BMW, Daimler End North America Car-Sharing, Pare Europe Unit
(Bloomberg) -- Daimler AG and BMW AG are withdrawing their joint car-sharing service from North America and halting service in three European cities, citing rising costs and low ridership.
The pullout represents a major setback for the German companies’ ambitions to create new businesses to respond to changing consumer views about vehicle ownership. The luxury car giants announced a 1 billion-euro ($1.1 billion) joint investment in February into both car-sharing and ride-hailing, and such a quick retreat from one business line points to the difficulties in building up new mobility services.
The car-sharing venture -- branded Share Now after a merger of Daimler’s Car2Go and BMW’s DriveNow units -- will cease operations in Brussels, London and Florence next year, leaving a network of 18 European cities, and wind down its remaining business in the U.S. and Canada, according to a statement Wednesday. General Motors Co. scaled back a similar service in April, while Ford Motor Co. shut down one mobility unit in March and another earlier this month.
While the German companies are pulling back in the car-sharing market, they are growing the ride-hailing part of their venture. FreeNow, which provides taxi services to customers, is expected to double its revenue this year and next as it competes with Uber Technologies Inc. and Lyft Inc. in Europe and Latin America.
Yet the struggling car-sharing arm, Share Now, has been paring back its North American business for months. The service suspended operations in Chicago in April after losing at least 75 vehicles to thieves who took advantage of looser background checks. It announced plans in October to pull out of Austin, Calgary, Denver and Portland. That left it with a presence in just five North American cities: Montreal, New York, Seattle, Vancouver and Washington. It will leave the remaining locations by Feb. 29.
“Moving forward, Share Now will focus on the remaining 18 European cities,” the company said in its statement. “We, along with our shareholders, believe these markets show the clearest potential for profitable growth and mobility innovation.”
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