BMW and the Owner of Mercedes-Benz Are Going Into Business Together

March 28, 2018, 5:20 PM UTC

BMW and Daimler are merging their untraditional operations—everything from car-sharing and ride-hailing to parking locator services and electric vehicle charging—into a single joint business as the two rival automakers attempt to better compete with Uber, Lyft, and other mobility companies.

The two companies on Wednesday signed an agreement to form a 50-50 joint venture that will include five verticals: car-sharing, ride-hailing, parking, electric vehicle charging, and what they describe as “multimodal,” a term meant to cover the on-demand ordering and payment component of the business.

BMW and Daimler AG, the owner of Mercedes-Benz, said they will continue to compete in their core business of building and selling vehicles.

“People will look back on today as a historic moment for the mobility of the future,” BMW Group board member Peter Schwarzenbauer said during a roundtable discussion with reporters at the New York International Auto Show. “Two of the major players in the automotive industry are basically joining forces in building a new company, which will in my eyes, offer a level of service that is unheard of yet.”

The idea is to create a single digital ecosystem that customers can use to hail a taxi, rent a car for short stints, or find and pay for parking. The two companies will not merge their respective autonomous vehicle development programs.

“The target isn’t to do a little bit here and a little bit there,” Schwarzenbauer said. “We want to become the leading provider when it comes to mobility services.”

But before that can happen, the two companies will have to go through the complicated process of merging their operations and determine whether to rebrand existing businesses such as Daimler’s car2go and BMW’s DriveNow and ReachNow car-sharing units or to leave those names intact. The deal also has to be reviewed and approved by antitrust regulators.

The number of businesses currently operating under each company illustrate the complexity of this new enterprise, and hint at how long it might take BMW and Daimler to integrate them.

For example, BMW’s DriveNow and Daimler’s Car2Go have 20,000 vehicles spread out among 31 cities globally. Other BMW or Daimler-owned mobility operations include moovel, ReachNow, ride-hailing services such as mytaxi, Chauffeur Privé, Clever Taxi and Beat, and parking businesses ParkNow and Parkmobile. Some 13 million customers and 140,000 drivers are already using BMW’s and Daimler’s ride-hailing services.

BMW and Daimler are also projecting that the deal will increase profits. If the merger is approved, Daimler expects earnings before taxes for its financial services unit will be “significantly higher than the previous year.”

BMW said the joint venture will trigger a one-time valuation and earnings effect in its group financial statement. Pre-tax earnings would increase slightly in 2018 compared with the previous year, BMW said.

The companies have gone into business together before. In 2015, a coalition of German carmakers that included Daimler, Audi, and BMW agreed to acquire Nokia’s HERE and its mapping technology.