Mini goes for car sharing

The carmaker starts a scheme that offers buyers the chance to offset the purchase price by renting out their vehicles

BERLIN - British carmaker Mini has joined the rush to solve the problem of customers abandoning car ownership in favour of car-sharing, launching a scheme that effectively offers buyers the chance to offset the purchase price by renting out their vehicles.

Established carmakers worldwide are looking for ways to stay relevant for a generation of drivers who increasingly prefers the convenience of car sharing, which a string of start-ups and rental agencies have been quick to exploit.

The Mini plan announced on Wednesday will work by expanding parent BMW's existing DriveNow car-sharing scheme to allow Mini owners to use the same smartphone app for third-party drivers to pay part of the company's proceeds to the car's owner.

The sharing economy's gathering momentum is already starting to hit car sales.

A recent survey of United States metropolitan car-sharing markets by AlixPartners showed that the availability of one car-sharing vehicle displaced the purchase of 32 new cars.

The new Mini concept, however, aims to offer buyers the best of both worlds. "The idea behind (accommodation website) Airbnb, to offer up private property for wider usage, was the inspiration behind the idea of offering a car-sharing option for Mini," said Mr Peter Schwarzenbauer, the BMW board member responsible for the Mini brand.

Although shared mobility companies handled only about 1 per cent of public passenger transportation in major cities in North America, Europe and Asia last year, usage is projected to grow significantly in the coming years.

Consultants Roland Berger say the market for car-sharing will grow 30 per cent a year and generate revenue of between €3.7 billion (S$5.6 billion) and €5.6 billion by 2020. The trend has already seen car-sharing pioneers Zipcar and IGO snapped up by traditional rental companies Avis Budget Group and Enterprise Rent-A-Car respectively.

BMW launched its DriveNow service in 2011, rolling it out in major German cities, Vienna, San Francisco and parts of London with a model that allows users to make one-way journeys without having to return the car to the point of departure.

The scheme now has more than 450,000 users and makes a profit. It has gained popularity because it allows clients to use cars without having to worry about fuel costs, insurance, repairs, vehicle tax and - most importantly - where to park.

About 38 per cent of clients who tried DriveNow - mainly those living in cities and who used their cars only on weekends - sold their own cars, BMW said, illustrating the dilemma facing the industry. These businesses have emerged to compete with ride-sharing company Lyft and online transportation provider Uber.

Mini said the option to allow BMW's DriveNow service to use private Minis would launch in the US next year before being extended to cities elsewhere. One potentially attractive element of the Mini scheme is that it will enable customers to define a circle of friends and family who can locate, unlock and use the car by smartphone and also pay the fee via the mobile app.

Rival carmakers are making similar moves. Toyota has a scheme renting cars from dealerships, Ford launched Ford2Go car-sharing in Germany, while General Motors' Opel arm has its CarUnity scheme. Other industries have already seen a permanent shift towards rental rather than ownership.

Ski rental has become so convenient that half the people on the slopes do not buy their equipment, a manager of an Intersport store told Reuters. "We can see continuous growth of rent revenues over the past 20 years and we are sure the trend will continue," said Mr Dieter Hagleitner, head of Intersport Rent for Germany, Austria, the Czech Republic, Slovakia and Poland.

In the same way that parking location is key to the success of car-sharing, Intersport found ski rental took off after once stores were located in the same building as main ski lifts.

BMW has invested in start-up and recently struck a deal with Inrix, both of which offer software services to help drivers to find a free parking space.


Torque shop

What does electronic stability control actually do?

Electronic stability control helps the driver regain control of his car during a skid or slide. It uses sensors to determine when the vehicle starts to veer off its path by looking at the steering input from the driver and the actual path of the vehicle. After sensing a skid, the computer can apply the brakes on one or more wheels to get the car back in line. It may also cut engine power momentarily to reinstate stability.

Automobile Association of Singapore

A version of this article appeared in the print edition of The Straits Times on June 27, 2015, with the headline 'Mini goes for car sharing'. Print Edition | Subscribe