Sunday, November 29, 2015

Get Rid of Your Car – project ideas for students of management

For background information, you might want to read an old post of mine:
Let me touch upon the key points from the above-mentioned blogpost, before I move on to discuss ideas for a small student project. We should each have a chauffeur driven virtual car. It should be available anywhere, anytime. Tap an app on the cell phone and optionally enter a destination and time of departure; you should have the driver calling you and turning up in a few minutes to take you where you wish to go.  This is already there, is it not? We should recognize that companies like Uber and Ola have made a significant impact on our lives in India. 
Let us look at what is not there. No one has got rid of his car! Customers have not accepted that owning cars is irrelevant as long as they can use cars whenever they want to. Society has not recognized the ongoing revolution as one that needs to be promoted through the right incentives. Lumpy “real” cars waste parking space in houses and apartment buildings, and in the places that people visit. We have not recognized the virtual car as one of the major solutions to traffic problems and atmospheric pollution. We have not visualized that it can create employment in significant numbers. We have only grudgingly accepted “taxi aggregators” as yet another enterprise and have done nothing to promote them. The issue is not one of administrative decisions; it is about the right visions for the transportation systems of the future.  
Unless society recognizes that information technology has made it unnecessary to have personal vehicles in most cases and creates the right policies to have them replaced by virtual cars, we will continue to have a moribund system of transportation. What are required are tax incentives to promote the use of shared vehicles, encouraging investments in companies providing shared vehicles, and support to employment generation for a large number of drivers. The use of shared vehicles will reduce wasteful investment in vehicles, because shared vehicles are far more productive. It will also eliminate waste of drivers’ time - private car drivers wasting their time waiting for car owners to come and occupy their cars.

Now to a student project on virtual cars:  some ideas discussed below  may be more relevant to countries where potential drivers are plentiful, but money to buy cars is relatively scarce; however, there are challenges to innovation in every country in regard to this new industry. I will offer a set of questions to trigger ideas for projects in this area:
a)   What incentives will persuade customers to give up “their own cars” in favour of virtual cars? If I am self-employed, the cost of owning and operating a car can be charged to my business expenses, saving me tax. Can we offer the same benefit to the self-employed for using virtual cars?
b)   Even employed persons can borrow money to buy cars and get tax benefits on the loan interest they pay. Can we allow customers of virtual car companies to invest in these companies to the extent of the cost of a car and get some tax benefits for that? For instance, if the virtual car operator gives them a discount of some X% because they have invested in the company, can the government treat the discount as tax-free income?
c)   How can a virtual car company deploy the investments it receives from customers to promote their own business? Can they, for instance, command a business loyalty from the customers through discounts in fares?
d)   Can the virtual car companies expand their business by offering car loans to their drivers? What role can banks pay in this regard?
e)   Can we prepare presentations to stimulate thinking in selected companies in this field?
f)    What would be right agencies to argue for suitable legislation to promote this socially relevant concept?
g)   What regulatory safeguards do we need to ensure that monopolies do not run away with the business and to protect other customer interests?
h)  What should manufacturers of electric cars do? Will the virtual car companies create and operate shared infrastructure for supporting electric cars under their control? What can the car manufacturers do to promote this? What should the government do to promote this?  
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