August 2023, Little City Car – The Case for a New Business Model.

Cars are increasingly unwelcome in cities. Congestion, either due to traffic or parking, limits the operating efficiency of the private car system in terms of time, space and energy. 

Some historical context – the past …

European city streets were built for pedestrian traffic, with horse drawn vehicles used only for larger traded goods and by the especially wealthy. As such, and insofar as it was consciously designed at all, urban road space was largely given over to pedestrians. Streets in London, Paris, Rome and beyond were public spaces, as much for socializing as for transport. Hand carts were commonplace, wagons and horse drawn carts less so, and carriages really quite rare – in comparison to the volume of all vehicles on these same roads today. Cities were, by default, largely walkable  or 15-minute cities.

The present …

These vehicles are disproportionately private cars and vans (including taxis and other light delivery vehicles). They are invariably designed to carry at least 4 or 5 adults at speeds up to 140 Kph. Even though some of them may be small for their type, they are still vast in comparison to their historical counterparts. Their sheer numbers block the traffic when in use – and further restrict useable road space when not in use by narrowing the streets with long lines of parking bays. They contribute to the urban “heat island” effect not only by their hot exhaust emissions but also due to their need for huge expanses of Tarmac. Reduce the need for lines of parked cars, reduce the overall length and width of traffic jams and you can plant more trees by the sides of the roads and cool the city.

And the future …

The direction of travel of environmental policy will surely limit the quantity and size of cars allowed in these cities. In Europe and parts of Asia – if not so much in North America, with its unique and unusual car culture – the problem will undoubtedly be addressed within the next 5 to 10 years. Recent weather events in Southern Europe in particular are pushing radical solutions to the problems caused by our unthinking and consumptive lifestyles up the political agenda. It is inevitable that urban car ownership and use will be curtailed. Fewer cars, even smaller cars, or cars that take up less space when parked would go some way to mitigate this problem.

How to be a car company in a world that doesn’t want as many cars.

Additionally, several companies are already questioning the accepted wisdom of why cars need to be so big in cities. Currently available offerings from the Citroen Ami / Opel Rocks-e / Fiat Topolino, Renault Twizy, Microlino and others all demonstrate that this is a live topic.

However, the inertia of the currently accepted commercial model where the majority of vehicles are privately owned by individuals – or leased to them in a manner that replicates the private ownership experience – means there is a strong disincentive to change the urban car ecosystem. Possession might not just be 9/10 of the law, it is also deep within our psyche. We humans like to own stuff; more importantly, we like to be seen to own stuff.

The way around this is to blur or negate the distinction between customer and shareholder. How would it be if you didn’t so much own the car as own the company? The car would belong to you, the customer, because the company belongs to you as a stakeholder. This would have a number of advantages.

First, legal ownership of the car stays with the company, contributing to the enduring commercial value and stock price. This is not just the narrow book value, but the worth of the resources currently tied up in that vehicle, increasingly important in a world where resource overconsumption is becoming unacceptable.

Second, responsibility for all down-stream recovery and re-use of these resources rests with the company, rather than those materials going into an uncontrolled secondhand or scrap marketplace, where they would in all likelihood not be efficiently circulated back into the ecosystem. All these resources can be re-used, re-purposed or recycled into new product to maximize revenue for the company within its normal commercial operations – by the people best able to handle them properly under controlled conditions. This is entirely in keeping with the principles of circular manufacturing. Nothing is wasted – not even money.

Third, it would nurture and engender a high degree of customer loyalty. There would be a strong incentive to continue as a customer and to encourage others to join the club. These would of course be B shares, certainly at the start of any such shareholder’s tenure – with a possibility for conversion to voting shares at a later date according to some milestone being reached under a mechanism still to be worked out. Overall, the customer / shareholder status would in effect be along the lines of a “with profits car lease” arrangement.

This company structure would also allow for shorter term rental via a car club, similar to ZipCar (owed by Avis) and Whizzgo (now Enterprise Car Club).