types” of auto manufacturers benefit the most from providing car sharing?

Primary Findings

Although car sharing has the potential to cannibalize car sales, it can boost auto manufacturers’ profitability. Manufacturers can reach more customers and increase the selling price of products because car sharing allows for better market segmentation. Higher-end manufacturers benefit more from providing this type of service.

Furthermore, car sharing allows manufacturers to produce vehicles with higher fuel efficiency, which leads to environmental benefits. However, the average fleet economy may decrease due to the smaller number of cars needed. This may compromise the OEM’s ability to meet the CAFE standards. Granting an incentive multiplier—so that each shared car counts as more than one vehicle towards the CAFE calculation—can ensure that manufacturers are not dissuaded from offering car sharing.

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