Connecting and automating vehicles will probably stall future parking revenue - here’s what you need to know - Financial Services blog | Deloitte Australia has been saved
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The rise of Connected Automated Vehicles (CAVs) will significantly impact parking businesses and others that are reliant on parking revenue. The time is now to review current business models and future proof their relevancy in a connected mobility ecosystem.
The total revenue of the parking service industry in Australia was around $1.6 billion in 2018-19 with more than two-thirds of the revenue being generated from airport car parking and daily car parking. The size of the industry is reliant on the fact that the average car is parked 95 percent of the time2 and, where land is scarce, the demand for convenient and affordable parking is high, particularly near logistics services and in CBDs.
The adoption of CAVs will change the demand for parking services affecting both the individuals who park as well as the suppliers of parking.
For individuals, CAVs will offer owners of vehicles other options besides using parking services – their CAVs can return home to park, circle idly while waiting for their owner or maybe even earn an income providing ride sharing services.
If we see increased usage of a shared fleet ownership model, such as GoGet, there will be a large reduction in demand for parking services because a shared CAV fleet may only park 30% of the time and be used 70% of the time.
The shift towards Mobility as a Service will likely reduce private vehicle ownership and the overall quantity of vehicle stock. Mobility as a Service (MaaS) is the seamless integration of multiple different modes of transport providing door-to-door transport. Some major cities are trialling different forms of MaaS, for example, Whim provide a subscription model to public transport modes in Helsinki, Antwerp and Birmingham. Vehicle efficiency gains from CAVs will be further increased by MaaS, and at some point MaaS could lead people to abandon vehicle ownership altogether– particularly in higher density areas. The seamless integration of multiple modes of transport is a looming threat to the future of parking revenue.
Possible future scenarios
Deloitte has modelled future parking demand across multiple future scenarios, including CAV uptake and shared mobility models to understand the future demand and impacts to car park spaces in Australia’s major cities, see Figure 2.
While CAVs will change the demand for car parking services, owners and operators of car parks can equally exploit CAV technologies to secure parking revenue and consider new business models that are difficult to imagine today.
The connected benefits of CAVs can be used to increase the efficiency of car parking by reducing the distance between vehicles. Location services can be used to identify and pre-book available parking spaces, reducing the level of effort needed to find parking and improving the overall experience.
Other value add-ons from parking
Car park operators/owners can expand their services by providing electric vehicle charging, in-car delivery services and premium last-mile services. CAVs will probably be electric and car parks could charge the vehicles when they’re stationary. In-car delivery allows individuals to have goods delivered to or picked up from their vehicle while it is parked - a service Amazon is already trialling.5
Another value add service is for premium last-mile transportation, such as stadiums and airports, where shuttles can run in between the car park/drop off area and the destination (e.g. the stadium or airport). These shuttles can both be offered at a premium to select patrons or be designed in a way to increase the patrons’ overall experience i.e. part of the ‘event experience’.
With a decreasing need for car parks, existing facilities can be modified for alternative uses, including transport-related uses (e.g. charging facilities, dispatch areas, mobility hubs), retail/industrial (e.g. storage spaces, urban farms, solar or wind farms, batter storage and exchange facilities, decentralised utility facilities), recreational (e.g. individual business areas, used to host events, connected to become underground malls) and residential/office (e.g. becoming office space, hotels, micro apartments).
Before CAVs transform the parking sector, there are some questions that require consideration to ensure we maximise the benefits of CAVs:
· Car park operators/owners - what would be the best alternative use of valuable inner city parking lots?
· Urban planners/architects/property developers – how much parking will residential developments need and what would be the best distribution of private parking and on-street parking?
· Government- how do we ensure that reduced car parking does not increase congestion? What is the right trade of in locating car parks between convenient distance and lower land cost? How do we ensure that our outer suburbs do not become a parking site for urban automated vehicles?
List of references
 Murno-Smith, IBISWorld Industry Report S9533 Parking Services in Australia (January 2019).
2 Ruth Eckdish Knack, Pay As You Park (May 2005) <http://shoup.bol.ucla.edu/PayAsYouPark.htm>.
3 Murno-Smith, IBISWorld Industry Report S9533 Parking Services in Australia (January 2019).
4 Deloitte Access Economics, Future parking scenario analysis (2018).
5 Andrew Hawkins, Amazon expands in-car delivery service to Ford and Lincoln vehicles (30 April 2019) The Verge <https://www.theverge.com/2019/4/30/18523216/amazon-key-ford-in-car-package-delivery>.
Eamon’s focus has been on applying quantitative microeconomic modelling to answer business and policy questions. This includes policy simulation, cost benefit analysis and forecasting. He has experience in infrastructure intensive industries such as transport, energy and mining. Recent projects have covered transport infrastructure planning, natural disaster risks, logistics (particularly stevedoring and ports) and land use planning (including agriculture and mining).
Steve is an economist with over 30 years’ experience in transport and major infrastructure sectors. Key knowledge areas include: economic evaluation, demand forecasting, project feasibility and business cases, project finance, operational analysis and modelling, infrastructures regulation and pricing, and general economic advice. He has extensive experience advising Australian government departments, government-owned corporations and private companies (financial institutions, operating firms and investors) on a range of economic and commercial issues in the transport sector. Steve also has significant international experience having advised Governments, private investors and multi-lateral lending institutions on projects in Angola, Argentina, Ireland, Laos, Malaysia, New Zealand, Portugal, South Africa, Saudi Arabia, Thailand, the UK and Vietnam.
Anna is a Director with the Infrastructure Advisory & Contestability team at Deloitte, focusing on transport policy and strategy in the areas of connected and automated vehicles, road safety and smart cities and working nationally on engagement with both the public and private sector.