Car Sharing Set to Become Major Business Over Next Decade

BMWBMWGermany, 1918 > present87 models
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has decided that 2013 will be the first year that it earns a profit from its car sharing service DriveNow that it operates with car rental company Sixt. To make the two-year old service profitable, BMW will slow down the service's growth to two cities in Europe this year. 

DriveNow is already available in four cities in Germany. It will add one more Germany city and one city in Europe in 2013. 

"We could expand quicker, but we want to prove that the business can be profitable. We look at profitability from city to city. There are not a lot of economies of scale.," said DriveNow Managing Director Andreas Schaaf.

Car sharing services are predicted to become significantly more popular in Europe over the next decade. As cities grow and become more congested, more buyers will opt for a car only when they need one. BMW and Daimler have both created their own car sharing services to supply these consumers. 

Daimler's Car2Go service wanted to break-even by 2014. It is currently profitable in three of the 18 cities that it operates in. It plans to increase its fleet from 6,100 Smart ForTwos to 10,000 cars in 2013 and increase subscribers from 275,000 to 500,000. 

Zipcar, the leading car sharing service in the US, was recently sold to the Avis Budget Group rental car company for $491 million. It claims 767,000 subscribers. 

BMW's service is still much smaller than Car2Go or Zipcar. It reports 77,000 subscribers. 

BMW and Daimler are still experimenting with car sharing services as not just businesses in their own right but also marketing opportunities. Both companies have begun offering electric cars as part of their service before they are available to buyers. BMW offers the Active EBMW ActiveE ConceptGermany, 2009 > present3 photos
, based on the 1 SeriesBMW 1 Series Gen.2 [F20] Germany, 2011 > present130 versions
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in Berlin and Munich. Daimler offered the electric Smart ForTwosmart Fortwo Electric DriveGermany, 2012 > present10 photos
before it was available to most consumers. BMW says that it will add the i3BMW i3Germany, 2011 > present26 photos
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to DriveNow when it is ready to go on sale. 

Source: Automotive News Europe