The development of ride-sharing platforms didn’t lead to a decrease of the taxi services market, but to a slight growth, according to a study conducted by PwC Romania. Furthermore, authorities adopting a licensing model for the digital platforms would lead to a sustainable development of the entire transport sector.
According to a study by PwC Romania for the “Coalition for Digital Economy” Association, the local market of urban mobility platforms (like Uber or Clever) is estimated at RON 1.587 million, of which the e-hailing segment (including taxi services generated by urban mobility applications) is worth RON 706 million, while ride-sharing accounts for RON 881 million.
The local ride-sharing market accounts for 21 percent of the total private urban transport market, and the total market for urban mobility platforms (including the equivalent of taxi services generated by urban mobility applications) accounts for 44 percent of the total, facilitating Romanians’ access to private urban transport services and providing a need for urban mobility unaddressed by traditional urban transport modes.
In addition, the study shows that the activity of urban mobility platforms generates direct and indirect economic benefits of over RON 1 billion annually, being complementary to taxi services and having a positive systemic impact. The direct benefits represented by taxes and charges paid by transport operators using these digital mobility platforms are RON 304 million per year, while the indirect benefits, which represent the degree of multiplication in economy of the consumption of private urban transport services generated through urban mobility platforms, amount to RON 781 million.
“Density in Romania has a significant increase – the number of vehicles per thousand inhabitants. For example, in Bucharest this is 22 percent higher than the EU average, and road infrastructure has failed to keep up with this increase in the fleet. This makes Bucharest one of the 5 most congested cities in the world in terms of traffic, with car journeys averaging 50 percent more than under normal traffic conditions, which means 57 minutes of additional travel due to congested traffic per driver per day, or 218 additional yearly hours spent in cars. Beyond the time lost in cars, this also poses serious environmental problems, with the level of suspended particles in the air in Bucharest being twice the maximum recommended by the World Health Organization. Under these circumstances, urban mobility platforms have found good development ground, covering the unmet need of the urban mobility market,” said Bogdan Belciu, partner at Management Consultancy Services, the coordinator of the study.
“If we look at the last four years in Bucharest and Ilfov, the number of taxi licenses has increased slightly (about 4 percent) and the operational revenue of taxi companies has increased by 11 percent over the same period. Therefore, the growth of digital urban mobility platforms has not been reflected in the decrease in the activity of taxi companies but has come to complement their services,” said Belciu.
After the local mobility of the urban mobility platforms, there was an accelerated increase in the number of passenger transport companies. Thus, while in the period 2004-2014 the number of transport companies increased by an average of 3 percent per year, in the period 2014-2018 their number increased on average by 17 percent per year, the highest increase being recorded in 2017 (42 percent versus 2016), anticipating the introduction of drivers’ obligation to work with urban mobility platforms through a company.
“This increase in the number of micro-enterprises and PFAs carrying out transport also translates into greater transparency of this activity, which is for the benefit of both consumers and authorities, which have more budgetary revenues as a result of the development of digital urban mobility platforms,” said Belciu.
According to the study, the number of drivers ride-sharing is 21 percent (approx. 20,000) of the total number of drivers urban transport private while taxi drivers who run urban mobility (eg Clever Star Taxi) is 23 percent of the total (about 22 thousand). Next, the number of taxi drivers who do not use any urban mobility application is significant (about 54 thousand). Being the primary form of economic activity, taxi services account for 84 percent of the total private urban transport market. On average, the Romanians do about 17 trips per year by taxi and 3 trips per year via ride sharing platforms.
Globally, the e-hailing market is currently estimated at USD 61 billion and is expected to increase to USD 218 billion in the 2025 horizon amid acceleration in urbanization, digital technology development and 5G connections, as well as climate change pressures, which will make a growing proportion of the population abandon the system of individual vehicle ownership by moving towards car-sharing systems and e-hailing services to meet their needs transport. It is estimated that in Europe there will be a structural change in the distribution of mobility systems by 2030, the stock of cars being projected to fall from 280 million to 200 million, while increasing the adoption of electric and autonomous cars.
The future of urban mobility will be characterized by:
- Electricity – Increasing the share of electric cars;
- Autonomy – The appearance of autonomous vehicles;
- Sharing – Increasing the share of car-sharing systems;
- Connectivity – Increase the number of vehicles connected with multiple sensors and communication devices;
- Annual Update – The ownership pattern of the vehicles will change without the need for them to be purchased at full value but paid in small amounts per use / lease under PCP (personal contract purchase).
“In a rapidly changing world driven by the evolution of digital technology, the future of urban mobility is also linked to the development of digital car-sharing and e-hailing platforms. Romania should take advantage of digital technology and adopt legislation to encourage the development of this area while at the same time alleviating the issues of pollution and traffic congestion. Our study shows that the adoption of such an open legislative framework for these platforms, as applied by most European states, would generate additional benefits for the economy over 2020-2023 amounting to more than 1.1 billion lei,” said Belciu.