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Home / Business

German car-share boom gives BMW, Daimler dibs on young drivers

By Elisabeth Behrmann
Bloomberg·
17 Aug, 2015 02:37 AM5 mins to read

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The Skoda Superb. The number of Germans registered for car sharing soared nearly sevenfold from 2010 to 1.04 million members as of the end of last year.

The Skoda Superb. The number of Germans registered for car sharing soared nearly sevenfold from 2010 to 1.04 million members as of the end of last year.

If Hamburg architect Oliver Kienzler had to buy just one car for his growing family, it would be a sensible Skoda station wagon. Instead, he has an entire fleet of BMWs at his disposal.

He's part of a wave of urban German drivers who could afford to own vehicles but are relying on car sharing instead because they don't want to search for parking, deal with maintenance and pay for insurance. Their choices are starting to have an impact in major cities in Germany, Europe's biggest arena for cars and car sharing, a sign the market may be shifting away from ownership.

"It's borderline silly to use your own car," said Kienzler, 46, who lives with his partner and their two toddlers in an affluent neighbourhood near Hamburg's tree-lined Outer Alster Lake. Having a home in the centre of the city makes owning a car more trouble than it's worth, he said.

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BMW and Daimler are both trying to benefit from the change. In Berlin, home to about a fifth of Germany's 15,400 shared cars, vehicle density decreased slightly last year, as it did in Munich, where the number of cars per 1,000 residents fell to 491 from 493, according to the Federal Motor Vehicle Office. In Hamburg, the increase in vehicle ownership has lagged behind nationwide gains.

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While car sharing is just one among many reasons for urban Germans to set aside their personal vehicles, the popularity of programs such as BMW's DriveNow and Daimler's Car2Go is probably playing a role, said Peter Schwarzenbauer, the BMW executive in charge of DriveNow as well as the Mini and Rolls-Royce brands.

"Fewer people are buying second cars," he said at an event in June.

Each shared vehicle could ultimately replace between six and 15 privately owned cars on the road, said Martyn Briggs, who heads the mobility team at consultancy Frost & Sullivan Inc. The switch will probably affect mass-market automakers first, because younger people will put off buying cars, he said.

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Getting young drivers hooked on cars they otherwise couldn't afford is one reason why luxury-car makers BMW and Mercedes-Benz parent Daimler have jumped on the idea. In Germany, BMW says its DriveNow members are an average of about 30 years old, while buyers of its Mini brand are about 40 and BMW customers about 50.

By contrast, mass-market leader Volkswagen is still figuring out how best to approach car sharing, said Malte Krause, a spokesman. Its shared Golf program Quicar operates only in Hanover, a 500,000-person city near its Wolfsburg headquarters, and it has a joint venture in the Netherlands and a rental pilot project in China.

Volkswagen's luxury car brand Audi has also been more reluctant.

"We don't really see the business case with the current car-sharing programs," spokesman Moritz Drechsel said.

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If Kienzler had chosen to buy the 30,250-euro ($33,000) Skoda Octavia Scout wagon, a Volkswagen product, he could have paid 232.54 euros a month, including insurance, on a basic Sixt SE lease contract. Those fixed costs compare to the bite-sized expenses of his three car-sharing memberships, which charge a sign-up fee and then bill by the minute or by the kilometre.

A 15-minute drive to dinner in a BMW X1 SUV can cost just 5.10 euros, compared to a base price of 37,600 euros to buy the car. A 10-minute scoot to a work meeting in an easy-to-park Smart car would set him back 4.35 euros, and a four-hour trek to Ikea, 12 kilometres (7.5 miles) away, in a roomy five-seat VW Caddy van would cost only about 15 euros.

Daimler sees two different reactions among car-sharing customers, Chief Executive Officer Dieter Zetsche said.

"There are about as many people who say car sharing was so practical they could get rid of their car as there are who say a Smart car was such a great car, they'd like to own one," Zetsche said on July 23.

The number of Germans registered for car sharing soared nearly sevenfold from 2010 to 1.04 million members as of the end of last year, according to Bundesverband CarSharing eV, German industry's trade association. That's still only about 2 percent of the country's residents with drivers' licenses, so there's room for growth.

Meanwhile, Daimler's Car2Go has dipped a toe into markets as diverse as Montreal, Milan and Columbus, Ohio. BMW set up a team this year to work with local governments on issues such as freeing up parking for car-sharing vehicles.

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And both want to make sure their cars are still the first choice of people like Kienzler, in Hamburg, should he decide eventually that outright owning a car isn't so silly after all.

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