Categories: Automotive

On-Demand Transportation Market Will See Rapid Expansion in Coming Years

The global on-demand transportation market reached USD 170. 6 billion in 2022 and is projected to be worth over USD 701.1 billion by 2030, with a growing CAGR of 19.25% from 2022 to 2030

On-Demand transportation is a convenient way for passengers to plan trips according to their schedule and get picked up at a specified location. This mode of transportation has been gaining popularity worldwide, with various options like e-hailing, car sharing, car renting, and station-based mobility creating a thriving environment for the transportation industry.

Regional Overview:

During the forecast period, the Asia Pacific region is expected to dominate the On-Demand Transportation market. This region serves as a significant reporting platform for transportation infrastructure and service provision, addressing challenges related to regional, urban, and rural connectivity, as well as public health concerns like road safety and pollutant emissions. In the United States, the Car Rentals industry is projected to generate a revenue of USD 22,424 million in 2021, and the number of users in the Car Rentals market is estimated to reach 49.7 million by 2025. This growth will significantly impact the overall on-demand transportation market, with the United States leading in terms of worldwide revenue.

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Market Dynamics:

Driver

The increasing sales of smartphones have played a pivotal role in promoting on-demand transportation services like car sharing, e-hailing, station-based mobility, and automobile renting. Mobile applications have allowed consumers to easily modify, pre-book, or cancel their cab arrangements. Advancements in IT infrastructure and the growing adoption of cab or taxi sharing services are expected to further drive the demand for on-demand transportation, benefiting both fuel conservation and time efficiency.

In India, smartphone penetration reached 54 percent in 2020, projected to rise to 96 percent by 2040, indicating a significant increase in smartphone users. The United Kingdom had the highest smartphone penetration rate globally in 2019, at 82.9%. As smartphone sales continue to rise, the on-road transportation sector is poised for substantial growth.

Restraint

Ensuring passenger safety has emerged as a crucial limitation for the expansion of the on-demand transportation industry. Concerns over passenger safety have led governments to impose strict regulations to ensure the well-being of both passengers and drivers. Incidents like the Indian Uber driver’s arrest for assaulting a female passenger have prompted governments to implement additional safety measures, potentially limiting market growth.

Opportunities

The development of Artificial Intelligence (AI) for transportation is transforming the industry, enhancing safety, efficiency, and sustainability. AI is already being employed in various transportation sectors, from assisting autonomous vehicles to optimizing traffic flow. Embracing AI can make all modes of transportation smarter, cleaner, and more convenient for users. For instance, AI-powered autonomous transportation can significantly reduce human errors leading to traffic accidents. The European Union (EU) is actively adapting its regulatory framework to foster AI-driven innovations while safeguarding fundamental values and rights.

Various strategies and guidelines supporting AI technology’s application in transportation have been implemented. Additionally, the EU provides financial support, especially for research in AI. This presents significant opportunities for participants in the on-demand transportation business to leverage AI advancements.

Challenges

Poor connectivity in certain areas poses a significant challenge to widespread adoption of on-demand transportation. A considerable portion of the world’s population, especially in developing nations, lacks access to the internet through mobile devices or fixed line broadband. Internet usage is significantly lower in Sub-Saharan Africa and some Asian countries, hindering seamless connectivity despite being leaders in mobile money transactions. Access rates are higher in advanced economies like the United States, Europe, and Canada. This disparity in internet connectivity between regions can impact the adoption of on-demand transportation services.

Some of the major players in the On-Demand Transportations market include: