Automakers hitch their wagons to ride-sharing

Melissa Burden
The Detroit News

Automakers increasingly are shifting gears from only selling vehicles to offering their own car-sharing rental businesses and ride-sharing services.

Car-sharing typically allows consumers to rent an automaker’s car for a short period of time, perhaps just a half hour. Ride-sharing matches people to available carpools or an Uber-like service that provides on-demand rides.

General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV and others are exploring and expanding car-sharing and ride-sharing efforts, mindful of forecasts that the market for these services will grow.

GM’s European Opel brand recently launched the free car-sharing smartphone app CarUnity in Germany. It allows users — so far more than 5,000 — to offer their own cars for rent, even if it’s not an Opel. It also allows those without wheels to find a car.

Many car-sharing programs here and abroad require a membership fee and use of a smartphone app that allows users to locate and reserve a car. An ID card typically allows a member to unlock a car and start it with a code. Charges typically are by the minute, and insurance often is included. Daimler AG’s Car2Go subsidiary, for example, charges a $35 sign-up fee; rentals are 41 cents a minute, plus tax and fees.

GM’s investment arm, GM Ventures, in July invested an undisclosed amount into Flinc, an Internet and app-based ride-sharing platform. Opel will use the program in 2016 to allow rides to be shared through its CarUnity app, as it looks to extend services in Europe.

Last year, the U.S. car-sharing market had 1.3 million users and about 19,000 vehicles. That’s projected to grow to more than 3 million members and 51,000 vehicles by 2020, according to Frost & Sullivan, a research and consulting firm.

Globally, car-sharing is even bigger: It will grow from 5.4 million customers last year to about 17 million by 2020, Frost & Sullivan predicts; the fleet is expected to grow from 88,000 cars to about half a million by 2020.

Automakers have taken note as some young people avoid buying in favor of on-demand rentals and services such as Uber.

Richard Steinberg, CEO of BMW’s DriveNow car-sharing program, said the German automaker has opted to not only produce premium automobiles, but also provide mobility services to reach millennials — those age 18 to 34 — who “aren’t necessarily in a position to own vehicles.”

“As their life stage changes, as they move out of the city or have kids … then we expect and hope that they will put us at the top of the list when they’re looking to buy a car,” he said.

Car companies such as GM cite other reasons for exploring car-sharing and ride-sharing: urbanization and population growth. And government regulations to ease congestion.

While some industry experts believe car-sharing will reduce vehicle ownership and new car sales, GM Chief Economist Mustafa Mohatarem said at a recent industry conference that he’s not concerned: “Will we see wholesale displacement of new vehicle purchases? I seriously doubt it.”

Still, Anil Valsan, global lead analyst for automotive and transportation at EY (formerly Ernst & Young), predicts more automaker car-sharing companies or business partnerships in the United States will launch in the next three to five years. He said public transportation companies may join carmakers to provide mobility access in cities — offering buses, car-sharing and bike-sharing.

Car companies also face competition from traditional, established rental car companies. Hertz, Enterprise and Avis offer car-sharing in some cities for short-term rentals. Nissan North America Inc. this week announced a multi-year deal with Enterprise CarShare to supply Nissan vehicles exclusively for nearly 90 of its university campus fleets.

So far, car-sharing has been most popular in Europe.

Fiat Chrysler is partnering in a car-sharing project called Enjoy, in four Italian cities, with more than 1,500 Fiat 500s. Since launching at the end of 2013, Enjoy has had nearly 4 million rentals. Enjoy, coordinated by an Italian multinational oil and gas company, has about 300,000 members. Fiat Chrysler and its partner are considering expanding Enjoy to the U.S. and other countries.

A Fiat spokesperson said it is evaluating launching its own Uber-like “peer-to-peer” ride-sharing program in Italy.

Ford and GM entered the car-sharing market later than some German competitors. Ford this year launched GoDrive, a car-sharing pilot service in London with 50 Fiestas and Focus Electrics. Ford expects to have 2,000 members in an initial phase.

The Dearborn automaker also is running a peer-to-peer car-sharing service pilot for 14,000 Ford Motor Credit customers in six U.S. cities and 12,000 in London that ends in November. This program allows Ford Motor Credit customers to rent their cars to other drivers.

Ford is looking at shared vehicle ownership in India. It’s also developing an on-demand carpooling experiment it hopes to launch this year in New York and London. The dynamic shuttle project would use real-time routing and give riders a maximum travel time. Ride prices could drop if more passengers sign on for the ride, Ford spokesman Alan Hall said.

BMW’s DriveNow started four years ago in Germany and has operated in San Francisco for about three years with i3 electrics and 10,000 members. It seeks to expand to 10 other North American cities in the next few years, mostly in the Pacific Northwest.

Daimler AG’s subsidiary Car2Go started in Germany in 2008, and expanded to North America in 2010. Today it’s in 15 North American cities (the closest is Columbus, Ohio) and 30 globally. It has more than half a million North American users and 1 million globally. It uses 13,500 Smart cars and plans to add new cities next year.

Audi recently launched “Audi on demand” in San Francisco. Customers can rent an A4 to an R8 for up to 28 days, and the car is delivered to them. Audi spokesman Brad Stertz said the luxury brand is considering more California markets.

It also plans to launch a car-sharing service called Audi at Home in select upscale condo complexes, where residents share an Audi and pay by the hour. Stertz said that service could launch yet this year in San Francisco and Miami.

GM has worked with U.S. peer-to-peer car-sharing service RelayRides and last year completed a ride-sharing pilot with Google Inc. at the tech company’s California campus, using 50 Chevrolet Spark EVs. At GM’s Warren Tech Center, the carmaker has a bike-sharing program with Zagster that allows 19,000 Tech Center employees to “rent” bikes to travel the campus. It’s also testing 20 EN-V 2.0 urban concept vehicles at a Shanghai university.

The pilots help GM explore creation of a system that would include multiple transportation modes, said David Tulauskas, GM’s director of sustainability.

“We’ve come to the conclusion that our industry within the context of today’s traditional vehicles and today’s traditional business model is not sustainable in its current form,” he said.

Staff Writer Michael Wayland contributed.