Why GM wants to compete with Uber – Yahoo Finance

Posted: Thursday, January 21, 2016

What will happen when people stop buying cars?

That’s a question all the big automakers are grappling with, and General Motors (GM) is backing its brainstorming with some aggressive spending on the next big thing.

GM is launching a “personal mobility” service called Maven that will kick off in Ann Arbor and spread to other major U.S. cities throughout 2016. Participants will use a smartphone app to locate GM vehicles for rent at parking spots throughout the city, unlocking the car using the app and a wireless connection to the car, instead of a key. The service is a blend of Uber, Zipcar and bike-sharing programs in many cities, since it allows users to find a short term rental closes to them using an app. 

GM also invested $500 million in the ride-sharing company Lyft recently, while also scooping up the remnants of Sidecar, an early ride-sharing venture that failed for lack of funding. GM president Dan Ammann will sit on Lyft’s board and oversee GM’s new ride-sharing projects. 

“The ownership model is a great model, but times are changing,” Phil Abram, GM’s chief infotainment officer, told Yahoo Finance at the Detroit auto show recently. “There will be alternatives.”

There already are alternatives, in fact, led by ride-sharing giant Uber, plus Zipcar, the short-term rental company popular with urbanites who need a vehicle every now and then but don’t want the hassle of owning one. Those ventures have grown from niche operators to mass-market firms that threaten to remake the car business, which insiders now call the mobility industry.

The challenge for GM, Ford (F) and all the automakers is finding ways to provide what customers want as the market for cars changes and possibly shrinks. One big shift is declining interest in driving and owning a car among younger Americans, which portends fewer car sales in the future. An Uber or Lyft driver might ferry passengers in a Ford or Chevy, but the automakers don’t benefit in any direct way.

GM doesn’t necessarily want to become the next Uber. But it does want to get inside such ride-sharing companies to learn more about changing consumer trends so it can optimize the business of providing people transportation. “We’re going to need partners,” Abram says in the video above. “We’re going to need new skills and new capabilities we don’t have in the company today.”

Hardly anybody thinks the “ownership model” is going away completely. But a family might own one car it needs full-time—a crossover for hauling kids, say—while renting or “sharing” a second car only when needed. Several young people living in a city could purchase a car together, sharing costs and access to a ride. Apartment buildings or condo complexes might operate a fleet of cars residents can check out as needed. Branded automakers might be the exclusive provider of vehicles for organizations that manage such fleets. Digital technology will continue to create new ways for people to access transportation.

Some new ideas will be flops, but others will be winners. Automakers at the fore of experimentation will benefit the most, or, in techspeak, be disrupted least. If the experiments go well, they might even disrupt themselves.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.

Editor’s note: This story has been updated to include new information about GM’s Maven program.

 

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