Carsharing venture DriveNow GmbH, owned by BMW and European rental company Sixt AG, is expected to be profitable this year, the first time that will happen since starting up two years ago. BMW hopes to overtake German rival Daimler (with Car2go) in this growing space as urban consumers become more interested in transportation alternatives like carsharing.
Since starting in May 2011, DriveNow has taken root in four German cities, and any further expansions will be limited to where the project can make money, said Andreas Schaaf, the partnership's managing director. This is certainly possible, since two more locations are on schedule to be added, one in Germany and another elsewhere in Europe, sometime this year. "We could expand quicker, but we want to prove that the business can be profitable," Schaaf said in an interview with Bloomberg. DriveNow offers a variety of BMW group vehicles, including Mini models and decidedly ungreen BMWs like the M3 and M6.
Carsharing is taking off in Europe and Frost & Sullivan predicts that it may surge 20-fold to almost 15 million users in Europe by 2020. This in a market that sold 12.5 million new cars last year. Analysts predict growth in North America, too, but not as fast as in Europe, which helps explain the recent acquisition of Zipcar by car rental giant Avis.
Daimler has had a strong carsharing presence in North America and Europe through its Car2go service. Daimler expects that Car2go will achieve break even financial status in 2014. Right now, the subsidiary is profitable in three of 18 cities where it operates, Daimler says. Car2go was started by Daimler as a pilot program in Germany in late 2008; showing that it does take a while to make carsharing worthwhile. A car company that can make it work, though, is pioneering a new way to make money by not selling cars.