When the time came for Robert Farrington to replace his car, which was over a decade old and had more than 100,000 miles, he decided not to buy one. Instead, he chose to use Uber and Lyft. His family still owned another car, but he primarily traveled via ride-sharing.
“Purchasing a car would cost several thousand dollars and getting a loan would have a monthly payment of at least $300 or more,” said Farrington, who lives in San Diego and founded The College Investor. “If ride sharing didn’t work, I would just buy a car.”
His experiment proved to be a resounding success: He only spends between $100 and $200 per month on rides with Uber, and there’s good availability in the suburbs. “I definitely think it’s a viable option as long as ride sharing is available and low cost,” he said.
Foregoing car ownership in favor of services like Lyft LYFT, +12.24% and Uber is not a common choice. Only 9% of people who sold or traded in a vehicle over the past year decided not to get a new car and instead use ride-sharing services, a May 2017 poll conducted by Reuters and Ipsos found.
And rather than persuading people against buying cars, new research suggests that services like Lyft and Uber might instead be putting more cars on the road and dissuading people from using public transit.
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Uber and Lyft may be causing worse traffic in the country’s biggest cities
A July 2018 report from transportation consultant Bruce Schaller found that companies like Lyft and Uber added 5.7 billion miles of driving in the country’s nine largest metropolitan areas — and car ownership rates climbed higher than the population in those areas. Moreover, ride-hailing services and taxis are expected to surpass busses in terms of ridership in 2018.
Carpooling options, such as UberPOOL and Lyft Line, aren’t any better at reducing traffic in city streets, he said. Schaller calculated that these shared services actually account for a 160% increase in driving in major cities.
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And people aren’t necessarily choosing Lyft or Uber instead of driving their own car. Instead, Schaller found that 60% of these services’ users would have taken public transportation, walked, rode a bike or not traveled if they hadn’t hailed a ride via an app.
That echoes research conducted for the Metropolitan Transportation Authority in New York and released earlier this month, which found that for-hire vehicle and taxi ridership grew 13.1% between 2016 and 2017 while subway ridership fell 1.7%.
Uber and Lyft dispute reports saying their services makes traffic worse
Uber argues that these criticisms ignore the benefits that such services provide. An Uber spokesperson noted that the use of for-hire vehicles in New York was growing most in the parts of the city that are not accessible by subway and fell in Manhattan where the new Second Avenue subway line was introduced.
Moreover, Uber said that ride-hailing services have benefited residents of suburbs and small towns without extensive public transportation options. “We’re growing in markets where there was no alternative to driving your own car, providing a vital lifeline to seniors and others unable to drive,” a company spokesman said in an email to MarketWatch.
A spokeswoman for Lyft also pointed to research from the Shared-Use Mobility Center, a nonprofit focused on transportation in urban areas, which showed that ride-sharing services fill in the gaps left by public transit. Specifically, the researchers suggested that these services could play a role in making public transportation more accessible through “first/last mile partnerships,” which would help people who live in areas not served by public transit get to a stop. “Lyft believes our cities need a spectrum of transportation options, including public transit and on-demand service,” the spokeswoman said.
And the amount of miles driven by personally-owned vehicles still far exceeds the amount driven by for-hire vehicles, including taxis, limousines and cars driven for Uber and Lyft, according to the National Household Travel Survey conducted by the Federal Highway Administration.
Car-sharing could also encourage people to ditch their vehicles
People like Farrington represent just the tip of the iceberg. One study found that as many as 25% of current American drivers could benefit from ditching their vehicles in favor of ride-sharing services. Another study conducted by experts at University of California, Berkeley, suggested that each car-sharing vehicle replaces between 9 and 13 personally-owned vehicles.
But it’s not just that people are choosing to get rid of their cars — many more people these days are just opting not to drive in the first place. Between 1983 and 2014, the percentage of people between the ages of 16 and 44 who held a driver’s license decreased from 91.8% to 76.7%, according to the University of Michigan’s Transportation Research Institute.
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The shift away car ownership is even more notable when taking car-sharing services such as Zipcar and car2go into account. Unlike Lyft and Uber, which allow users to hail cars or carpool, car-sharing programs allow members to reserve a car they drive themselves. Users typically pay an hourly rate for the time they use a car, and there are sometimes recurring fees for a membership.
While 43% of Zipcar members owned a car prior to joining, only 24% continue to do so after they’ve joined, Zipcar said. Zipcar estimates that it has taken more than 400,000 cars off the road since it went into business. (Of course, it has a vested interest in people renting rather than buying automobiles.)
Uber is moving beyond ride-sharing into bike-sharing
Indeed, as part of its goal to reduce individual car ownership, Uber has begun to explore ways to expand its services beyond ride-sharing, Uber CEO Dara Khosrowshahi outlined in a blog post earlier this year.
“Having a greater variety of transportation modes at your fingertips helps make it increasingly easy to live without a car,” Khosrowshahi wrote. “That’s why we want to provide alternatives to personal car ownership by bringing together multiple modes of transportation right in our app.”
The company has begun to explore car-sharing and formed a deal with public transit mobile ticketing provider Masabi to allow Uber users to begin booking and using transit tickets through its app.
Additionally, Uber acquired bike-sharing start-up Jump, and in San Francisco the platform has proved so popular that Jump lowered the number of car rides taken during peak hours by 15%, the company said. The company also has devoted $1 million toward a campaign advocating for congestion pricing in New York City.
Lyft shares jumped 22% in morning trading following the company’s initial public offering. Comparatively, the S&P 500 SPX, +0.42% was up 0.39% as of Friday afternoon, while the Dow Jones Industrial Average DJIA, +0.59% was up 0.55%. The Renaissance IPO ETF IPO, +0.39% had also gained 0.25% by mid-day.
(This story was updated on March 29, 2019.)
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