Hipsters rolling through the streets of Brooklyn in 9-foot long Smart cars will soon be able to upgrade to a much classier set of wheels — Mercedes-Benz sedans and SUVs.
Car2Go, the Daimler AG-owned car-sharing unit, is adding Mercedes CLA sedans and GLA crossovers to its New York fleet later this year. The move beyond urban micro cars, which is already underway in other North American cities, comes after a dearth of larger vehicles hindered demand.
“The one thing that hurt us, that limited a lot of our use cases, is the two-door,” Paul DeLong, president of Car2Go’s North American business, said in an interview. In the cities where Mercedes models are already in the fleet, “we are seeing utilization that is doubling what we were typically seeing with Smart vehicles.”
Daimler, which launched Car2Go in 2008, is one of a growing number of automakers offering sharing services as alternatives to ownership. Car2Go boasts 2.8 million customers globally, with 900,000 in North America, appealing to a growing group of drivers who’d rather summon wheels with a smartphone.
Car2Go, which offers one-way point-to-point rentals in more than two dozen cities worldwide, typically charges 47 cents a minute to rent a Mercedes in the U.S., compared with 41 cents to use a Smart Fortwo model.
Drivers can also rent by the hour or day for set rates, though the company declined to say how much more a Mercedes will cost versus the $15 per hour and $85 per day Smart cars go for in the New York market. Vehicles are available to be picked up and parked in Brooklyn or Queens and can leave those boroughs during trips.
Other cities where Car2Go operates already are comprised entirely of Mercedes-Benz models, with Portland making this transition by the end of October. Dense urban areas like New York will retain some Smart cars, DeLong said. The company will replace 60 percent of Car2Go’s 6,000-vehicle North American fleet with Mercedes vehicles by the end of the year.
Car2Go has been investing in expansion and in technology including predictive algorithms that guide the timing and placement of vehicles.
“Utilization is a big thing; we don’t want cars sitting around,” DeLong said.
Size and Scale
DeLong declined to say whether the North American unit is profitable. Daimler said in its 2015 annual report that a number of its Car2Go units posted losses. It stopped detailing results for its car-sharing businesses in its 2016 report.
As more automakers push into car-sharing, there may be opportunities for mergers that would add scale. Sixt SE, BMW AG’s partner in its DriveNow car-sharing business, indicated in August that talks to combine the unit with Car2Go were in the works. DeLong declined to comment on a potential merger.
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He did say, however, that Car2Go is open to having its service aggregated by other apps. Users in Seattle, for example, can access Car2Go and Avis Budget Group Inc.’s Zipcar through the Free2Move mobility app launched by rival European automaker PSA Group earlier this month.
“The more options people have, the better it is from a business perspective for us because people have the option to use Car2Go,” DeLong said. “And the more confident they are that they don’t need to own that second or third car.”