Big European Players Embrace the Car-Sharing Trend

LONDON — The big automakers and car rental companies are taking matters into their own hands.

Instead of letting the popularity of car-sharing disrupt their business, they are joining in, and even taking the lead, with their own new ventures in the hopes of holding onto existing customers and connecting with future ones.

Daimler and the rental giant Europcar have joined forces to create Car2Go, while BMW has teamed up with the car-rental company Sixt to form DriveNow. Both companies offer a technology-driven twist on the on-street rental model made popular by Zipcar, which itself is owned by Avis.

“Our core business in the ’70s was selling cars; in the ’80s, late ’70s came the great innovation of leasing and financing,” said Tony Douglas, head of marketing and sales at BMW’s mobility unit. “Now you can pay per use of a car. It’s like the music industry. You used to have to buy an album, now you can pay per play.”

Mr. Douglas added that, particularly among young people, “you’re going to see the rise of car-sharing in cities and the decline of owning my own car.”

Those in the industry foresee a huge change in the way people, especially in cities, think about getting around. The future of mobility, they believe, will be “multi-modal,” with urban dwellers using smartphones to plan mix-and-match trips that combine cars, bikes, public transportation and walking.

“We just think it’s the future, as simple as that,” said Robert Henrich, the chief executive of Daimler Mobility Services, which includes Car2Go. “Young customers cannot imagine a life without smartphones anymore, and we need to be part of the smartphone world.”

Last year, about 2.3 million drivers worldwide belonged to a car-sharing service, a number expected to increase to 26 million by 2020, said Martyn Briggs, mobility expert at the consulting group Frost & Sullivan. About two-thirds are likely to use station-based services like Zipcar, while a third will use the new, one-way approach, in which cars have no set home location, he said.

The new sector’s growth is being propelled by a number of factors, including urbanization, the need to address problems like congestion and pollution, a big drop in car sales to young people, and, of course, the availability of technologies that enable more flexible approaches.

While Zipcar, which is available in North America and a handful of European countries, rents by the hour and requires vehicles to be returned to a designated parking spot at a time agreed upon in advance, Car2Go and DriveNow customers pay by the minute, and leave the cars in any legal space whenever they are finished. Drivers generally use them for quick, one-way trips that do not need to be planned ahead of time.

The companies negotiate parking rights with local governments, allowing their vehicles to float freely within a designated area, usually a city’s limits. When customers want a car, they use a smartphone to locate the one nearest them and a membership card to get in.

Both companies, whose approach requires GPS and an Internet connection in every car, started in Germany, where they are highly visible and popular, particularly among young people.

“In every big city almost, you see these vehicles standing around, and you can jump in and take it,” said Thorsten Wagner, a spokesman for the Automotive Institute for Management at the European Business School in Oestrich-Winkel, Germany.

A student recently complained to him about a local variant that required users to return vehicles to a designated parking spot, saying “‘This is inflexible, it’s not real car-sharing,”’ Mr. Wagner said. “It opened my eyes to how big this approach is.”

Car2Go has expanded across Europe and North America, and now has 9,500 cars and 500,000 customers in 25 cities, including Amsterdam, London, Miami and Seattle. DriveNow, which plans to expand, operates in five German cities, plus San Francisco, though its California operation offers less flexible parking.

Volkswagen, Citroën and Ford are among the other big manufacturers venturing into car-sharing. The German rail operator Deutsche Bahn runs the successful Flinkster, and Autolib operates a fleet of electric cars in Paris with backing from the Bolloré industrial group.

But Daimler and BMW are the clear leaders, and Mr. Wagner said it would be hard for competitors to catch up.

The companies, and industry analysts, say their flexible approach is just a taste of the innovations to come in an area they call urban mobility.

No End to Falling European Car Sales

PARIS — European car sales keep falling, and American automakers are among the biggest losers in the shrinking market, industry data showed Tuesday.

European Union new passenger car registrations slid 10.5 percent in February from a year earlier, the European Automobile Manufacturers’ Association said in Brussels. It was the 17th consecutive drop, with sales falling everywhere except Britain, where they rose 7.9 percent.

E.U. sales, at 795,482 cars, came in at the lowest recorded for the month of February since the records started in 1990, Quynh-Nhu Huynh, statistical director for the automakers’ association, said.

She noted that in February 1990, new car sales totaled 1.1 million — at a time when the European Union had just 15 members.

The euro zone crisis, and the government budget-tightening measures prescribed to combat it, have hurt demand. Record unemployment has squeezed household budgets and left consumers reluctant to upgrade older models, and much of the younger generation lacks the means to purchase their first cars.

“Unless there’s a turnaround in the middle of the year, we appear to be headed for the worst performance ever,” Ms. Huynh said.

American automakers bore much of the brunt. General Motors’ European sales slid 20.1 percent, while Ford Motor recorded a 20.8 percent drop.

The European market sales of Volkswagen, the largest E.U. automaker, fell 7.2 percent, while the region’s No.2 carmaker, PSA Peugeot Citroën, fell 13.2 percent. Sales of Fiat, the Italian carmaker that controls Chrysler, fell 14 percent. Honda Motor led a handful of companies that posted gains, with its sales up 15 percent.

Ian Fletcher, an analyst at IHS Automotive in London, said that G.M., Ford, Fiat and Peugeot faced similar problems, with luxury carmakers reaching down to take their sales in a declining market, and cheaper models gaining at the bottom of the market.

“It’s the squashed middle market,” he said. “They’re facing pressure from the top of the market, from Mercedes and BMW, and pressure at the low end from the likes of Kia, Hyundai and Dacia.”

The U.S. carmakers, he said, are also suffering relative to other companies because they were less willing to offer buyer incentives, and were unable to match some rivals, particularly Volkswagen, on financing terms.

Mr. Fletcher said he expected car sales to grow this year in the United States, as well as in fast growing economies like China, Brazil, Russia and India.

He predicted that the European Union market, which shrank by 8.2 percent last year, was set for another 2.6 percent contraction this year, to around 11.8 million units.

There is hope, he said, that sales might bottom out before long, with gradual improvement possible by the end of the year. But with the monthly data as bad as they have been so far in 2013, he said, analysts might be looking at their forecasts again “in the next few months” for a possible downward revision.

The Horn in Hyundai-Kia boasts his contributions the European economy

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DUMPING COMMERCIAL

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DESTRUCTION OF VALUE

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