In late 2018, the EU approved the merger of two rivals in the automotive industry, namely BMW and Daimler. The merger was completed in early 2019. The prime focus of the merger is ‘’to offer customers a single source for sustainable urban mobility services.” The outcomes of the merger are wide-ranging and the merger has taken the market by shock. The 50:50 joint venture aims to offer consolidated services including the provision of information about parking location, ride and car sharing, and charging services to its customers. The JV is also planning to employ the Moovel platform developed by Daimler. Both the companies are aiming for the lead position in offering mobility services. The joint venture has the ability to shut competitor car-sharing services and integrator applications. The joint venture will provide stiff competition to other mobility providers such as Uber and Lyft. The venture aims to target six main cities initially, namely Cologne, Berlin, Hamburg, Dusseldorf, Vienna, and Munich.
The JV is expected to establish itself as a significant player to offer innovative mobility services. The venture will operate in synergy and will leverage each other’s platforms and technology wherever possible. According to Automo, to achieve a relevant position in the market and at the same time achieve sustainable success, the venture needs to work on its financial strength and level of flexibility, and offer rapid response and a comprehensive portfolio of products. The venture needs to come up with new business models and services to outperform the current competition in the market.
Daimler car2go has more than 3 million members and is one of the largest operators of car sharing platform. After the merger, the joint venture is expected to cover more than 30% of the market share. This will increase the competition and race to dominate the market, and this competition will not only be visible in the car sharing market, but also in ride-hailing and other services offered by the joint venture. The merger will take on the biggest in ride hailing services such as DiDi and Uber.
The new joint venture will also promote their innovative technologies in autonomous, electric and connected verticals. The joint venture’s focus on reducing emission and traffic congestion in cities will also receive support from local authorities. It is also expected that the joint venture will also include the public mode of transportation in their one mobile application platform. If the joint venture is able to achieve this in a short time, there will be no competition left for them in mobility services.
The joint venture between the two competitors will be interesting to witness. On the one hand, both the companies will operate in synergy, whereas on the other hand, they will still be competing with respect to product design, intellectual property, and R&D in passenger vehicles and other vehicles as well. In addition, the firms will also compete in aftermarket sales and services.
Both the companies have focused on a 50:50 joint venture, which will help both parties to work towards the company’s interest. But we believe that this is 1,000-year-old model where the companies coming together split the joint venture with 50:50 ownership. Equal ownership is not accepted to be good over the long term. In addition, according to both BMW and Daimler, the company’s shares the vision but this won’t help to achieve a common goal. This will further increase issues with respect to joint venture operation. It is also expected that in the medium to long term, both the companies will try to increase their ownership from 50%. This will further create chaos and also has the ability to hamper the joint venture. So both the companies should keep the environment open and transparent for communication, and if the need to change the ownership in the joint venture arises, it should be done based on common grounds and discussion.
There are many stakeholders in the market who are willing to take a piece of the share in the market. So the other OEMs are expected to take multiple routes to enter the market, such as:
• investing in startups or acquiring startups that have a good presence in the market,
• partnering or collaborating with smaller companies for technology advancement.
• starting their own pilot services.