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Lyft (NASDAQ: LYFT), the No. 2 ride-sharing company in the U.S., just went public earlier this month. The company's IPO may have some investors wondering exactly how big the ride-sharing market is, whether it's worth taking seriously, and how they might benefit from it.
If you're interested in the ride-sharing market but don't know where to start, here are a few reasons why you should pay attention to what's happening in this space, and why you need to keep a close eye on what Lyft, Uber, and General Motors (NYSE: GM) are doing.
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1. Ride-sharing could be worth $285 billion by 2030
There are a lot of estimates out there trying to pinpoint how big the ride-sharing market will be, but one thing they all have in common is that it's going to be huge. Morgan Stanley said in a 2017 research report that the global ride-sharing market will be worth $285 billion by 2030.
A more recent estimate from Markets and Markets says that ride-sharing services across the globe will be worth $218 billion by 2025. No matter which estimate proves more accurate, it's clear that ride-sharing is a massive global industry.
That's why Uber has expanded into nearly 65 countries, and why the company recently spent $3.1 billion to purchase its ride-sharing rival Careem in the Middle East. Uber's decision to snatch up a larger international player rather than fight it out with Careem in its home territory comes as the global ride-sharing market has become much more competitve. For example, Uber couldn't keep up with its China rival, DiDi Chuxing, and ended up selling its China business to DiDi a few years back.
2. Americans' views on car ownership are changing
Americans, particularly younger ones, are far more open to the idea of paying for transportation only when they need it, as opposed to owning a car themselves. And these shifting ideas on car ownership will result in less automotive sales in the coming years. IHS Markit data shows that the auto industry will experience a 33% decline in automotive sales between 2017 and 2040.
With nearly 80% of the U.S. population now living in urban areas, the hassle of owning and driving a car in the city, finding parking, etc. isn't worth it to many Americans. Add the fact that cars sit idle 96% of the time, and many Americans are losing enthusiasm for the automobile.
GM has seen the writing on the wall, which is why the company currently has a peer-to-peer ride-sharing service that allows GM owners to rent out their cars to others. The company also has plans to introduce an autonomous ride-sharing service sometime this year. Though both of the programs will be limited in availability for a while, GM's bets on self-driving ride-sharing services and peer-to-peer vehicle sharing show that even automotive stalwarts are looking toward new innovations to stay relevant.