Daimler Tests "car2go" Car Sharing Service

Posted by: Jack Ewing on October 22

Carmaker Daimler is set to start testing a new kind of car sharing service in the city of Ulm that the company says it hopes to export to the U.S. Daimler is calling the new service car2go, and it represents not only a new approach to car sharing but also a foray by the German automaker into the service business.

When the car2go press release crossed my desk, I figured Daimler was simply demonstrating a new business model that others would actually implement. I was wrong. If the Ulm test is a success, the company plans to operate car2go as a new business in Europe as well as the U.S. Daimler says it is already in talks with Paris as well as several U.S. cities and could start offering car2go to the public next year. The company is not ready to name any U.S. cities, but they are likely to be metropolitan areas such as Seattle or New York where car sharing is already well accepted.

Car2go appears to be an improvement on existing car sharing programs. I was myself a customer of a car sharing service in Frankfurt operated by Deutsche Bahn, the national railroad. The Deutsche Bahn service works well, but has two disadvantages. You have to reserve the car for fixed periods of time—and pay a penalty if you come back late—and you have to return the car to the same parking spot.

According to Daimler, car2go customers will be able to spontaneously rent a Daimler-made Smart car using a microchip card that gives them access to the vehicle. They can drive the car as long as they like, then leave it anywhere in the designated metropolitan area. Daimler also plans to maintain reserved parking spots at train stations and other heavily trafficked areas. Customers can reserve vehicles if they prefer.

Beta testing of car2go begins Oct. 24 with 50 two-seat Smart cars in Ulm, a mid-sized city east of Daimler’s base in Stuttgart. Initially only Daimler employees will take part, but beginning early next year all Ulm residents and visitors will be eligible. The diminutive Smart car is a natural fit for this kind of service, but Daimler may include other vehicles later.

The price also sounds right. The basic rate is 19 euro cents a minute, or about 25 U.S. cents, which includes fuel and insurance. That’s probably less than it costs you to talk on your mobile phone. The maximum hourly rate for car2go is 9.90 euros ($12.75) and a whole day will cost 49.90 euros ($64). Unlike most car-sharing plans, Daimler doesn’t plan to charge a sign-up or membership fee.

In practice, I can see how car2go might suffer some startup problems. I’m also an occasional user of another Deutsche Bahn service called Call a Bike which allows you to rent bicycles in German cities and is analogous to car2go. You can borrow the bikes for as long as you like without reserving ahead of time and leave them anywhere in the city.

Call a Bike also works well, but the bicycles sometimes have defects such as non-functioning gears or warped wheels that only become apparent once you start riding, and it can be hard to find one when you really want one. Cars are much more complicated beasts than bicycles, so I can imagine that keeping the Smart fleet clean and in good running condition will be a challenge.

In addition, car sharing services have struggled to make money. Daimler execs believe that car sharing is a growth business. But the company, traditionally a manufacturer best known for its Mercedes cars, must prove it can be a better service provider than existing companies such as Zipcar.

Still, it’s a worthy idea. And as Daimler points out, car2go may also provide a platform to introduce electric vehicles. Many people may be wary of buying electric vehicles because of their limited range, but will be happy to pay by the minute to use one around town.