BMW and Daimler Merge Mobility Services Divisions

BMW Group and Daimler AG will merge their respective mobility service divisions into a 50/50 joint venture, while still maintaining competition within their core businesses.

The venture is a “clear sign” that the mobility market is “maturing,” Grayson Brulte, a consultant and co-founder of Brulte & Company told Auto Finance News.

“Across the board look for M&A activity in autonomy, ridesharing and carsharing,” he said. “There are too many companies competing for the same piece of the pie.”

The venture is designed to combine services in the five areas: On-demand mobility, carsharing, ride-hailing, parking, and charging. For example, Daimler’s Car2Go and BMW’s DriveNow carshare programs — which include a total of 20,000 vehicles, 4 million customers, in 31 major international cities — will be combined, pending regulatory approval of the merger.

Other Daimler services slated to merge with BMW programs include Urban booking and payment platforms Moovel and ReachNow; Ride-hailing services mytaxi, Chauffeur Privé, Clever Taxi, and Beat; digital parking services ParkNow and Parkmobile Group; and networked public charging stations ChargeNow and Digital Charging Solutions.

In regards to how the joint venture will specifically operate, and how the platforms will co-exist or change, could not be addressed yet, a Daimler spokeswoman told AFN.

“We just signed the agreement so it’s a little too early to say,” she said.

BMW did not respond to requests for comment by press time.

Harry Campbell, of the popular blog The Rideshare Guy, agreed there will be more M&A activity with OEMs.

“I think automakers know that a discreet point in the future is that ownership is going to be changing; transportation-as-a-service from Uber and Lyft have been eating away with this and autonomy, and I think carmakers know they’re going to be a big shift but aren’t sure how to be involved in this future model,” he said.

This future is one where we have reached full autonomy and autonomous services have proliferated the market. But in the meantime, BMW and Daimler are able to gather more data and learn more about customer behavior than each company would by itself. Brulte said he anticipates that the mobility ecosystem will see more mergers and acquisition activity throughout the year, although he was unsure of what companies may be next.

“Watch where the dominoes fall, because this is just the beginning,” he said.

The formation of the joint venture will produce a significant valuation and earnings effect at Daimler Financial Services, while BMW will see 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, the press release said. Under these circumstances, pre-tax earnings on Group level would increase slightly in 2018 compared with the previous year.

The Daimler spokeswoman declined to say how much this would impact future Daimler earnings but did say that if the joint venture receives regulatory approval this year it would significantly increase Daimler Financial Services’ EBIT. However, until regulatory approval is granted, it could not be determined when exactly an impact from the joint venture would be seen.

As featured in Auto Finance News on March 28, 2018