In the following chapter the concept of personal mobility is presented in section 4.1 and in section 4.2 the current nature of car sharing in Copenhagen is outlined. Section 4.3 provides the reader with an introduction to DriveNow and the companies behind the initiative.
4.1 Personal mobility
The personal mobility sector and the development of sharing within this sector as a mean of brand- and legitimacy creation create ground for this thesis’ conceptualization. BMW is a large and influential player within the automotive sector and with the introduction of DriveNow, BMW is actively entering the sharing economy. The mobility industry encompasses “activities that provide products and services which aim to optimize the mobility of goods and people by combining or connecting means and modes of transport” (PwC, 2013). As the research’s area of interest is on the transportation of people and personal mobility within the sharing economy, mobility of goods is excluded from the analysis.
In relation to CSR and the sharing economy, the personal mobility sector is of particular interest as several driving forces within the personal mobility sector makes it an interesting case for a study on the sharing economy. Within the sharing economy, the personal mobility industry is particularly developed and several mobility service providers and ride-sharing initiatives exist around the world. In a classification of sharing economy companies conducted in June 2015, 17 identified companies were valued at more than US$ 1 billion dollars. Of those, 23% operates within transportation, making it the most represented category within the sharing economy (Koetsier, 2015). The personal mobility industry has experienced a rapid development within the sharing economy and fast growing startups like BlablaCar, Uber, Zipcar and GoMore have developed a new market for carpooling and car sharing. Established auto manufacturers and car rental companies such as Avis, BMW and Daimler AG are examples of traditional companies that have developed and purchased car-sharing initiatives as a response to this development (Avis Budget Group, 2013; BMW Group, 2015; Daimler Financial Services, 2015).
The established companies’ interest in car sharing can be seen as a response to the high degree of competition within the automotive industry in terms of increasing prices of raw material and a demand for innovation (Kallstrom, 2015). The industry is much less stable than previously and is constantly developing as auto manufacturers, as well as electronic companies compete on the development of batteries for electrical vehicles and self-driving vehicles (Dicken, 2011; 341). Car manufactures face the challenges of meeting current and future environmental regulations on emission and much research is conducted on how to develop new ways of transportation that meets the ever increasing regulations related to greenhouse gas
emissions and air pollution (Ibid.: 343). Finally, the need to define and implement a clear market positioning strategy in a market characterized by fragmentation, saturation, overcapacities, competition and cost pressures from high research and development costs make established auto manufacturers companies seek out alternatives (Holweg, 2008) such as the development of electrical vehicles and car sharing initiatives.
4.2 Car sharing in Copenhagen
In order to add a local level to the analysis of car sharing initiatives, the market for car sharing in Copenhagen has been analyzed. Five car sharing initiatives have been identified; namely BMW’s DriveNow, Delebilen by Hertz, Greenabout Move, LetsGo and GoMore. GoMore offers both car sharing and carpooling through their P2P platform. The car sharing market in Copenhagen is rapidly developing and several actors compete in order to uncover the right solution in terms of car sharing in Copenhagen and gain a foothold within the market. Car2Go, a fifth car sharing initiative with international presence develop by the German auto manufacturer Daimler AG, terminated its service in Copenhagen in February 2016 only 17 months after it started, a further testimony of the high degree of competition in the market and the companies’ challenges with obtaining a critical mass in terms of members (Barlag, 2016)
In addition to the four identified car sharing initiatives, several private unions provide car sharing initiatives to their local neighborhoods. These unions are characterized by having a small number of cars to share and operate as small communal unions.
4.3 DriveNow
The empirical foundation of the thesis is the car sharing initiative DriveNow and the following section provides the reader with an introduction to the concept of DriveNow, BMW and Sixt AG.
DriveNow can be categorized as an access based sharing economy initiative and have been developed by BMW, through their sub-brand BMW i, in corporation with the German car rental company Sixt AG. The brand alliance of BMW and Sixt AG is employing a “do it yourself” entry strategy to the sharing economy. The two companies thus combine their individual strengths, where BMW is the expert in terms of production of cars and knowledgeable about electrical vehicles and Sixts AG provides expertize in terms of logistics. It is a pay per minute car sharing service that allow individuals to use city cars for a limited time period and afterwards drop them off on the nearest parking spot. DriveNow has an area of operation where the cars can be picked up and dropped off. Within the area of operation DriveNow members can, through the use of an app, locate an available DriveNow car in close proximity and reserve it for free for 15 minutes, in order for users to have time to get to the location of the car (DriveNow Gmbh & Co. KG & Arriva Danmark A/S, 2016c). The cars can be dropped off in specific DriveNow parking spots or in standard parking area, where DriveNow in
corporation with the local authorities have arranged specific permits for DriveNow cars (DriveNow UK Ltd., 2016). In order to be able to use the cars made available through the DriveNow initiative, customers sign up as members in advance and DriveNow charges a signup fee. Hereafter all costs are covered by a pay per minute fee (DriveNow Gmbh & Co. KG & Arriva Danmark A/S, 2016b).
DriveNow is branded as an individual brand with its own logo, website and visual identity, with no explicit connection to its parent brands of BMW, Sixt AG and Arriva, and BMW does thus not apply a monolithic branding strategy in the case of DriveNow, but market DriveNow as an individual “product” brand.
Figure 5 - DriveNow Area of Operation, Copenhagen
4.3.1 International presence
Since the car sharing initiative was first launched in Munich in April 2011 (Boeriu, 2011) eight other cities throughout Europe have followed suit and as per February 2016, DriveNow operates in five German cities;
Munich, Berlin, Hamburg, Düsseldorf and Cologne, Vienna in Austria, London in the United Kingdom, Stockholm in Sweden and Copenhagen in Denmark (DriveNow Gmbh & Co. KG & Arriva Danmark A/S, 2016a).
Until November 2015 the concept was also running in the San Francisco Bay Area, United States, but was discontinued due to new parking regulations (BMW CarSharing LLC, 2016).
As DriveNow operates the car sharing initiative internationally, already signed up members can use the DriveNow service in all cities DriveNow operates in (DriveNow GmbH & Co. KG, 2016). The signup fee and
pay per minute rate varies from country to country as well as the terms and conditions are dependent on the specific country. The accumulated DriveNow car fleet consist of 3950 cars, where some are electrical and others run on diesel or gasoline.
Table 2 - DriveNow International Presence (DriveNow GmbH & Co. KG, 2016)
4.3.2 DriveNow in Denmark
DriveNow entered the Danish market in September 2015, when the cars were introduced as city cars in the Copenhagen area. In Denmark, DriveNow is structured as a franchise through a partnership between the parent initiators, BMW and Sixt AG, and the local partners Arriva, E.ON and Rejsekortet (Vinther Andersen, 2016). The Danish DriveNow fleet consists exclusively of electrical cars, that are recharged through electrical charging stations located throughout the area of operation. DriveNow encourages members to drop of the cars in the electrical charging stations and reward members that do so with bonus minutes in order to increase the incentive for customers to help recharge the cars (Ibid.).
4.3.3 BMW
BMW is a German car manufacturer with a long history of producing premium cars and motorcycles. Since the establishment of the BMW Group in 1916, the company has positioned itself as the provider of premium quality cars with a vision of inspiring people on the move, while shaping “tomorrow’s individual premium mobility” (BMW Group, 2016a). The partnership between Sixt and BMW and the development of DriveNow, is part of BMW’s overall strategy to meet the future needs associated with the growth in urban living and the rise of the sharing economy (Boeriu, 2015).
BMW i is BMW’s sustainability concept that support the development of sustainable mobility through the introduction of electrical vehicles, such as the BMW i3, and mobility services (BMW, 2016). Through the BMW
emission-free mobility. BMW wish to link cars and mobility services in an intelligent way through its mobility services in order to promote urban mobility. Through the BMW owned venture capital firm BMW i Ventures, BMW enter into long-term strategic initiatives that promotes a sustainable mobility behavior such as DriveNow or the parking initiative Just Park (BMW, 2015).
4.3.4 Sixt AG
Sixt AG is an internationally operating car rental company founded in 1912 in Munich, Germany and BMWs business partner in the development of DriveNow. Sixt AG is known as a frontrunner within its industry in terms of integrating technology into their business and was the first car rental company to allow their customers to make reservations online and subsequently via smartphones (Sixt AG, 2016). As a car rental company, Sixt AG is experts within fleet management and is responsible for the fleet operation and logistics of DriveNow (Vinther Andersen, 2016).