National

Car-pooling shows growth potential over long distances

by Kathleen Chu and Komaki Ito

Bloomberg

Stuck in traffic heading out of Tokyo, Kohei Miwa noticed how few of the cars near him on the expressway were carrying passengers.

“It occurred to me that car-pooling would be one way to reduce traffic jams,” said Miwa, a 38-year-old former banker who worked at Goldman Sachs Group Inc. and Morgan Stanley.

Miwa quit banking in 2013, giving up millions of yen a year in income, to set up Notteco, which lets people use the Internet to find drivers offering intercity travel at a minimum cost. For now, he’s providing the match-making service for free, allowing drivers and passengers to share their costs without paying a commission until he expands his base.

Unlike Uber Technologies Inc.’s on-demand car service, Notteco targets long-distance travelers between cities. Online shopping giant Rakuten Inc. said in March it agreed to invest $300 million in Lyft Inc., a San Francisco-based on-demand car service provider.

Notteco, a Japanese phrase that means “let’s get on and get going,” plans to raise ¥100 million ($837,000) initially from individuals, Miwa said. He wants to approach companies in the next stage of fundraising to get an additional several hundred million yen, he said.

Miwa acquired Notteco, a website offering similar car-pooling services, earlier this month, and gained more than 15,000 members. He is revamping the site and wants 30,000 users in a year and 100,000 in two years. Miwa said he may charge a handling fee when Notteco gathers “critical mass,” which he envisions at 50,000 members.

Miwa estimates the car-pooling market in Japan to be worth about ¥12 billion, with the potential to double or triple, without providing a time frame.

Notteco won’t make any revenue this year, and Miwa forecasts sales from the car service to reach ¥32 million next year. That will double in the following year and eventually reach ¥563 million in 2020, he said.

The website is also targeting the hospitality industry to advertise ski resorts, hotels and amusement parks in areas where members travel.

Passengers will also be able to rate drivers on their services and safety on the website, he said.

“That value is something large companies can’t easily duplicate,” said Miwa, who graduated from Hokkaido University, where he studied quantum chemistry.

In addition to convenience, Notteco can offer cost-savings to riders, Miwa said. Driving from Tokyo to Nagoya, a 350-km (218-mile) trip, costs about ¥12,000 for highway tolls and gasoline. That cost may be reduced to a quarter or more, depending on what the driver chooses to charge passengers, Miwa said. By comparison, going by bus costs about ¥5,000 and bullet train costs ¥11,000.

Time is a factor that’s less easy to control. Traffic congestion, especially at peak holiday periods in early May, August and New Year’s, can turn the four-hour drive between the two cities into an all-day experience.

And car travel faces stiff competition in a land of fast trains that are getting even faster — Central Japan Railway Co. (JR Tokai) on Tuesday clocked its magnetic levitation train, the type that will eventually ply the Tokyo-Nagoya route, at a record 603 kph.

While cars are sometimes seen as polluters, Miwa said that building high-speed train lines also comes at an environmental cost, given the 248 km of tunnels JR Tokai will have to dig through the Japan Alps before the high-speed line opens in 2027.

“There are energy-efficient and environmentally friendly ways to travel,” said Miwa. “Car-pooling is one of them.”