OEMs: Complementing ride-hailing service ecosystems

Type de publication:

Conference Proceedings

Source:

Gerpisa colloquium, Bordeaux (2024)

Texte complet:

The profile of new automotive vehicle owners is changing globally due to the development of information technologies which enabled the emergence of new mobility services in recent years (Ferrero et al., 2018). Today, apart from a multitude of public modes of transport in place in many cities, individuals can opt from renting a vehicle for short routes, sharing a trip, or ordering on-demand trip (i.e., offered by taxi or ride-hailing services) for a much lower price compared to only two decades ago (Prieto et al., 2017). The availability of such alternatives caused many people to avoid owning an automobile (Schaefers et al., 2016). To give an example of the relevance of this phenomenon, the market share of automobiles and commercial light vehicles sold in Brazil to car rental companies increased from 19.0% in 2018 to 30.1% in 2022 according to ABLA, the Brazilian Vehicle Rental Association (ABLA, 2023). Besides, an expressive part of this growth was due to independent ride-hailing drivers` demand, representing about 20% of a population of more than 1 million drivers currently working through Uber, 99 (from DiDi group) and other similar services operating in Brazil by 2022 (Saragiotto, 2023). The relevance of this new segment caused car rental companies to create new business units only to attend to ride-hailing drivers` demand (Irenilda, 2023; Saragiotto, 2023).

The car rental business trend seems to follow a similar path, although probably on a smaller scale, in US and Europe (Carey, 2023; Korosec, 2023), as the potential population of young drivers and many people living in metropolitan cities are avoiding owning a car due to the alternatives complementing the public means and fulfilling their urban transportation necessities (Amadeus & Microsoft, 2023; Deloitte, 2024). Such a market movement also influences Original Equipment Manufacturers` (OEMs) strategic decisions on product and service market positioning and the partnerships established even downstream (KPMG, 2023). By the end of 2020, BYD launched in China the D1 model, an electric vehicle (EV) specially designed and equipped for ride-hailing service to target a current market of more than 30 million drivers working through DiDi, its partner in the project there (Chang, 2020; Sun & Goh, 2020). Less than one year later, in August of 2021, it was the time for Mobilize – a joint venture formed between Renault Group and Jiangling Motors Group – to reveal the Limo model, a EV saloon also designed for ride-hailing service (Mobilize, 2021). In May of 2022, Cabify, a Spanish ride-hailing service operator and orchestrator, received 40 Limos ordered, the first units delivered in Europe, to fulfill the demand of its subsidiary, Vecttor, in Madrid (El Mundo, 2022).

These examples illustrate not only that OEMs are already designing and producing vehicles with specific functions (i.e., connectivity and ergonomics) to operate in this new emerging segment (e.g., the ride-hailing service) but they are also assuming new activities on these sharing economy ecosystems to ensure the financial conditions to make such products available to independent commercial drivers. They’ve been configuring, together with bank arms` partners, transaction specifications to enable product access based on subscriptions instead of acquisitions (see Mobilize, 2021), as well as articulating different terms directly with Car Rental companies to have them handled by the final users (see BYD, 2023). 

The innovation ecosystem literature studies “a community of hierarchically independent, yet interdependent heterogeneous participants who collectively generate an ecosystem output and related value offering targeted at a defined audience” (Thomas & Autio, 2020, p. 11). Therefore, it is a meta-organizational perspective helpful in analyzing the complementarity of resources and routines of actors jointly adding value to a focal offer (Jacobides et al., 2018) as well as verifying the alignment structure relating the activities of a multilateral set of actors that interact for a focal value proposition to materialize (Adner, 2017). This theoretical lens enables us to answer the question: ‘What are the vehicle`s characteristics and the financial arrangements necessary to promote their access by final users, contributing to ride-hailing service ecosystems` value creation?’

Our analysis will be centered on the downstream impacts of the product design, its digital features and the financial arrangements supporting their handover. It intends to cover the strategies used by OEMs to create value either offering EVs whose connectivity resources (e.g., sensors, APIs, information systems) (Buck & Watkowski, 2023) enhance the digitalization to improve the performance of the ride-hailing service platforms (e.g., improve matchings, network-effects, customer loyalty) (Sommer et al., 2021) or whose vehicles` trim level combined to digital features provide benefits to vehicle users (e.g. helpful information, higher comfort, safety). The analysis also covers the financial strategies used to market the products, involving horizontal relations with banks, car rental companies, and ride-hailing service firms to configure efficient subscription terms and other financial architectures. Besides the implied managerial contributions, the research will target ecosystems led by platform firms providing temporary access to rivalrous resources (i.e., physical and human resources, which cannot be replicated as digital ones), supporting the elaboration of theories explaining the strategies for their orchestration. According to Markman et al. (2021), these particular types of management must be differentiated and better understood. A second theoretical contribution comes from the approach chosen for the analysis. By evaluating the outcomes of strategies performed by complementors of ride-hailing ecosystems (i.e., OEMs), in opposition to mainstream studies that verify the value created by strategies executed by the ecosystems` leaders (i.e., Uber, Didi, Lift), it adds insights that couldn’t be perceived otherwise (Miehé et al., 2023).

This research will apply a qualitative approach through a multicase analysis (Yin, 2017), including phenomenon revelations such as BYD and Mobilize cases. Data collection will involve direct and indirect sources (e.g., interviews, newspaper publications, reports, and minutes) counting on the employees of OEMs and their partners in such projects. The comparison of the similarities and differences among the cases must produce theoretical insights (Eisenhardt & Graebner, 2007) related to the main characteristics of the products and the financial arrangements creating value for ride-hailing ecosystems. The research outcome will be a list of interrelated factors enabling the penetration of these specific OEM products in this emergent market for the value they generate for the ecosystems.  Finally, the following proposition is expected to be confirmed: “The customization of digital and physical purposeful features in financially viable EV models promotes higher sharing ecosystem activity”.

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