Ford, BMW See Success In The Relatively Serene Car-Sharing Scene – Forbes

Posted: Friday, August 22, 2014

While on the ride-sharing side of things Uber and Lyft bicker with each other and fight with the entire American taxi-driving fraternity, things are much smoother over on the car-sharing front. No one seems to be arguing, and a boom in the sector is lifting the auto companies that are participating.

There’s no denying the current and long-term threat to the auto industry that is posed by Millennials’ embrace of ride-sharing services instead of car ownership. But Ford and BMW are among car makers reporting that they’re at least scoring some good results from experiments with ride-sharing services that are aimed to claw back part of that loss of business. General Motors General Motors and Mercedes-Benz Mercedes-Benz also have stakes in vehicle-sharing startups.

Ford, for instance, has boosted its vehicle population with Zipcar Zipcar — a startup that was acquired last year by Avis Budget Group Avis Budget Group — to about 1,100 vehicles, mostly Focus and Escape models, on about 350 U.S. college and university campuses now compared with only several dozen vehicles on 150 campuses shortly after they launched their partnership in 2011. Importantly, driving the Fords that are part of the Zipcar fleet has boosted students’ regard for the Ford brand significantly.

“It’s the epitome of a no-pressure test drive,” Lisa Schoder, Ford’s global small-car marketing manager, told me. “It’s on their terms and in their world, in real life, and the results have been very favorable. Millennials tend to be brand agnostic toward autos. So to the extent we can be part of their experience and show them what Ford has to offer, we can build their opinion.”

Meanwhile, BMW’s car-sharing venture with Sixt in Germany is profitable in cities where it’s been operating for more than a year. The two companies operate the DriveNow service in five German cities — and San Francisco — with plans to expand under a five-year plan to reach 25 cities in Europe and the U.S., Sixt CEO Erich Sixt said, according to Automotive News Europe.

“We’ve been surprised about the explosion of new subscriptions, which has helped boost revenue,” Sixt said in a conference call with reporters.

To be sure, car sharing remains a net negative for auto brands. A half-million vehicle purchases in the United States already have been avoided due to the growing popularity of Zipcar, for instance, and other services such as Relay Rides, which partners with GM, according to a recent study by Alix Partners, a business-advisory firm. That total of foregone purchases could grow by another 1.2 million vehicles by 2021, Alix projected.

“Our study suggests that Americans’ willingness to avoid vehicle purchases due to growing car-sharing options is higher than many have thought,” said Mark Wakefield, managing director of Alix Partners and head of its North American automotive practice.

But for the auto brands that are trying things out with car-sharing services, it’s a case of joining them because they can’t beat them.


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