BMW and Daimler Believe Car Sharing Businesses Will Grow Into Moneymakers

Daimler'sDaimlerGermany, 1889 > present12 models
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Car2Go and BMW'sBMWGermany, 1918 > present87 models
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Drive Now car sharing services are predicted by the automakers to grow into €1 billion businesses each by 2020.

Mercedes launched Car2Go in 2008 as a car sharing service for the Smart Fortwosmart Fortwo Gen.2Germany, 2007 > 2013102 versions
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. It currently operates in 21 cities in Europe, Canada and the United States and has three more cities coming soon to the US. It has a fleet of 10,000 total cars and has 500,000 users.

BMW's DriveNow was founded two years ago and operates in Dusseldorf, Berlin, Munich, Cologne and San Francisco, California. It is expected to make a profit for the first time this year. DriveNow is co-owned by European rental car company Sixt and has 1,600 cars available in the five cities. It predicts that it will have a million users by 2020 and says that it has 125,000 users as of June 2013.

"You're witnessing a tipping point in the car-sharing market. It's becoming mainstream," said Tony Douglas, head of mobility services at BMW.

Analysts at Frost & Sullivan estimate that car sharing will grow from 2.3 million users globally now to 26 million in 2020, 15 million of them estimated to be in Europe.

The key to the market is that users have to be able to find a vehicle quickly, and it has to be close by.

"It's like the bus stop. If there's a stop within 400 meters of their house, then people will use the bus. Same with car sharing. If they'll find a car within 500 meters they'll use it," said Douglas.

The danger of the car sharing market is choosing the right cities. In cities with congestion charges like London car sharing services are doing quite well. The key is choosing large cities with large urban populations. Many cities in the US with significant suburban populations are not right for car sharing services.

Both BMW and Daimler have been using the services as a way to allow their users the chance to drive cars that are not conventionally available. BMW has been offering its 1-Series-basedBMW 1 SeriesGermany, 2004 > present191 versions
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ActiveEBMW ActiveE ConceptGermany, 2009 > present3 photos
, and Car2Go has the Smart Fortwo Electric Drivesmart Fortwo Electric DriveGermany, 2012 > present10 photos
before anywhere else. It allows potential buyers a chance to drive these cars in real world conditions and acts as viral marketing for people seeing them on the street.

The next step for both services is to improve their smartphone functionality. Both services are developing ways for users to find and reserve cars more quickly. Daimler is also developing apps for Berlin and Stuttgart with door-to-door directions that will get users from their home, to the car and to the destination even if there is walking or public transport in between.  BMW is developing apps for finding and reporting open parking spaces.

FordFordUnited Kingdom, 1909 > present33 models
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and VolkswagenVolkswagenGermany, 1938 > present98 models
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have also investigated founding their own car sharing services. 

Source: Automotive News Europe