BMW and Daimler to Combine Businesses of Car-Sharing

Leading luxury carmakers in Germany BMW and Daimler joined forces to grow their new services business like electric vehicle charging and car-sharing to battle with Uber in the U.S. and with Didi Chuxing in mainland China.

Under terms of the deal between BMW and Daimler, which includes the units of car-sharing DriveNow and Car2To, charging and parking services, both will each have a stake of 50% in their joint venture.

The two said the goal was to offer their customers a system that is intelligent, seamlessly connects mobility services that rapidly are able to be expanded across the globe, while continuing their luxury cars. Daimler owns Mercedes Benz brand.

Being pioneers in the area of automotive engineering we won’t leave the responsibility of shaping the future of urban mobility to anyone else, said Dieter Zetsche the CEO at Daimler on Wednesday.

PwC a consultancy said that the conventional carmakers of today will become marginalized from the technology firms flush with cash if they are not able to develop mobility services that are pay-per mile.

Their shares currently of the global automobile industry profits might fall from a current 85% to below 50% within 12 years said the consultancy.

An industry analyst said that the deal between BMW and Daimler seemed a good one for the consumer. The analyst added that with many thing that are related to the shared connectivity/mobility services, consumers want a solution that is one-app rather than a large number of offerings that are standalone.

Collaboration industry-wide must materially increase if automakers want a realistic chance of turning new mobility services into revenue generators that are profitable.

Assuming that the transaction is approved by regulators, both businesses expect that their key profit figures, which would be earnings prior to interests and EBIT for Daimler and BMW’s pre-tax profit, to increase slightly from one year to the next, in comparison with prior guidance for profit to be flat.

The deal would not have any impact on the core automotive segment of BMW’s operating profit margin, said the two companies,

Daimler agreed earlier in March to acquire Europcar’s stake of 25% in Car2Go for €70 million or $86 million, a move that was considered at that time to pace the way for more cooperation with BMW.

Both companies are very strong in both Europe and the U.S. and are considered leaders in the industry.