The Impact of Lyft, Uber, and other Ridesharing Services on the New Car Business

Facilitated by successful smartphone penetration, Uber, Lyft, and other rideshare tech giants have decimated the taxi business. Meanwhile, car manufacturers have been enjoying better sales since the advent of these transportation services.

But what are some of the possible lasting ramifications of rideshare services for the broader new car industry?

Instead of the declining sales volumes, as most pessimists had forecasted, the most impactful threat appears to be a higher level of vehicle homogenization. It is an issue with the potential to radically impact the probability of the new car manufacturing and the usability of the second-hand car business.

All opinions related to the impact of ridesharing on the taxi and general car business fall into one of two categories. First, the ‘tech optimists’ imagine Uber, Lyft, and other rideshare companies with a fleet of stunning, self-driving cars dominating the major highways across the country within the next few years. Others point to the technical and regulatory issues that are likely to hinder the progress towards this brave achievement.

For instance, Uber vehicles get involved in road accidents, and the resulting claims tend to be more complex. Besides, the specific contracts between the rideshare company and the driver (contractual) are complicated. Further, the fact that auto insurance policy doesn’t cover profit activities for car owners complicates the process of pursuing compensation in case a passenger gets injured in an accident involving Uber vehicles. Talk to a Chicago Uber accident lawyer, and you will understand how complicated these issues can be.

Impact on the new car business

A larger number of commenters focus on the widespread belief that Lyft, Uber, and other rideshare service providers will lead to a decline in the number of cars in use. This issue will affect the car manufacturing business negatively. However, this might not be the case.

Generally, vehicle manufacturing business benefits from vehicle obsolescence. In case a specific vehicle tech doesn’t advance, the vehicle maker is likely to move more units by providing cars with a short lifespan. Besides, the manufacturers engage in research and development to entice vehicle owners to trade up to more up-to-date versions with outstanding features and a higher level of comfort. Studies show that most car buyers are likely to pay a higher price for a vehicle that meets their requirements.

In fact, non-rideshare cars tend to last longer, and thus, obsolescence has always been a big issue for their owners. If a larger number of cars were rideshare – driven regularly in the service of travelers, fewer cars would be replaced before the exhaustion of their physical life. Therefore, for a specific number of passenger miles traveled, the chances are that there’ll be fewer vehicles sold, relative to the status quo, due to the advent of ridesharing services.

Rideshare giants like Lyft and Uber have keen interest in securing access to vehicles with outstanding features, can stand the test of time, and are preferred by clients. As rideshare industry continues to grow, the new car manufacturers will have a diminished scope of monopoly profits due to the need to provide differentiated products.