Turo
Turo CEO Andre Haddad.
- Automakers have in recent years begun rolling out ride-hailing, car-sharing, and subscription services to prepare for a potential move away from individual vehicle ownership, but many of those services have shut down or contracted.
- Andre Haddad, the CEO of the car-sharing service Turo, told Business Insider there were three primary reasons auto companies have struggled to grow their mobility services.
- Automakers don't have much experience dealing directly with consumers, lack expertise in non-vehicle technology, and sometimes decline to use the names of their car brands in those of their mobility apps, he said.
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As the auto industry enters a potentially transformative period marked by a shift toward electric and autonomous vehicles, some observers have raised the possibility that personal ownership of vehicles may one day be replaced by ride-hailing, car-sharing, and subscription services.
Automakers have in recent years begun rolling out their own mobility services to stay ahead of the curve, but many of them have shut down or contracted. In September, Ford sold its subscription service, Canvas to a competitor, the startup Fair, a year after a Lincoln executive told Automotive News he was surprised by the lack of interest in it. Six months earlier, Ford shut down its shuttle-based ride-sharing service, Chariot. Those moves came as General Motors, Daimler, and BMW have reduced the number of cities in which their car-sharing services operate.
"These OEMs have tried to build their own products, their own mobility services, and they haven't been very successful," Andre Haddad, the CEO of the car-sharing service Turo, said in an interview with Business Insider.
Automakers rely on third-party dealerships and repair shops to handle sales and service, so they don't have much experience dealing directly with consumers, Haddad said. That issue has been compounded by their lack of expertise in developing nonvehicle technology, like mobile apps, and the fact that automakers have sometimes declined to use the names of their car brands in those of their mobility apps.
"They don't actually leverage their brands, which is kind of absurd, when you think about it," Haddad said.
Automakers have said that, even when their mobility services don't work as planned, they gain knowledge that will be useful in the future. And even if individual ownership declines, someone will still have to make the vehicles used in mobility services. The long history of failed auto startups serves as a reminder that vehicle manufacturing can be prohibitively difficult for new entrants.
But if automakers are unable to gain much traction in areas like autonomy and mobility services, they may find new companies taking some of their already-thin profit margins. In the third quarter of 2019, auto and truck manufacturers had earned an average profit margin of 7.9% in the past year. The tech industry earned an average margin of 21.9% in the same period.
- Read more:
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- I tried Turo, a car share company that connects vehicle owners and renters - here's why I'll never use a traditional car rental again
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