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21 August 2017

Daimler and BMW May Merge Their Car-Sharing Divisions

Daimler’s Car2Go and BMW’s DriveNow may be merging their car-sharing services, according to a hint by the chief executive of DriveNow’s partner, Sixt.

CEO Erich Sixt, who heads the Germany-based car rental company named after him, would not confirm that talks are under way, but suggested that it is in motion.

“At the last press conference I made clear that we are not involved. Today I can only say ‘no comment.’ This is of course a slightly different statement from the last one. Why things are dragging on is not down to us,” Sixt said Thursday.

The merger question had come up in May, when Sixt said his company wasn’t involved in talks between the two car-sharing firms. He did share that Sixt’s 50-percent stake in DriveNow had been valued at about 480 million euros ($560 million).

Prior to that, the question has been coming up for a while. In December, German monthly Manager Magazin reported that the two German automakers were in talks to consolidate their car-sharing units on an operations level, keeping the Car2Go and DriveNow brands active.

Both automakers declined to comment in December. This time around, Car2Go declined to comment and DriveNow was yet to respond.

BMW did comment to a question about Daimler and BMW being in talks about consolidation in car-sharing.

“We are in constant talks with our partners and are of course evaluating the strategic options for our activities and stakes,” a BMW spokeswoman said.

BMW and Daimler are seeing mobility services take off in global markets, but have taken a cautious approach about expanding their networks.

Car2Go recently reported seeing 40-percent growth in North America, with its one-way car-sharing model taking off. The company had shut down operations in a few cities in that region the year before.

DriveNow, was a joint venture between BMW and Sixt founded in 2011. Last year, BMW launched an Uber-competitive brand, ReachNow, in North America. On-demand ride services are being offered in a few markets, including the use of BMW i3 electric cars.

In Europe, demand for car-sharing is seeing quite a bit of growth in cities such as London, Frankfurt, Berlin, Milan, and Helsinki. Customers appreciate free parking in their car-sharing rentals, which cuts down a major cost in those cities.

BMW is seeing car-sharing having an impact with consumers on car ownership and mobility choices. More than a third of DriveNow customers in London have sold their cars, and only 20 percent of them had committed to keeping their own vehicles.

SEE ALSO:  Car2go Sees 40-Percent Trip Growth In First Half

Growth for their services has been taking off lately. Sixt reported that its DriveNow membership base had grown from 815,000 customers at the end of 2016 to 950,000 at the end of June.

Car2Go said that it has about 2.7 million members who have access to 13,900 vehicles in eight countries located in North America and Europe, and in China.

Both of the automakers, and most of their industry peers, see the game changing for vehicle manufacturers. Paid, autonomous mobility services are expected to make up much of their revenue over the next couple of decades.

Ride-hailing services offers by companies such as Uber, Lyft, and Didi, make up about a third of the global taxi market, according to Goldman Sachs.

The investment firm expects that to grow eightfold to $285 billion by 2030. Autonomous robotaxis will make that happen, Goldman Sachs said.

Reuters

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