Fearing Uber BMW and Daimler merge car-sharing in challenge to Uber

Germany’s largest luxury carmakers are merging their car and ride-hailing services, including ReachNow and Car2go, in a bit to strengthen their position against Uber, Didi and Lyft.
Pooling resources.

One sentence revealed what is at stake: “As pioneers in automotive engineering, we will not leave the task of shaping future urban mobility to others,” Daimler boss Dieter Zetsche said in a joint press release with BMW.

Mercedes-maker Daimler and BMW, the world’s number one and two makers of luxury cars respectively, announced on Wednesday that they would merge their car-sharing, ride-hailing, parking and charging services to “become a leading provider of innovative mobility services.”

The two carmakers are responding to growing competition in the ride-hailing market from the likes of Uber, Lyft and Didi and electric carmaker Tesla, as well as Drivy, Snappcar and Turo,which offer alternative platforms that allow consumers to hire cars directly from other individuals.

Both BMW and Daimler have been slowly building up their competing services. The Munich-based carmaker owns car-sharing company DriveNow, known as ReachNow in the United States. Daimler operates Car2go, the ride-hailing app mytaxi and Chauffeur Privé. Not all of these operations are profitable and merging them could make it easier to turn the losses into earnings. Scale is crucial, especially in the car-sharing business.

By focusing on mobility services, Daimler and BMW want to make sure they are not relegated to mere hardware makers. Uber and China’s Didi, whose operations heavily rely on software, could start making money as more people move from owning cars to sharing them, whether as a taxi, a rental or a shared ride.

Daimler and BMW's combined businesses, which still need antitrust approval to officially merge, will have a valuation of more than €1 billion, Handelsblatt has learned. That’s a far cry from the $72 billion reported for Uber, which made $4.5 billion in losses last year, or the $11.5 billion value for Lyft, but it is closer to the $6 billion reported for Asian peer Grab and $2-3 billion for Gett.

The German joint venture, which will include parking app ParkNow and access to 143,000 electric charging stations globally, currently has 40 million customers, mostly in Europe. That compares to 40 million users per month for Uber and 23 million users last year for Lyft, which is partially owned by GM and Ford.

Daimler and BMW, which are worth €71 billion and €56 billion respectively on the stock market, bought out their previous joint car-sharing partners Europcar and Sixt to combine Car2go and DriveNow.

Markus Fasse specializes in aviation and automobile industry news and works from Handelsblatt’s Munich office. Gilbert Kreijger is an editor with Handelsblatt Global. To contact the authors: [email protected] and [email protected]