BMW and Daimler are pulling their flagship car-sharing services out of North America and the UK, citing rising costs and insufficient customer interest, as the companies’ chief executives refocus on selling premium vehicles.
The German carmakers’ new bosses, BMW’s Oliver Zipse and Daimler’s Ola Kallenius, are unwilling to invest more into the venture while they grapple with the huge cost of developing electric cars, according to people with knowledge of the matter.
The two arch-rivals had joined forces in February, pledging to invest more than €1bn in five businesses, including ShareNow, which amalgamated Daimler’s decade old Car2Go brand and BMW’s DriveNow.
Both offer app-based, by-the-minute rentals, which allow drivers to park their vehicles anywhere within a designated metropolitan zone in large cities.
At the start of the year, BMW and Daimler executives said they would launch services in nearly 90 cities in 2019, and expand “tenfold” in the following years.
On Wednesday, ShareNow said it would leave the United States and Canada due the “volatile state of the global mobility landscape” and the “rising infrastructure complexities facing North American transportation”.
The business also said it would leave Brussels, London and Florence due to “low adoption rates”.
Daimler and BMW had been pioneers in the so-called mobility sector, investing in car-sharing in an attempt to prepare for a potential saturation of the personal car market, and the rapid growth of cities.
Despite boasting 90m users of its “mobility services”, which include ride-hailing and charging apps, the companies have thus far failed to make car-sharing profitable.
DriveNow and Car2Go, which had already pulled out of more than a dozen locations, will continue to operate in 18 European cities, including seven in Germany.
“We believe these markets show clear potential for profitable growth and mobility innovation,” ShareNow said.
At the beginning of the month, BMW and Daimler announced plans to streamline their joint ventures, saying that ShareNow, which had attracted approximately 1m new customers since the start of 2019, was being “systematically further developed”.
However, BMW’s Mr Zipse, and his Daimler counterpart Mr Kallenius, both of whom assumed their roles this year, have repeatedly talked down the earning potential of such services.
Other manufacturers have also struggled to get similar projects off the ground. Earlier this year, GM was forced to pull its Maven car-sharing service out several cities, while Ford closed its van-hailing app Chariot, and sold its car subscription business to Fair.
Claims that the industry was facing profound disruption, which spurred the investment into mobility services, were “probably overblown”, says Max Warburton, an analyst at Bernstein.
‘Mobility services’ and ‘car sharing’ look like overhyped, lossmaking taxi hailing and car rental services,” he added. “You could lose money in this for the next 20 or 30 years”.