2018 China New Mobility Study

China’s Mobility Industry Picks Up SpeedWhat are the big consequences of e-hailing, bike sharing and other mobility options?By Raymond Tsang, Pierre-Henri Boutot and Dorothy Cai Raymond Tsang leads Bain & Company’s Automotive practice in Asia-Pacific. He is based in Shanghai. Pierre-Henri Boutot is a Bain partner based in Hong Kong. Dorothy Cai is a partner in the firm’s Toronto office.Copyright © 2018 Bain & Company, Inc. All rights reserved. China’s Mobility Industry Picks Up Speed1China has quickly emerged as the world’s largest mobility market. Innovations in automotive, technology and e-commerce are rapidly converging in new, unexpected ways. Chinese consumers, who lead most other countries in digital adoption, are willing to try new options that are becoming available at a record pace and are upending the definition of mobility. Consider that China’s market for e-hailing—ordering car rides electronically from a mobile phone—now totals about $23 billion, more than the rest of the world combined (see Figure 1). This mobility market is expected to maintain its robust growth, fueled by $50 bil-lion in investments from 2014 to 2017 (see Figure 2).We wanted to understand the dimensions of this huge shift and its potential implications across industries, so we surveyed nearly 2,000 Chinese consumers in Tier-1, Tier-2 and Tier-3 cities (see the sidebar “How big and how fast?”). We learned that 60% of respondents increased their mo-bility frequency in the past two years, with new mobility services accounting for a significant part of that increase (see Figure 3). Chinese consumers adopt new practices as soon as they are introduced and bring them into the main-stream. While bike sharing, the most popular solution, was used by 73% of respondents, e-hailing was second— 62% of respondents used this growing alternative. As an indication of how prevalent these two mobility solutions have become, compare how widely they are used in China vs. Germany and the US. We conducted similar studies of consumers in those countries. In Germany, only 29% had used e-hailing and 9% had tried bike sharing. In the US, 23% had relied on e-hailing and 8% had used bike shar-ing. However, Chinese consumers are less likely than their German or US counterparts to use such traditional mobility solutions as car rentals (see Figure 4).Mobility’s upward trajectoryBy our estimates, bike sharing has grown more than five-fold and e-hailing fourfold since their introduction (see Figure 5). Part of that explosive growth is due to the popu-larity of mobile payments. Chinese consumers began paying with mobile phones in earnest in 2014. Today the value of mobile payments made in China is 60 times more than in the US. The other force contributing to the rise in mobility solutions: the major traffic delays on roads and highways in China’s top-tier cities. In fact, when we asked consumers to name their top travel pain points, time spent on the road topped the list (see Figure 6). With technology integration, government support and the emergence of new options such as B2C car sharing, China’s mobility in-dustry is likely to continue on its upward trajectory.Given these newly available transportation options, the formidable traffic congestion and the financial costs of car ownership, more Chinese consumers are turning their backs on buying cars (see the sidebar “A disaffection with car ownership?”) Cars have long been equated with social status in China, yet less than 50% of our survey partici-pants feel that owning a car improves one’s social status. That is smaller than the portion of consumers who felt cars improved social status in a similar study Bain con-ducted in 2014. Nearly half the people in our recent sur-vey indicated that owning a car has decreased as a status symbol in the past five years (see Figure 7).Both car owners and potential car owners agree on the spe-cific factors that will persuade them to either give up their car or make them avoid buying one in the future. Heavy traffic tops the list for both groups (see Figure 8). In almost How big and how fast?To track the rapidly emerging mobility industry, Bain & Company is surveying thousands of consumers in the US, Germany and China every three years. We ask consumers about their experience using different mobility options, their willingness to try new solutions such as autonomous vehicles and their views of car ownership, among other issues. The results paint a clear picture of an industry that is quickly growing, especially in China. In our 2014 study, the mobility industry in both Germany and the US outpaced China. However, in our most recent survey, conducted in 2017, it is clear how speedily China has grown to dwarf those markets. In fact, China’s e-hailing market alone is larger than that of the rest of the world combin