ReachNow, BMW Group's carsharing service in North America, has announced that it is shutting down operations.
After a period of over 3 years, in which ReachNow evolved from a floating
carsharing service in Seattle to offering multiple mobility services under a
single banner and app (as well as spreading to Portland and, for a while,
to the east coast in Brooklyn), it will now cancel all of its services, effective immediately. What happened?
The writing has been on the wall since the mobility joint venture
between Daimler and BMW was announced, reflected by a very quick resignation
by Steve Banfield, the then CEO of ReachNow, along with a statement speaking about
the “end of a great team and a missed opportunity”.
The shutdown of the service is being attributed to a
strategic decision, and part of a larger restructure of the still young YOUR
NOW joint venture (JV) between BMW and Daimler, downsizing from five brands to a
more manageable three.
The focus of ReachNow, momentarily rebranded to REACH NOW, will be
combined with SHARE NOW, allowing the latter to be the sole operator of
carsharing services within the JV. Interestingly, ReachNow users will not be
grandfathered into car2go, the JV’s most prominent carsharing service.
If you’re struggling to keep up with so many branding changes,
mergers and cancellations… you are definitely not alone. The main sentiment
from consumers since the rebranding has been a sense of confusion.
The wind-down of the service will directly affect more than 100,000 ReachNow consumers in Seattle and Portland.
This pyramid shows the typical stages that a mobility service goes
through, from establishing its brand, to scaling to other markets and
types of services and becoming profitable. Once that is achieved, a service
would look to in-source its operations and perhaps offer its services as a
platform for other services to use.
While the $1bn
investment made in the joint venture of Daimler and BMW made a definite
statement that both automotive giants are serious about making a profitable
business case out of scalable mobility services, the execution seems to have
started on shaky grounds.
Branding: car2go was perhaps the strongest of all the brands in the JV, but
the decision was taken to fold it into the SHARE NOW brand instead of keeping
it as a flagship to the lead the JV.
Scalability: This is an area that both BMW and Daimler’s services struggled with
in the past, with multiple withdrawals from markets like San Diego, Brooklyn,
Toronto and London.
Profitability: car2go is assumed to have been profitable, as
evidenced by its withdrawal from several unprofitable markets in the past. In
parallel, ReachNow (and RideCell by proxy) have claimed the service profitable
at as little as 12% utilization in the past.
In-sourcing: This is perhaps the biggest advantage of this JV –
it allows Daimler and BMW and merge their back-end operations into a single,
scalable solution that can be used fort a variety of services.
Platform: While not stated as one of the objectives of the JV, it could
emerge as a business opportunity in the future to compete with Toyota Connected
and Ford’s TMC.
successful mobility service is challenging, and we are still in an experimental era where trial-and-error is to be applauded. While, on the surface, this JV may seem to have done more harm than good to
the car2go brand and consumer perception towards the services, it is not
all bad news. Brand clarity and consistency is important, and the calculated move to end ReachNow is likely for the best. In the long-term, this will make the services clearer for consumers and is better done now, before any large-scale roll out.