Dan Frank Shares Misconceptions on Mobility as a Service
This article originally appeared in the “Wheels Mobility Guide,” a feature of the April 2019 edition of Automotive Fleet magazine.
Mobility as a Service (MaaS) is one of the most buzzed about topics in the fleet world. As its related technologies, like ride-hailing and pooled vehicles evolve, so does the collective understanding of MaaS. To help further along the discussion and dispel some of the more common myths, Wheels President and CEO Dan Frank tackles the subject head on.
Here is Frank’s take on three common MaaS misconceptions:
MaaS misconception 1: MaaS is cheaper than a company-provided vehicle
“You read statistics that the average vehicle sits idle 95% of the time and that the opposite will be true with a shared vehicle, which will be used 95% of the time,” Frank says. “I don’t think that’s necessarily true. First of all, fleet vehicles get used more than 5% of the time. When people cite those statistics, they’re talking about consumers. Company drivers, for the most part, drive much of their day, and are in their vehicle more like 25-30% of the time.”
MaaS misconception 2: Shared vehicles have drastically less down time
“The other false assumption is that shared vehicles get used 95% of the time,” he says. “In order to provide an efficient service, shared-vehicle businesses are going to have to scale these solutions to be able to accommodate the busiest time of the day, which is rush hour. So there’s going to be a lot of excess vehicles that are going to be unused much of the day outside of that peak time.
The second issue is that shared vehicles drive a lot of empty miles. I’ve seen statistics that they drive up to 40% empty miles. That means by the time they drop off one person to the time they pick up the next, they’re driving without a paying customer in that vehicle. You incur expenses for maintenance, fuel, and depreciation, when it’s not being put to productive use.”
MaaS misconception 3: Vehicle idling is a large expense
“You’re only paying for interest and registration expenses whether or not the vehicle is being driven,” says Frank. “The majority of expenses come from a vehicle being driven. When you add up these costs that’s a pretty small number compared to the benefits of having that vehicle available when you want it, being able to use it for storage, and the big factor, which is increased productivity.
Even in dense, heavily serviced urban areas, the average wait for an Uber/Lyft pickup is somewhere around eight minutes. If you’re a sales rep that makes eight to 12 sales calls a day, and you wait eight to 10 minutes between each one, you could lose one to two calls a day.
On top of all that, the Mobility as a Service companies are going to charge significant premiums for the expense they have of running those networks, of cleaning and storing those vehicles, and maintaining them. They generally earn much higher margins than what fleet-management companies charge.
When you add all that up, the economics favor a well-used company-provided vehicle in most cases.”
Dan Frank's comments are part of a larger conversation regarding fleet mobility. Download the Wheels Mobility Guide to read his full remarks.