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Carsharing Could Become Big Business for Daimler, Says CEO

Mercedes’ parent sees global opportunity to supplement conventional car, truck sales.

by on Apr.12, 2013

A Smart car in Berlin, part of Daimler's car2go carsharing service.

After so-so sales during the first quarter, Daimler AG has deferred making any kind of prediction on its first quarter profits from its core automobile and truck business.

However, while Daimler declined to offer revised income and sales forecasts, CEO Dieter Zetsche did tout the success of the company’s fledgling carsharing service, which going forward will serve as the anchor for a new business unit that could bring in as much as $100 million in revenue next year.

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“We see great potential in the expansion of our business operations in the area of innovative mobility services,” Zetsche said. “The car2go (service) made us the world’s fastest-growing provider of carsharing services. In fact, the number of car2go customers has increased roughly fivefold since January 2012. Altogether we have more than 300,000 customers in 18 major cities in Europe and North America,” he noted this week.

The list of cities in North America includes Austin, Portland, Seattle, Washington D.C. , Toronto, Calgary and Vancouver as well Amsterdam, Hamburg, Vienna, Cologne, London and Ulm, according to the information presented by Daimler AG representatives.

Zetsche said Daimler’s new “movel” platform aims to network with different mobility options from automobiles to taxis and public transportation through a smart phone app that shows users how they can get from point A to point B. The system, which was developed by Daimler’s in-house Business Innovations unit and is part of new subsidiary of Daimler Finacial Services, is already operating in Berlin and Stuttgart.

“That makes us the first automaker to offer such a comprehensively networked urban mobility solution” he said. The car2go network in Berlin has emerged as the largest free-floating carsharing system, which allows users to leave or park a car anywhere within the service area.

Zetsche said Daimler Mobility Services GmbH is expected to expand. “Our plan is for the new company to generate 100 million euros as early as next year,” he said, noting that combining smart phones and transportation is reshaping the experiences of many commuters.

“Digital networking is not only the basis of new automotive technologies, it also holds the key to completely new business ideas for mobility in general,” he said.

“For example, experts predict that the number of carsharing customers in Europe alone will increase from 700,000 today to around 15 million by 2020. Thanks to car2go, we are pioneers when it comes to shared mobility,” Zetsche said.

The goal is to not only expand existing carsharing services, the Daimler CEO said, but to continue pioneering new ways to reach potential customers. That includes bringing

the car2go concept to commercial fleets, Zetsche said. Daimler has also developed an online platform for renting privately owned cars, which has been dubbed ‘car2share,” while it is now working up an intelligent IT solution for the shared use if parking places, he added.

“It’s business concepts such as these that will change our company,” he insisted. “But there’s another thing I’m sure as well. They won’t harm our existing operations. Instead, they will complement and refine them and enable us to attract new customer groups.

Zetsche noted the average age of the company’s female customers are more than a decade younger than male buyers.

New products also have been highly successful in attracting new customers, Zetsche added.

“A-Class buyers in Germany are now 10 years younger on average than we were before we launched the new model. But just as importantly some 40 percent of A-Class customers in Germany used to drive a vehicle from another brand,” he added.

 

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2 Responses to “Carsharing Could Become Big Business for Daimler, Says CEO”

  1. Jorge M. says:

    I think this concept may be more viable in Urrup than in the U.S.

  2. Bob Austin says:

    Car sharing is definitely a part of the automotive future. It is likely to be an even bigger part as we move to the age of autonomously guided vehicles…which is coming, like it or not. Daimler is smart for addressing it early and because it actually is a better fit for their Smart products than selling them in the retail market.

    A large manufacturer owned car sharing operation does have one significant business drawback. When a manufacturer sells a car to a dealer today, it comes off the company’s book. If it continues in service to another division of the company (the car sharing division) it is still tying up company capital and diluting the company’s return on capital employed. This may not be warmly embraced by investors who rate companies on ratios like these. This could turn out to be more of a problem than actually putting the car sharing system into place.