The announcement that BMW and Mercedes will sell their money-losing ShareNow car-share service to Stellantis prompts the question: why does Stellantis want a business that has given the two German premium makers nothing but headaches?
ShareNow was formed by BMW and Mercedes in 2019 to combine their car-share operations along with a range of other mobility solutions with the ultimate goal that they would all merge to provide a fully autonomous electric ride-hail fleet.
It was an attempt to find some economies of scale in their respective DriveNow (BMW) and Car2Go (Mercedes) car-share operations and reverse years of losses.
However, the money kept flowing the wrong way. In 2019, BMW’s share of the losses incurred for the Your Now umbrella mobility entity that included ShareNow was €662 million (£566m). The situation improved in 2020 to a €349m (£299m) loss and in 2021 to €171m (£147m). But given last year’s loss was based on revenue of just €248m (£212m), the sale to Stellantis was probably the right decision. No figure has been disclosed although the reports estimate the figure at between €100m and €400m (£86m-£342m).
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The headaches for car-sharing operators are multiple. Unlike daily rental, car-share vehicles are parked in dedicated spaces usually on the street in order to get vehicles as close as possible to potential customers. Theoretically, they become the de facto personal car for a group of people, rather than just one.
While the idea is sound, the reality is that people generally need the car at the same time of the day, meaning that for large chunks of time the cars remain unused, forcing operators to increase the by-minute charge to cover their costs.
There are other problems. They need to be cleaned regularly, inside and out, or they risk looking neglected and unappealing. The pandemic dealt a further blow on that front. “Travel reduced and customers decided they did not want to use a car that had just been used by someone else,” wrote Steve Young, head of car distribution research company ICDP, on a recent blog covering the sale.
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