While it goes in a different direction than the auto industry’s traditional go-it-alone approach of vertical integration years ago, today’s world demands that auto companies collaborate in areas outside their space and seek ways to make new profits from disrupting trends.
This year will see more of such activities, like using car- and ride- sharing as a means to create new residual value in their cars and engage with a new consumer demographic.
More auto OEMs will make moves like creating leasing organizations and dealer networks that are able to deal with partial ownership and vehicle servicing. And importantly, with the right offering, they can reach new drivers and create brand-specific loyalty.
Many of the car-sharing business models will act as a pay by the minute or mile, or a combination of the two, where OEMs will still own the physical asset. This will allow the OEM to amortize car cost across many transactions, not just a single sale — creating better profitability options.
Swedish automaker Volvo is establishing a car-sharing business that will operate not just in Sweden, but in other countries across the globe. It will be based on Sunfleet, the car-sharing service that it’s been running in its homeland for decades. According to TechCrunch, you can avail of Sunfleet’s services by booking a car through its website, which you can then unlock with an app. While you can book a car for a day or two, you can also set up a monthly subscription. The new business will likely offer something similar, though the company says it will also introduce “an entirely new range of mobility services.” Who knows — someday that might even include the ability to rent one of its self-driving vehicles.
The company joins the list of automakers with their own car-sharing service, such as GM’s Maven that already operates in several cities across the US. BMW has ReachNow, Mercedes-Benz has Croove in Germany, while Toyota has begun testing its keyless car-sharing service last year.
Cities Examples: San Francisco, Tel Aviv and Seattle
San Francisco’s on-street car-sharing program is at a crossroads. After a two-year pilot, which 200 parking spaces were designated for car sharing — a majority in the northeast neighborhoods — the San Francisco Municipal Transportation Agency will decide whether to expand the program. The discussion comes as San Francisco’s parking is becoming increasingly congested with new uses like Uber and Lyft, Scoot (an electric motor scooter rental) and bike sharing.
Tel Aviv on Sunday unveiled its municipal car-sharing plan that will let users rent one of 260 vehicles to be dispersed around the city on a short-term basis, measured in minutes, when the program is launched this fall. Officials said they hope the Tel-Auto program would help alleviate the city’s chronic traffic and parking problems, even though the plan calls for reserving 520 parking spaces around the city for the cars. “We are going ahead on the assumption, based on similar systems around the world, that every shared car reduces by four the number of private cars on the roads,” said Mayor Ron Huldai at an event for Tel-Auto. “In Israel, a project like this is important because 20% of the time – Sabbaths and holidays – there’s no public transportation.”
As the headquarters for BMW’s ReachNow car-sharing service, Seattle will be one of the first places people get to try out BMW autonomous vehicles. Steve Banfield, CEO of ReachNow, said Thursday at the Economic Development Council of Seattle & King County annual Economic Forecast Conference that BMW will test out its eventual self-driving fleet through ReachNow. The company reportedly plans to test driverless cars in Germany this year. “The benefit to having ReachNow in your region, is that you are going to be the first people to try autonomous cars from BMW,” Banfield said. “We are going to bring them here and we are going to be able to use them and test them.” ReachNow only launched nine months ago, but it has grown fast. In that time period, it has expanded service in Seattle and come to Portland and Brooklyn. The number of users now sits above 40,000, Banfield said Thursday.