BMW boss Harald Krüger (left) and Daimler CEO Dieter Zetsche
In a former subway tunnel under Potsdamer Platz in Berlin, two long-time rivals became partners on Friday.
Berlin have been more than a hundred years Daimler and BMW bitter rivals. There were times when people in Stuttgart only mockingly talked about Munich and vice versa. Part of that is still the case today. But at least the top managers of the two vehicle manufacturers are no longer sitting frosty. In recent months, one ate more times white sausages or spaetzle together, they say.
The chemistry among the executives agree. The consequence: Daimler-Boss Dieter Zetsche and BMWfrontman Harald Kruger lay the foundation for a new, possibly historic era in the auto industry,
In a former subway tunnel under Potsdamer Platz in Berlin, two longstanding rivals have become partners this Friday. In the core business, the sale of premium carsIf you continue to deliver tough competition, both companies promise. But with mobility services, the hopeful business of the future, Daimler and BMW do future common cause,
“We combine the strengths and know-how of 14 successful brands,” said Daimler CEO Zetsche. “We’re creating a world-leading game changer,” asserted BMW CEO Krüger. The corporations are investing a good billion euros to expand and interlink their existing services such as Car2Go and Drive Now.
Specifically, the auto companies are setting up five joint ventures in the areas of car sharing, ride-sharing services, parking, charging stations for electric cars and a mobility platform that enables multimodal travel in one click.
For example, Car2go and Drive Now are combined in the long term under the name Share Now. From the taxi services, which include MyTaxi, Beat and Clevertaxi, the brand Free Now. The mobility platform Moovel will operate under the name Reach Now. Only the previous BMW services Charge Now and Park Now retain their name. Over the next few years, up to 1,000 new jobs will be created in all divisions worldwide.
Comment: The successful car sales model is nearing its end
The aim of the deal: Daimler and BMW want to offer their customers solutions from a single source and leverage economies of scale. With a combined customer base of more than 60 million customers, the two automakers hope to quickly reach more than a hundred million users in order to restrain annoying competitors from the Silicon Valley and the Far East.
Zetsche and Krüger have recognized that they like the financial power of digital attackers Over. Lyft or Didi Chuxing the automakers counteract only in a coordinated effort
The market promises immense growth
Currently, the companies estimate the turnover of their joint services at about three billion euros. That’s just over one percent of the revenue Daimler and BMW generate each year. In other words, the future business is still rather small.
The market, however, promises immense growth. Example Ride Hailing, how about Over and Lyft In 2018, according to IHS Markit, the London-based analysis house, 14 billion journeys were made in the core regions of China, United States, Europe and India. This corresponds to a growth of more than 300 percent in relation to the year 2015.
The revenue that Ride Hailing suppliers generated in the four largest markets was approximately $ 100 billion last year. By 2040, this market could “explode” to one trillion dollars in sales, IHS predicts. Established car companies such as Daimler and BMW must therefore move. They are increasingly threatening to break away from their core business.
If the sale of cars, components and spare parts today for 99 percent of the industry profits, it will be according to calculations by Boston Consulting 2035 probably only 60 percent. The remaining 40 percent of the revenue will be generated by the carmaker with new mobility services.
In this world of platform economics, digital concerns with their software skills seem to have the advantage. How do the auto companies want to counter that? “We combine hardware and software,” says BMW CEO Krüger: “That’s our competence”. Together you can beat everyone else.
While it is true that the digital revolution has already made many companies in established sectors obsolete, admits the outgoing Daimler CEO Zetsche. But: “Our case is different”. Because as long as people can not be beamed, a moving or flying vehicle is needed to get them from A to B. “And with all due respect for the tech companies: that is our strength”.
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