Driving Force German Automakers Embrace Car-Sharing

As car ownership becomes less popular, German automakers are flooding major cities with affordable short-term rental cars in a wave of new car-sharing initiatives. But critics claim the programs, which are driven more by business than environmental concerns, may end up making urban congestion worse.

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Buying a device that you only need for a few minutes a day doesn't seem like a particularly clever idea. And yet people usually have no alternative. After all, who rents a coffeemaker or an electric razor?

But cars are a different story. A joint-use concept known as car-sharing is becoming increasingly popular, and there are many providers. Now even automakers have joined the fray.

Today, anyone can cruise through the German capital in a new BMW for just a few euros. All he or she needs is a valid driver's license and a membership in the user club known as DriveNow, a joint venture by the Munich-based automaker BMW and car-rental company Sixt. The one-time membership fee is €29 ($39).

In return, members get an electronically readable driver's license sticker, which opens the doors of hundreds of BMWs or Minis parked on Berlin's streets. Users can locate and reserve the cars online. When a DriveNow user is finished with a car, he or she simply parks it and uses a prepaid card to fill the gas tank. Gasoline, parking fees and comprehensive insurance are included in the rental fee of €0.29 per minute.

How can this be profitable? And what does BMW get out of it?

Out of Necessity

The company, like other automakers, may very well have no other choice. DriveNow is BMW's version of the car-sharing model that its competitor Daimler developed for its Smart city car. Following a pilot program in the southwestern German city of Ulm, Daimler now intends to expand to many major cities around the world. The program, called Car2Go, is already available in Hamburg, Vancouver and Austin, Texas. Car2Go will soon offer electric Smart cars in Amsterdam and San Diego, and in the coming five years it expects to be established in 40 to 50 major cities on several continents -- unless, of course, someone else gets there first. Volkswagen, for example, will launch its own car-sharing program, dubbed Quicar, in the northern German city of Hanover next week.

"The model certainly makes sense in larger cities," explains VW sales chief Christian Klingler. His words clearly indicate that it isn't a conclusion he has reached with enthusiasm, but out of sheer necessity.

A shift in values is taking place in German society, striking a critical nerve in the country's key automotive industry. The automobile, once the strongest symbol of affluence and freedom, and the most expensive consumer product in the industrialized world, is losing its fascination. Fewer and fewer young people are buying their own cars.

Declining Ownership

In a speech at the national conference of Germany's auto industry association in late October, Stefan Bratzel of the University of Applied Economics (FHDW) in Bergisch Gladbach, near Cologne, asked the $64,000 question: "Is the automobile still cool?"

The professor had conducted an online survey of young people -- and found that their answer was a clear "no." "Car ownership and car use," Bratzel said, "are declining significantly among urban youth." As recently as 2000, more than half of men aged 18 to 29 owned a car. Today, it's only about a third.

Talking in typical academic-speak, the professor told his audience that he detects a "trend toward the de-emotionalization of auto-mobility." He also listed reasons for this development:

  • Driving a car is too expensive. According to Bratzel, since 1995 the costs of gasoline, as well as buying and maintaining a car, have increased at a faster rate than the general cost of living. To make matters worse, those who are expected to pay these costs are often young people who are struggling to find proper jobs despite having attended university, a group that is dubbed the "internship generation" in Germany. These people have other things to worry about than paying a fortune for a Volkswagen Golf.
  • Driving isn't practical, at least in large metropolitan areas. Traffic jams and a severe shortage of parking spaces are among the main reasons city dwellers are deciding to do without a car. The survey respondents also said that they were satisfied with the availability of local public transportation.

Hence, it isn't militant environmentalism but simply pragmatic considerations that motivates young city dwellers to abandon the idea of driving to work every day. And instead of driving on long vacations, people are now using budget airlines and renting cars at their destinations. The German Automobile Association (ADAC), once the guardian of Germany's obsession with horsepower, now offers an inter-city car-pooling service whose slogan is "Travel together. Save money!"

Aversion to the Automobile

There is one group that is clearly not benefiting from this trend. Daimler and its fellow German carmakers, once the manufacturers of automotive dreams, are confronted with a bitter realization: If this trend continues, people who buy their own cars will soon be the Neanderthals of mobile society.

The disaster hasn't arrived yet. Enough older people are still steadily buying cars, and there are still markets like Russia and China with newly affluent people who don't mind maneuvering their status symbols through heavy rush-hour traffic. But the new aversion to the automobile will eventually take hold in those markets, too.

Manufacturers will not be able to stop this development. Instead, their goal now is to rescue what they can. The first step is already underway in the form of programs such as Car2Go, DriveNow and Quicar. It's a foray that requires careful strategic thinking. By using car-sharing, the auto industry is employing an instrument that was originally developed by radical opponents of cars. Indeed, it used to be one of the strongest weapons of the industry's enemies.

Stattauto Car-Sharing GmbH was launched 21 years ago in Berlin as the first "car rental company that's against cars." Back then, German society was probably more hostile to cars than at any other time in industrial history. Acid rain and the resulting destruction of the country's forests had made the automobile public enemy No. 1 for environmentalists. Hamburg imposed a 30 kilometer-per-hour (19 mph) speed limit on a major four-lane highway. Meanwhile, in Switzerland, Zürich drastically reduced the density of streets in the city and became a mecca for car-phobic urban planners.

'Tedious'

Stattauto fit perfectly into the zeitgeist. Prospective members were not allowed to have their own cars. The purpose of sharing was to make the automobile as unnecessary as possible. The founders, three hip Berliners, corresponded to all the clichés of combative far-left culture. Their aim was to make the city as car-free as possible and to eliminate private cars, which they believed would be "associated with stupidity" one day. Co-founder Carsten Petersen announced: "If our current traffic problems continue, cars will become too tedious to be objects of pleasure anymore."

This proved to be prophetic, indeed. The automobile has become well mannered. Nowadays, its exhaust fumes are no longer responsible for killing trees, due to the use of catalytic converters. Thanks to crash tests, car bodies are now more optimized and thus much less hazardous to pedestrians. In addition to its "M Power" slogan, BMW now bases much of its advertising on the concept of "Efficient Dynamics." Cars have become boring, expensive and idle.

Nevertheless, car-sharing still hasn't achieved a major breakthrough. So far about 200,000 people in Germany have opted for this form of using cars, compared with a total of 42 million registered automobiles.

But the auto industry is heading in that direction. Carmakers are entering the car-sharing business -- and not necessarily to the delight of the established players.

Doubts about Motives

The German umbrella organization Bundesverband CarSharing e.V. (National Car-Sharing Association) has preserved the transportation policy goals of the early days of car-sharing. Organizations that wish to be members, explains managing director Willi Loose, must prove that fewer cars are registered and fewer kilometers are driven in cities as a result of their efforts.

BCS refuses to admit BMW's and Daimler's car-sharing operations. Loose doubts that the carmakers satisfy the membership requirements.

There is no question that Car2Go and DriveNow pursue completely different goals than traditional car-sharing initiatives. Instead of seeking to dissuade people from driving, they want to make driving attractive once again to people who have already switched to other forms of transportation. This is why they also have a different organizational and fee model.

The classic car-sharing company has fixed locations for picking up cars, as well as billing systems in which users pay by time and kilometers driven. Its service is tailored to a user who only uses a car for special trips and usually takes the bus or the train.

The cars offered by Car2Go and DriveNow are "self-service taxis," says Loose. Short, spontaneous trips are particularly inexpensive. The cars are only attractive for trips in downtown areas and can only be parked in those areas. For the operators, the business model only works if the cars are used almost constantly -- in an urban environment where buses and trains are plentiful and cars are the biggest problem.

Will Initiatives Increase Congestion?

With their initiatives, Daimler and BMW have created bitter competitors to local public transportation and are, in fact, acting in a way that is completely counterproductive, at least by the standards of the original car-sharing model. In fact, on its website Car2Go blatantly advertises its rental Smart as "the first personal means of public transportation."

If these projects are successful, they will automatically become a plague for downtown areas. The denser the network of parked cars, the more attractive the program becomes, the more people are likely to participate and the more cars the manufacturer will dispatch into the pool.

With its Quicar program, Volkswagen has opted for a hybrid between Car2Go and the conventional model. The cars, initially only standard Golf models, will also be offered at an inexpensive minute-based rate, but the cars must be rented for at least half an hour, and they have to be picked up and dropped off again at one of 50 stations in Hanover.

In this system, a highly frequent use of the cars, a condition of efficiency, is very unlikely. It seems that Volkswagen is merely trying to show that it means well and will probably keep Quicar relatively small. "We are doing this as a test," explains sales chief Klingler, pointing out that the program is "economically justifiable." He makes no mention of profits.

Translated from the German by Christopher Sultan

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