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BMW and Daimler, Once Rivals, Join Forces to Fend Off SiliconValley

(JACK EWING)

FRANKFURT — The German carmakers Daimler and BMW said onWednesday that they would merge their car-sharing businesses asthey try to compete better with Silicon Valley companies out toupend the traditional automotive industry.

Daimler, the maker of Mercedes-Benz cars, and BMW said theywould put their respective mobility services — an array of apps andservices that provide transport options for people who may not owncars — into a joint venture in which they will own equalshares.

The alliance is a major departure for BMW and Daimler,longtime rivals for the affections of affluent car buyers. Alongwith Volkswagen’s Audi division, the pair dominate the globalmarket for luxury vehicles. Still, they are in danger of beingoverwhelmed by the superior financial firepower of new competitorsfrom the tech world. Alphabet, Google’s parent company, which hasinvested in autonomous car technology, has a stock market value 10times Daimler’s.

In addition to BMW’s DriveNow and Daimler’s Car2Go, which arelike rental agencies but allow customers to book on short noticeand use cars for brief periods, the agreement announced onWednesday includes services that help customers hail taxis, findparking spots and charge electric vehicles.

“As pioneers in automotive engineering, we will not leave thetask of shaping future urban mobility to others,” Dieter Zetsche,the chief executive of Daimler, said in a statement.

Virtually all major carmakers in Europe, in the United Statesand elsewhere are trying to remake themselves into “mobilitycompanies” that do more than just mass-produce vehicles. But it isstill an open question whether traditional automobile manufacturerscan be as agile and technologically savvy as Silicon Valleycompanies, like Uber and Google, that are trying to change the verymeaning of car ownership — and often have much greater financialresources.

Thus far, old-line car companies have struggled to make moneywith new services like car sharing. DriveNow, a car-sharingbusiness offering a fleet of BMW and Mini cars for customers inEurope, lost 34 million euros, or $42 million, on sales of ?142million in 2017.

By putting aside their longtime rivalry and merging theirdigital operations, BMW and Daimler hope they will be in a betterposition to compete with companies like Zipcar, a unit of AvisBudget Group that is the largest car-sharing service in the UnitedStates, as well as bigger threats like Uber.

The two companies did not disclose the financial terms of thedeal. Both said the merger, which must be approved by regulators,will have a slight positive effect on 2018 earnings.

The businesses that will be put into the new joint venture,which does not yet have a name, include:

? Daimler’s Car2Go, which has a fleet of 14,000 vehicles inNorth America, Asia and Europe and claims to be the largestflexible car-sharing service in the world. Combined, Car2Go andBMW’s DriveNow will have four million users, the companiessaid.

? BMW’s ParkNow service, which helps users find free on-streetparking and spaces in paid parking lots.

? BMW’s electric car charging network, which via partnerscovers 143,000 charging points worldwide.

? Ride-hailing services including Daimler’s MyTaxi, an appthat allows users to order and pay for registered taxis. The app ispopular in Europe, where many cities do not allow Uber and otherride-hailing services.

Daimler and BMW “remain competitors when it comes to the bestpremium vehicles,” Harald Krüger, the chief executive of BMW, saidin a statement. He added, “The planned merger of our mobilityservices will pool our resources and sends a strong signal to ournew competitors.”

1- How does this article illustrate globalization? Supportyour answer.

This article illustrates globalization in the followingways:

2- Which of the following globalization forces: political,economic, environmental, social, cultural, competitive,technological, have been presented in the case?

If some of the forces have not been explicitly discussed inthis case, then how would they affect the global marketplace?

The following globalization forces have been presented in thiscase:

3-Explain which globalization forces are the most significantfor decisions made by major car manufacturers?

The following globalization forces are the most significant inthis case: