Here’s Why VW Is Throwing in the Towel on Car Sharing

Wolfsburg is the latest automaker to sell its car sharing startup, amid an uncertain long-term outlook for the industry.

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  • VW sells WeShare car sharing startup to Miles Mobility, becoming the latest automaker to shed its car sharing venture.
  • The automaker will fold its 2000 EVs, which were offered in Berlin and Hamburg, into Miles Mobility’s operations.
  • Lack of profitability has driven rapid consolidation in the car sharing industry, which first appeared on the scene in the late 2000s as an alternative to car rentals.

    Volkswagen became the latest automaker to sell its car sharing business unit, WeShare, to an outside company, in this case the startup Miles Mobility. The sale of the car sharing venture, not long ago hailed as a future source of revenue by a number of large automakers, follows sharp cuts in the operations of other car sharing arms launched in the previous decade.

    The culprit, once again, is profitability in a fledgling industry that hasn’t quite taken the world by storm. The automaker’s car sharing unit WeShare offered about 2000 Volkswagen ID.3 and ID.4 EVs operating in Berlin and Hamburg, and a much greater number of internal-combustion models in a number of other cities.

    Miles Mobility, on the other hand, offers vehicles in Potsdam, Düsseldorf, Berlin, Bonn, Duisburg, Hamburg, Munich, and Cologne, and has recently set up operations in Ghent and Brussels. The company has 9000 vehicles at the moment, so it’s certainly the bigger fish acquiring a smaller one in this transaction, which was completed for an undisclosed amount.

    “We are pleased to have found the perfect partner in Miles, whose portfolio will be bookable via the Volkswagen mobility platform. WeShare customers will then benefit from car sharing services in eight German cities,” said Christian Dahlheim, chairman of the Board of Volkswagen Financial Services AG.

    Is car sharing itself on its way out as a business model?

    Not quite, but automakers have invariably faced high operating costs in a number of regions, prompting very abrupt starts and stops to service in several large cities, particularly in North America.

    After a period of a sugar high of sorts in the early 2010s when several automakers sought to rebrand themselves as “mobility solution providers” and dreamed of turning everything into a subscription model, a period of industry consolidation has set in a few years ago, with relatively few established worldwide players experiencing profitability. Automakers have not been among them.

    Three years ago, Mercedes’ car2go and BMW’s DriveNow merged after about a decade of competition, forming Share Now. But the newly formed company also left North America just days after the merger, citing high operating costs. In May of this year, Share Now was purchased by Stellantis in a transaction the details of which were not publicized—effectively being folded into the latter’s Free2move car sharing operation, which now has 450,000 vehicles and some 6 million customers worldwide.

    Despite a handful of players gaining scale through these acquisitions, margins in this industry remain tight, as in the traditional car rental industry, with which car sharing services are in constant competition. But there is also a growing realization in the industry that in the long term robotaxis will likely displace car sharing, though timing remains unclear.

    While Volkswagen is clinging to Mobility as a Service (MaaS) in some of its forms, we’re unlikely to have seen the last round of consolidation in this industry.

    Jay Ramey Jay Ramey grew up around very strange European cars, and instead of seeking out something reliable and comfortable for his own personal use he has been drawn to the more adventurous side of the dependability spectrum.

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