Less is more in Daimler’s mobility strategy

Big changes are coming to the auto industry but Daimler is striving to stay ahead of the curve. The automaker has increased its stake in Blacklane and has also developed car2go, a car-sharing service that has grown significantly since its debut in 2008.

“I would say there’s been disruption,” said Michael Mikos, CFO and director of business development at car2go. “[But] I don’t think you’ve seen that in auto sales specifically.”

Mikos cited a Seattle survey that showed 14% of car2go members avoided a car purchase. He added: “Half of those relate car2go directly to it, so we know there’s an impact happening. Is it at the scale that’s impacting car manufacturers? Probably not today. But I think the way car manufacturers are looking, they know the speed at which things change. Probably the biggest wakeup call, the infamous Uber and how fast that changed. They don’t want to be left behind. They know there’s a shift – how big and when it’ll happen is to be determined. No one wants to be caught without having a plan.”

Mikos isn’t sure where the market will end up, but he speculated that it could convert from one of auto sales to an industry made up of mobility service providers. “Daimler, with car2go and moovel, which is comprised of RideScout and GlobeSherpa, definitely is looking at other avenues to be a mobility service provider, rather than strictly a car manufacturer,” he said.

More than profits

Car-sharing and ride-sharing are hot right now but some may wonder if automakers are intrigued by the potential to increase profits over time. Each vehicle could be worth more if its sharing fees exceed those of a one-time sale.

“I don’t think Daimler looks at it that way,” said Mikos. “I think Daimler is looking at, ‘What are the trends? What is the next evolution of the automobile [and] of mobility services?’ They are certainly very interested, very excited about the potential of their mobility services. I think it’s less about dollars and cents and more excitement about what’s to come – and ‘How are we addressing change and being prepared for change?’”

Autonomous dreams

Mikos said the car2go team is “as excited as everybody else about autonomous vehicles.” “From that standpoint, it certainly has the possibility to fundamentally change the way car2go operates,” he said. “From an efficiency [and] convenience standpoint, it’s a natural evolution.”

If autonomy helps increase sharing, it could allow cities to replace some of its massive parking structures with new living and retail spaces. “That’s the opportunity,” said Mikos. “I think a lot has to happen in between – a lot of efficiencies and finding the balance. In the early days it could be that you have a lot of cars and then you have to find places to store them at the end of the day. We see, even with car2go, ebbs and flows in demand throughout the day.”

That said, Mikos expects car2go to find opportunities to open up more parking spaces. “When we talk about the Seattle study, that means 9,000 less cars on the road – that clearly should free up parking,” he said. “How much parking it frees up ultimately with autonomous, we’ll find out.”

On-demand driving: a thing of the past?

Autonomous car services are expected to be very beneficial but they could represent a new hurdle: consumers will have to wait for a vehicle to pick them up. That’s a different world from automobile ownership or even a car-sharing service like car2go, which allows a driver to hop in and leave immediately.

“You’ve got to find that balance,” said Mikos. “I think you find that across mobility. More and more people have, me included, less patience to wait. So what is appropriate – five minutes or less, 10 minutes or less? What does that mean to the amount of cars you need on the road?”

Mikos expects consumer acceptance to determine how this pans out. If people are willing to pay more for a quicker commute, mobility services will be more likely to put additional cars on the road. If consumers would prefer to save money and wait, there may be fewer cars on the road.

New cities coming soon

Mikos wasn’t ready to reveal where car2go is headed next but he said that discussions have continued with large cities about future expansion. He said: “Any major metropolitan area is of interest to us. We just need to work with them to come to an agreement to allow us the ultimate flexibility. [car2go is] like having your own car – you can pick it up, drop it off in any legal parking space. That’s what we want to get [from] the city before we launch with them.”

Mikos added that it is “highly important” to provide that “full experience to our members.”

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