BMW's Ian Robertson on the future of car sharing
One thing for certain is that the business model is changing. Most carmakers are now into, or getting into car sharing or alternative mobility. Jaguar Land Rover has recently announced InMotion, a new technology business that builds apps and on-demand services to overcome modern travel and transport challenges.
With technology changing the way people travel and providing access to vehicles at the swipe of a screen, more and more people are looking for ways to improve their commute to work or to access the car they want, when they want to.
In April InMotion will begin real-world testing of a number of different services such as car sharing and car ownership solutions, across North America, Europe and Asia in the coming months.
At the same time, BMW said it is expanding its DriveNow car share service into the US starting in Seattle under the brand name ReachNow.
Based on the successful DriveNow model currently operating in Europe, ReachNow is starting with an initial fleet of 370 BMW and MINI vehicles with 20% of the fleet made up of i3 electric vehicles. In addition to Seattle, ReachNow will be expanded into further cities in the US.
This move is in line with the company’s strategy NUMBER ONE>NEXT, as outlined by management board chairman Harald Krüger at this year’s annual accounts press conference. The strategy states that the development of customer-oriented mobility services will be one of the company’s central business fields in the future.
BMW’s new strategy is aimed at setting new standards for connectivity and automated driving. Kruger said the BMW Group will move into a new era in which, “we will transform and shape both individual mobility and the entire sector in a permanent way”.
He added: “We are convinced individual mobility will remain a fundamental human need. According to forecasts, new car registrations worldwide are expected to reach 100m by 2020, including a growing premium segment. At the same time, mobility is going to change dramatically thanks to new technological advancements.”
BMW and other carmakers are supplementing their classic business model with additional services that make life on the road easier for people in big cities. DriveNow, the joint car-sharing venture between the BMW Group and Sixt SE, offers BMW and MINI brand vehicles for rental in European cities according to the free-floating principle.
The vehicles can be rented and returned anywhere within a defined area of the city. Well over half a million registered customers can locate and reserve the vehicles via the DriveNow app or website and can use the service in any DriveNow city. DriveNow operates a fleet of more than 4,000 vehicles at locations in Munich, Berlin, Düsseldorf, Cologne, Hamburg, Vienna, London, Copenhagen and Stockholm. 20% of these are electric BMW i3s. Several scientific studies show that a DriveNow vehicle is a substitution for at least three privately owned cars, meaning DriveNow is making a contribution towards reducing traffic congestion in urban areas.
Board member for sales and marketing, Ian Robertson, said that BMW has a clear set of target parameters and will continue to invest heavily in the future.
The rise of car sharing and ride sharing is, he said, an opportunity, bringing more people to the BMW brand who may only have aspired to it in the past. DriveNow has 580,000 members in 10 European cities but as the sharing culture grows could this not lead to manufacturers owning all their vehicles rather than selling them?
Robertson said: “We already own a lot of cars through our huge leasing business but in high density urban areas there are many people who don’t need a car all the time and who could not afford a premium model. As an aspirational brand, the sharing environment opens BMW up to a lot of people who we didn’t have before. There is a much higher risk for volume brands. There are many different ways of achieving mobility and this is very high on our agenda.”
He added: “The average car use is just 5% a day making a vehicle a very expensive asset. With DriveNow we are already achieving 20% utilisation and making a profit. What we need to do is analyse the current usage to find ways of getting more people to use the available cars more often. Do we see the sharing environment as revenue potential? Yes we do.”
That said, Robertson believes vehicle ownership will remain strong, particularly away from big cities. The future will also bring greater demands for connectivity between people, vehicles and infrastructure.
Robertson said: “We have a very strong software base which we will further enhance in the future by acquiring expertise from start-ups. For example we currently have 200 people in Chicago working on our own apps. But the big question as cars become more connected is who owns the data. There are any number of people who want access to data in return for their products but our view is that the customer owns the data.
“We have developed back end structures so we can articulate the data into our own systems. That data is then only available when the customer wants it to be. We do not intend to give anything away, we will be looking to control it ourselves.”
As the industry moves towards more connectivity and autonomous vehicles, will it be possible to retain brand identity?
In the premium segment the brand is even more important.
Robertson said: “Aspiration and what it stands for is our differentiator today and will be tomorrow.”
As for driverless cars, much of the technology is already available with technologies such as forward radar, braking assist, lane keeping, cruise control and parking assist. Roberson added: “It is possible now to drive for many miles without using foot pedals and for short periods without touching the steering wheel. More hands off and eyes off will come, but brain off and driver off are still some way off. It all comes down to who is responsible and who makes the decisions.”