Fearing Uber

BMW and Daimler merge car-sharing in challenge to Uber

main 45275813 picture alliance ZB – DriveNow Car2go Uber Mytaxi taxi eu Daimler BMW car-sharing ride-sharing Mercedes-Benz mobility services
Pooling resources. Source: picture alliance / ZB

One sentence revealed what is at stake: “As pioneers in automotive engineering, we will not leave the task of shaping future urban mobility to others,” Daimler boss Dieter Zetsche said in a joint press release with BMW.

Mercedes-maker Daimler and BMW, the world’s number one and two makers of luxury cars respectively, announced on Wednesday that they would merge their car-sharing, ride-hailing, parking and charging services to “become a leading provider of innovative mobility services.”

The two carmakers are responding to growing competition in the ride-hailing market from the likes of Uber, Lyft and Didi and electric carmaker Tesla, as well as Drivy, Snappcar and Turo,which offer alternative platforms that allow consumers to hire cars directly from other individuals.

Both BMW and Daimler have been slowly building up their competing services. The Munich-based carmaker owns car-sharing company DriveNow, known as ReachNow in the United States. Daimler operates Car2go, the ride-hailing app mytaxi and Chauffeur Privé. Not all of these operations are profitable and merging them could make it easier to turn the losses into earnings. Scale is crucial, especially in the car-sharing business.

By focusing on mobility services, Daimler and BMW want to make sure they are not relegated to mere hardware makers. Uber and China’s Didi, whose operations heavily rely on software, could start making money as more people move from owning cars to sharing them, whether as a taxi, a rental or a shared ride.

Daimler and BMW’s combined businesses, which still need antitrust approval to officially merge, will have a valuation of more than €1 billion, Handelsblatt has learned. That’s a far cry from the $72 billion reported for Uber, which made $4.5 billion in losses last year, or the $11.5 billion value for Lyft, but it is closer to the $6 billion reported for Asian peer Grab and $2-3 billion for Gett.

The German joint venture, which will include parking app ParkNow and access to 143,000 electric charging stations globally, currently has 40 million customers, mostly in Europe. That compares to 40 million users per month for Uber and 23 million users last year for Lyft, which is partially owned by GM and Ford.

Daimler and BMW, which are worth €71 billion and €56 billion respectively on the stock market, bought out their previous joint car-sharing partners Europcar and Sixt to combine Car2go and DriveNow.

In early September last year Daimler announced it invested in Turo as part of a financing round with a total volume of $92 million. The round was co-led by Daimler Mobility Services and one of South Korea’s leading companies, SK Holdings. Source: Turo
In October 2017 Daimler set up a joint venture together with New York-based mobility service Via. Just a few months later, the company started offering its first services in Germany. Daimler and Berlin public transport authority BVG share vans using Via technology. Source: via
The taxi start-up founded by Niclaus Mewes was one of Daimler's early investments, in January 2012. The German firm now boasts 100,000 taxi drivers in some 50 cities. In September 2014, Daimler assumed complete ownership. Source: mytaxi
In order to spur Mytaxi's growth, Daimler has encouraged its subsidiary to take over competitors. In February last year, it acquired Taxibeat in Greece, an app with 8,000 taxi drivers and around 540,000 customers. Source: Taxibeat
In December 2013, Daimler bought a stake in Blacklane, a company that offers limousine rides at a fixed price in 50 countries worldwide. In 2016, the investment was increased by an eight-figure amount. Source: Blacklane
Careem is Middle East shuttle service, founded in 2012 by two McKinsey consultants. The company arranges trips within 53 cities in the Middle East, North Africa and South Asia. Daimler took part in a $500 million financing round in June last year. Source: Careem
Offering 200,000 connections between 1,200 destinations in 26 countries — including the US — Flixbus is the undisputed market leader in the long-distance bus market in Germany. Daimler has been involved in this success story with a minority stake since September 2013. Source: dpa

Markus Fasse specializes in aviation and automobile industry news and works from Handelsblatt’s Munich office. Gilbert Kreijger is an editor with Handelsblatt Global. To contact the authors: fasse@handelsblatt.com and kreijger@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!