BMW will this week launch its pay-as-you-go car club in London in the latest sign of carmakers’ eagerness to tap the “sharing” economy.
The German manufacturer, which has steered a revival of its popular Mini brand in the UK, will on Thursday announce the arrival of its DriveNow scheme in London following launches in Berlin, Vienna and San Francisco.
Launched in 2011, DriveNow, a joint venture with Sixt car rental company, has 360,000 customers in Germany, making it the country’s biggest car-sharing organisation. The company intends to launch in 15 European cities outside Germany and 10 in North America.
London is the biggest market in Europe by members for the round-trip car club model operated by the likes of Zipcar – where vehicles are picked up and dropped off in the same location.
But DriveNow runs on a one-way “disposable” basis, rather like the so-called Boris bike scheme in London, named after the city’s mayor, allowing the cars to be parked in any public space in the local area.
By coming to the UK with DriveNow, BMW is seeking to succeed where rival Daimler failed.
The Mercedes-Benz maker launched its car2go scheme in the UK in 2012, starting in London before extending the scheme to Birmingham. But Daimler put the brakes on the system in May this year, having failed to drum up enough interest or conquer the “unique challenges” of co-ordinating a fluid network of cars and parking spaces. A big challenge for the one-way car sharing model is how to distribute the cars evenly across the city. London’s bicycle sharing scheme uses a fleet of lorries to ensure an even spread of bikes and spaces.
Still, analysts expect rapid growth in car sharing, particularly one-way schemes. The Frost & Sullivan consultancy has said that there could be 800,000 car club members by the end of the decade in London compared with about 170,000 members today. The one-way model is expected to account for almost half of car-sharing trips in London by 2020, from about 15 per cent today. Zipcar is testing the one-way model in Boston and French tycoon Vincent Bolloré plans to launch the Autolib’ electric car rental network in London next year.
DriveNow customers pay a registration fee and can then drive models such as the Mini and the electric i3 on a pay-per-minute basis. Access to the vehicles is via a smartphone app or bank card. Insurance, car tax, car parking tickets are all included.
The growth in car sharing presents a big threat to established carmakers – which is why manufacturers including Volkswagen and Peugeot-Citroën are pushing into the sector.
AlixPartners, the consultancy, has estimated that just one car sharing vehicle takes out 32 personal purchases. Brokerage Aviate Global has estimated that just 5 per cent growth in car sharing by the end of the decade could halve US auto sales.
“Household vehicles are beginning to feel like stranded assets: high in cost, but utilised only 4 per cent of the time on average in a 24-hour day,” said Gary Paulin, partner at Aviate Global.