BMW and Daimler wanted to bring ridesharing and car sharing to the fore together. In the meantime, the euphoria has given way to disillusionment.
EIt wasn’t long ago that some future topics in the auto industry were top priority. When the two premium manufacturers BMW and Daimler announced in February 2019 that they would jointly offer car sharing, ridesharing or digital parking assistance in the future, their CEOs Harald Krüger and Dieter Zetsche stood on a stage in Berlin as if it were a matter of course. At the time, they both promised an investment of more than one billion euros in order to shape the “urban mobility of today and tomorrow”. The money was to be used to create a mobility offer “with fully electric and self-driving fleets that charge and park independently and network with other means of transport,” was the vision presented in the shop window.
A good year and a half later everything is different. At BMW, Krüger was replaced by Oliver Zipse; at Daimler, Zetsche was followed by Ola Källenius. The two new ones work under difficult conditions. When Corona makes the world stand still, a lot takes a back seat. The euphoria surrounding the mobility service divisions of the automobile manufacturers combined in the jointly managed “Your Now” holding has given way to the efforts of the level. At the corporate headquarters in Munich and Stuttgart, they speak of the “long journey into extended mobility” in a rather disillusioned manner.
Hope bearers with losses
As evidenced by the consolidated balance sheets, former beacons of hope such as car sharing or ridesharing remain one thing above all else: loss makers. At the turn of the year, the Daimler Group still had its part of Your Now Holding on its books with a value of 866 million euros. But because business is not going well and several write-downs were necessary, the value fell to 618 million euros at the end of June. Here, too, the corona pandemic has an impact on the value of the stake, which, as usual, is listed in the respective financial results of BMW and Daimler. According to Daimler, 98 million customers were still using one of the five Your Now companies at the end of March, including the taxi and chauffeur broker Free Now, which started out as Mytaxi. At the end of June the number of customers was 92 million.
Because of the Corona exit restrictions in many markets, the transaction volume within Your-Now-Holding fell sharply in the second quarter of the year, by 70 percent compared to the same quarter of the previous year. After all: business has picked up again since the beginning of May, according to the companies involved. But if costs have to be reduced everywhere in day-to-day business, much more attention is paid to profitability in the young, hopefully started projects. And the bill for the new mobility services only works if the occupancy rate is high. That is why BMW and Daimler are more than ever looking for more partners so that they no longer have to bear the burden of mobility services alone.
New partners wanted
There is already speculation about sales. For example, the American ride-sharing broker Uber could take over the Free Now taxi service from Daimler and BMW in order to meet the requirements of the strictly regulated European taxi market. The companies did not want to comment on this when asked. A sale seems unlikely, but an investment by Uber or other companies in Free Now would be very welcome.
And that doesn’t just apply to the ridesharing agent. According to information from the FAZ, Daimler and BMW have also found a prominent new partner for the Reach Now mobility platform, which once operated as Moovel. With Reach Now, customers can combine several modes of transport, such as local public transport with car sharing. According to the merger control statistics of the Federal Cartel Office, the authority has been checking since mid-July whether Deutsche Bahn’s entry via the subsidiary Mobimeo GmbH would raise competition concerns. In mid-August, the Cartel Office gave its approval, and so Daimler, BMW and, indirectly, Deutsche Bahn will soon be involved in Reach Now. This cooperation is to be officially announced in the next few days. Behind this development is obviously the realization that even two financially strong corporations like Daimler and BMW are not in a position to cover all facets of future mobility on their own.
Complete withdrawal would be a mistake
Industry observers see it similarly. “With ride sharing, ride hailing, but also with car sharing, size matters. And classic industrial companies continue to find it difficult to finance the necessary investments to acquire customers or drivers and to bind them to their own platforms, ”says Kersten Heineke, partner at McKinsey management consultancy and its mobility specialist. “This is another reason why partnerships with third parties can make sense in order to bring the business to size faster.” Even before the corona pandemic, it was difficult for car manufacturers to finance the future field of mobility services alone. The crisis has exacerbated the situation again.
However, the McKinsey consultant believes that a complete withdrawal from future issues would be wrong, also because the global car market would, at best, stagnate until 2030. “Manufacturers who continue to engage in the field of mobility services will find it easier in this environment to increase their sales and maintain or even increase profitability.”