BMW and Daimler, Once Rivals, Join Forces to Fend Off Silicon
Valley
(JACK EWING)
FRANKFURT — The German carmakers Daimler and BMW said on
Wednesday that they would merge their car-sharing businesses as
they try to compete better with Silicon Valley companies out to
upend the traditional automotive industry.
Daimler, the maker of Mercedes-Benz cars, and BMW said they
would put their respective mobility services — an array of apps and
services that provide transport options for people who may not own
cars — into a joint venture in which they will own equal
shares.
The alliance is a major departure for BMW and Daimler,
longtime rivals for the affections of affluent car buyers. Along
with Volkswagen’s Audi division, the pair dominate the global
market for luxury vehicles. Still, they are in danger of being
overwhelmed by the superior financial firepower of new competitors
from the tech world. Alphabet, Google’s parent company, which has
invested in autonomous car technology, has a stock market value 10
times Daimler’s.
In addition to BMW’s DriveNow and Daimler’s Car2Go, which are
like rental agencies but allow customers to book on short notice
and use cars for brief periods, the agreement announced on
Wednesday includes services that help customers hail taxis, find
parking spots and charge electric vehicles.
“As pioneers in automotive engineering, we will not leave the
task of shaping future urban mobility to others,” Dieter Zetsche,
the chief executive of Daimler, said in a statement.
Virtually all major carmakers in Europe, in the United States
and elsewhere are trying to remake themselves into “mobility
companies” that do more than just mass-produce vehicles. But it is
still an open question whether traditional automobile manufacturers
can be as agile and technologically savvy as Silicon Valley
companies, like Uber and Google, that are trying to change the very
meaning of car ownership — and often have much greater financial
resources.
Thus far, old-line car companies have struggled to make money
with new services like car sharing. DriveNow, a car-sharing
business offering a fleet of BMW and Mini cars for customers in
Europe, lost 34 million euros, or $42 million, on sales of ?142
million in 2017.
By putting aside their longtime rivalry and merging their
digital operations, BMW and Daimler hope they will be in a better
position to compete with companies like Zipcar, a unit of Avis
Budget Group that is the largest car-sharing service in the United
States, as well as bigger threats like Uber.
The two companies did not disclose the financial terms of the
deal. Both said the merger, which must be approved by regulators,
will have a slight positive effect on 2018 earnings.
The businesses that will be put into the new joint venture,
which does not yet have a name, include:
? Daimler’s Car2Go, which has a fleet of 14,000 vehicles in
North America, Asia and Europe and claims to be the largest
flexible car-sharing service in the world. Combined, Car2Go and
BMW’s DriveNow will have four million users, the companies
said.
? BMW’s ParkNow service, which helps users find free on-street
parking and spaces in paid parking lots.
? BMW’s electric car charging network, which via partners
covers 143,000 charging points worldwide.
? Ride-hailing services including Daimler’s MyTaxi, an app
that allows users to order and pay for registered taxis. The app is
popular in Europe, where many cities do not allow Uber and other
ride-hailing services.
Daimler and BMW “remain competitors when it comes to the best
premium vehicles,” Harald Krüger, the chief executive of BMW, said
in a statement. He added, “The planned merger of our mobility
services will pool our resources and sends a strong signal to our
new competitors.”
1- How does this article illustrate globalization? Support
your answer.
This article illustrates globalization in the following
ways:
2- Which of the following globalization forces: political,
economic, environmental, social, cultural, competitive,
technological, have been presented in the case?
If some of the forces have not been explicitly discussed in
this case, then how would they affect the global marketplace?
The following globalization forces have been presented in this
case:
3-Explain which globalization forces are the most significant
for decisions made by major car manufacturers?
The following globalization forces are the most significant in
this case: