Opportunities or threats: The rise of Online Collaborative Consumption (OCC) and its impact on new car sales

Abstract

Abstract Online collaborative consumption models, such as Uber and Airbnb, have emerged as popular peer-to-peer platforms in the sharing economy. The recent introduction of ride-hailing apps for smartphones has generated a powerful medium for passengers to call cars effortlessly and flexible job opportunities for drivers. A central question surrounding the introduction of online collaborative consumption regards its impact on incumbent firms. For example, ride-hailing services could discourage private car ownership, potentially leading to a subsequent decline of new car sales. Our study investigates whether the adoption of a leading ride-hailing platform, Didi Chuxing, increases or decreases new car sales shortly after the platform’s entries across 51 cities in China. Our empirical results suggest that the initial entry of a dominant ride-hailing company like Didi Chuxing positively impacts new car sales in the short run. However, we suspect that this positive effect will be transitory. Whether the auto industry can leverage the ride-hailing platforms to achieve sustainable benefits remains to be seen in the long run.