How Will Coronavirus Affect the Mobility Industry? Implications from SARS
The tracks of an epidemic are often broader and deeper than they may first appear, stretching far beyond the obvious industry effects.
The last time a major public health crisis hit China was during the 2002-2003 outbreak of the Severe Acute Respiratory Syndrome, or ‘SARS’ as it is popularly known.
Like the coronavirus, SARS also first appeared in China and soon spread worldwide, killing nearly 800 people, mostly in China and Hong Kong.
Although the economic – if not the health impact – of SARS turned out to be perhaps smaller than many feared at the time, transportation, hospitality, retail, and entertainment sectors were affected.
One of the most significant impacts of SARS was the negative effect on public transportation and the travel sector. According to research published by the National Central University of Taiwan, during the 2003 SARS period, there was a significant relationship between the daily underground ridership – that is, taking the subway – and the daily reported SARS cases that were observed in Taiwan.
The report found that there existed a quick response among the underground ridership with respect to the daily reported SARS cases that made headlines almost every day in the mass media during the SARS period. The overwhelming reports from these public media appear to have had a big impact on the willingness of the public to use the underground as a means of going to schools and offices.
In addition, the report further estimated that, for each reported new SARS case, there was an immediate loss of about 1200 underground rides. It concluded in the report that about 50% of daily ridership was lost during the peak of the 2003 SARS period.
On the other hand, this fear of public transport resulted in a positive effect on motorized vehicles and the bicycle industry. As public transport became associated with disease and danger, it caused an even bigger rush toward owning cars and bicycles in big cities.
In an interview with the New York Times back in 2003, a Beijing bicycle show owner says, ''We sold more bikes during epidemic than I can remember.'' In ordinary times the store sold 30 or so bicycles a day, however, during the epidemic the store sold as many as 119 in a day.
With the disease around, a lot of people who typically catch buses and the subway decided to ride bikes, he said.
The car business also benefited from SARS. Many of the residents avoiding public transportation sought to buy cars for the first time. China Automotive News reported that, after late April 2003, car sales in Beijing had reached 800 a day, double the usual number.
Now, the same sectors are likely to suffer from the current coronavirus outbreak. To illustrate, the World Health Organization (WHO) and several countries and multinational organizations have issued a piece of warning advice against travel to China. Public transport is also being affected. In a couple of cities, including Wuhan, public transport has already been shut down indefinitely. People are avoiding mass gathering places.
But again, this might be good news for bike-sharing and ride-hailing companies such as Mobike, Meituan Bike and Bluegogo. Although in the short run, the coronavirus will affect the industry negatively, in the long run, they will likely benefit from the public’s fear of taking subways and buses.
Currently, ride-hailing companies face challenging times amid reports of multiple drivers being diagnosed with the virus.
“The epidemic will have a substantial impact on the ride-hailing industry because there is a probability of getting infected by the drivers,” said Sun Naiyue, a fellow analyst at research firm Analysis, who covers China’s broader mobility sector. “The demand has also been decreasing, as people are not going out.”
However, in the long run, the industry will recover, and is even likely to make profit as people return to work, many may choose to cycle or take a taxi or a ride-hailing service over public transport systems, which are way more crowded and increase the risk of getting infected.
Even the new energy vehicles industry might see a positive turn of events for its sales. The Chinese government is already providing various incentives to increase the sale of electric vehicles – such as giving free license plates, monetary subsidies that, for a representative, midsize car, amount to approximately 23% of the total electric car price.
Combined with these initiatives, the fear of public transport might increase NEV sales, as it boosted the car and bike sales earlier during the SARS epidemic.