German car manufacturing colossuses BMW and Daimler AG have formally announced that they will merge their expertise and know-how to partner on the development of urban mobility services.
The two automotive firms have agreed to merge their existing suite of mobility services and business units in an effort to accelerate the development and subsequent adoption of mobility services across a diverse portfolio of solutions including car sharing, ride-hailing, parking, charging and multimodality.
In addition, it has been disclosed that both entities will hold a 50% stake in the innovative joint-venture model that consolidates both companies' mobility services. However, despite the partnership representatives of both BMW and Daimler AG insisted that both will remain fierce competitors in their respective core businesses.
The aim of this transaction is to become a leading provider of innovative mobility services. Both automotive manufacturers aim to shape the mobility of the future to be able to offer their customers unique experiences and support their partners, such as cities and communes, in achieving sustainable urban mobility.
The partners intend to offer their customers a holistic ecosystem of intelligent, seamlessly connected mobility services, available at the tap of a finger. Together, the BMW Group and Daimler AG plan to grow this new business model sustainably and enable rapid global scaling of services. Working as partners, both companies are thereby addressing the challenges arising from urban mobility and changing customer wishes, and cooperating with cities, municipalities and other interest groups to improve quality of life in major cities. The merger will promote electro-mobility, for example, by offering electrified car-sharing vehicles, as well as easy access to charging and parking options. As a result, it will become even easier to experience and use sustainable mobility services.
"The BMW Group is shaping future mobility - and striking out in new directions to do so. Our strategy number one > Next provides the BMW Group with a roadmap to a digital and emission-free future," said Harald Krüger, Chairman of the Board of Management of BMW AG. "Combining our mobility services as planned will create a unique digital ecosystem. This alliance will make it easier for our customers to discover the emission-free mobility of the future. We remain competitors when it comes to the best premium vehicles. The planned merger of our mobility services will pool our resources and sends a strong signal to our new competitors," added Krüger.
"As pioneers in automotive engineering, we will not leave the task of shaping future urban mobility to others. There will be more people than ever before without a car who will still want to be extremely mobile. We want to combine our expertise and experience to develop a unique, sustainable ecosystem for urban mobility," said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars. "At Daimler, we are vigorously and systematically pursuing our transformation from automobile manufacturer to provider of mobility services with our CASE strategy. CASE stands for Connectivity, Automated driving, Sharing & services and Electric mobility.
"The future of mobility lies in cities. The key to more livable cities is in intelligent and seamless services that are easy to use and combine sustainable modes of transport and mobility services," said Peter Schwarzenbauer, member of the Board of Management of BMW AG, responsible for MINI, Rolls-Royce, BMW Motorrad, Customer Engagement and Digital Business Innovation BMW Group. "The pioneering work and commitment of the employees who provide our services have laid a valuable foundation. I would like to thank them very much indeed for all that they have done," Schwarzenbauer continued.
"The sustainable mobility of tomorrow is flexible and connected - a vision we share with our partner, the BMW Group," explained Bodo Uebber, member of the Board of Management of Daimler AG, responsible for Finance & Controlling and Daimler Financial Services. "Together, we can offer millions of customers highly-attractive products and services to make their lives easier and their environment a better place to live. The options offered by the planned joint venture-concept will complement mobility services offered by cities."
The equally-owned joint venture model is designed to combine services in the following five areas:
- Multimodal and on-demand mobility with moovel and ReachNow
- Intelligent and seamless connectivity between different mobility offerings - including booking and payment - will create significant added value for users.
- It will also offer possible solutions for the challenges of urban private transport.
- CarSharing with Car2Go and DriveNow
- Car2Go and DriveNow operate a total of 20,000 vehicles in 31 major international cities.
- CarSharing enables better utilisation of vehicles and thus helps reduce the total number of vehicles in cities.
- More than four million customers already use these CarSharing services.
- Ride-Hailing with mytaxi, Chauffeur Privé, Clever Taxi and Beat
- With Europe's largest taxi app, simply order a taxi or use a licensed driver in France for a ride in the French metropolises.
- In total, 13 million customers and some 140,000 drivers are already using the modern, practical and fast way of Ride-Hailing with mytaxi, Clever Taxi and Beat or private hire vehicle service Chauffeur Privé.
- Innovative offers such as mytaximatch, in which people not known to each other share a taxi at a fingertip, make an important contribution to reducing inner-city traffic by eliminating numerous individual trips in the urban space.
- Parking with ParkNow and Parkmobile Group/Parkmobile LLC
- Ticketless, cashless on-street parking or help finding, reserving and paying for off-street parking in a garage.
- Innovative digital parking services reduce the time and the amount of driving involved in finding a parking space. This will reduce traffic significantly, as cars searching for parking spaces currently account for around 30% of road traffic.
- Charging with ChargeNow and Digital Charging Solutions
- Easy access (including location, charging and payment) to the world's largest network of public charging stations with more than 143,000 charging points worldwide.
- Combined with parking privileges in cities, this will support the expansion of electro-mobility, by helping people get to know this drive technology - and integrate it easily into their mobility needs.
The formation of the joint venture will produce a significant valuation and earnings effect at Daimler Financial Services. If the approval of the competition authorities is received this year, following adjustments will be made to the group outlook for Daimler AG: The company expects EBIT for Daimler Financial Services to be significantly higher than the previous year; for the Group as a whole, this means EBIT is likely to be slightly higher than the previous year.
If approved by the relevant authorities in the course of this year, the formation of the joint venture will trigger a one-time valuation and earnings effect in the BMW AG's group financial statement and thus lead to an adjustment of the company's guidance. Under these circumstances, pre-tax earnings on Group level would increase slightly in 2018 compared with the previous year. The valuation and earnings effect would have no impact on the EBIT margin in the automotive segment.
The joint project is subject to examination and approval by the respective competition authorities. The best-possible customer experience is already the focus of both partners' services. Therefore, initially nothing will change for the millions of customers, with existing services still being provided to the same extent and with the same level of quality.