European Carmakers Crank Up Car-Sharing Plans

More than half a dozen European carmakers are testing car-sharing schemes for a market expected to multiply more than tenfold by the end of the decade, Automotive News Europe reports.

The two highest-profile programs BMW's DriveNow and Daimler's Car2Go predict they will each generate annual revenue of $1.3 billion by 2020. ANE notes that Ford, PSA, Renault, Toyota and Volkswagen have launched similar car-sharing tests.

Daimler's program, now in its fourth year, offers short-term rentals from a fleet of 10,000 Smart ForTwo city cars in 21 cities. BMW two-year-old project with rental car provider Sixt operates a 1,600-vehicle fleet in five European cities.

Daimler says several of its Car2Go operations are already profitable. BMW tells ANE its DriveNow business is likely to earn its first profit this year.

Analysts anticipate strong demand for instant rentals as an option to car ownership in urban areas, especially across Europe. Frost & Sullivan predicts car-share programs in the region will attract 15 million customers by 2020 compared to 1 million currently. The consulting firm expects the global market to jump from 2.3 million to 26 million customers over the same period.

Carmakers believe car-sharing can help attract buyers. But ANE says some analysts estimate the 20,500 vehicles in Europe's sharing fleets represent at least 250,000 lost sales to private owners.

Frost & Sullivan expects the number of vehicles in car-sharing fleets worldwide will grow to 500,000 units nearly half in Europe by 2020.

Daimler tells ANE that further growth could be limited by the rising cost to car-sharing operators of parking such vehicles on city streets. The company says Car2Go spends as much as $266 on monthly parking fees for its cars an operating cost second only to depreciation.