Interview Question

Senior Associate Interview

-Chicago, IL

McKinsey & Company

Estimate size of vehicles fleet in a large city

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4 Answers

2

"Define" large city to mean 10 million people+, but assume 10 million to keep the math feasible Assume that those living under the poverty line cannot afford cars - this takes 30% or 3 million people out of the running Out of the remaining 7 million people, assume that 30% are under 18 and another 20% are over 65 and thus are unlikely to drive a car themselves This leaves a potential car-owning population of 3.5 Million people Assume that there are 2 types of cities - ones with great public transport (e.g., NYC, San Francisco) and others with poor public transport (e.g., Dallas) In the former, only about 20% of the potential car-owning population is likely to hassle with owning a car, but in the latter 70% of the potential owners may opt for a car. Thus the range of cars that I'd expect to see in a city of 10 million is somewhere between 700K and 2.45M. Oh and by the way, I am assuming that this is a city with enough infrastructure (e.g., roads, parking, gas stations) to support cars for this many people.

The Numerical One on

0

Wouldn't it be simpler to go this route: ~300M ppl in the US ~3 ppl/ household ~100M Household Assuming there are ~1.5-2 cars per household in teh US (mostly rural population, rely on cars a lot, even large cities and counties rely on cars: Bay Area, Seattle, Florida. The only place I think the majority of people won't own a car is NYC which has ~8M ppl). Going from the assumption that there are ~1.5 car / HH in the us that would bring the number of 150M cars in the US from households. Assuming this represents 70% of all cars in the US we could add an additional 30% for commercial fleets, cabs etc.. bringing our final number to ~200M cars in the United States. The number of vehicles in the US in 2015 was 265M including trucks etc... so our estimate is in the right ballpark.

Braf on

2

This is a simple market-sizing question. Therefore you need to make assumptions on the numbers, for example... Assume large city = 5 million people Assume 60% own a car, the rest use public transport = 3 million people Assume 50% of these people work in an office = 1.5 million people Assume 10% of these people are middle to top mgt = 150K people Therefore size of the vehicles fleet in a large city = 3% of population of the city This is an example of how it can be done. They are not looking for the exact number! They won't to know how you think...how you break a problem down.

Anonymous on

0

Tried to approach problem using bottom-up reasoning

Anonymous on

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