TOKYO: Daimler AG, Audi, and BMW AG have all seen their ambitions crushed in Stockholm, a city that’s gaining notoriety as one of the toughest car-sharing markets in the world. Even so, a Japanese trading company with zero experience in the sector is betting it can succeed where others failed.
Sumitomo Corp – a conglomerate that does everything from mining iron ore to managing supermarkets – is the latest to bet that people in Sweden’s capital will prefer to rent cars for short periods when they need one, instead of owning a vehicle. The Tokyo-based company is rolling out aimo in Stockholm on Oct 31, the same day that BMW’s DriveNow pulls out.
Car-sharing has already caught on in other dense, urban centres. Providers such as Zipcar Inc. in the US and Times Car Plus in Japan let drivers pick up and drop off vehicles from designated parking lots and use them in hourly increments, saving them the hassle of owning an automobile or finding a rental agency.
Sumitomo is the latest challenger in a shared-mobility market that will grow by 20% a year on average to surpass US$11bil by 2024, according to Global Market Insights.
“The reason the others failed is that they went about it the wrong way, not because Stockholm is not a good place for car sharing,” Yuichi Ono, a Sumitomo manager overseeing the project, said in an interview in Tokyo this month.
Ono is betting that Sumitomo will succeed precisely because it doesn’t build vehicles. While automakers tend to use their car-sharing services to advertise certain models, Sumitomo can just choose the car it judges best for the purpose, he said. Aimo will offer a completely stripped-down service: there’s no sign-up fee, only one payment plan, and only one kind of car, Renault SA’s all-electric Zoe.
On paper, Stockholm looks an enticing location for a car-sharing venture. The population is young, tech-savvy and growing. The Nordic country also has among the world’s most supportive policy environments for the plug-in vehicles increasingly being favoured for car-share fleets, according to Sumitomo.
In practice though, the city has been brutal for new entrants. Daimler’s Car2Go crashed out in 2016 after less than two years, citing insufficient interest in its service. Volkswagen AG’s Audi shuttered its programme a year later without ever graduating from the pilot phase. DriveNow exits amid lower-than-anticipated demand and higher-than-expected costs.
The biggest obstacle may have been the incumbent, Sweden’s own Sunfleet. Run by Volvo Cars, it dominates the market with some 1,500 vehicles in 50 cities nationwide, and around 76,000 registered users. In operation since 1998, Sunfleet more closely resembles a traditional car-rental business, requiring customers to reserve a car and then pick it up and drop it off at pre-designated locations. But it’s in the process of a major update, re-branding itself as M from next spring and incorporating artificial intelligence to learn users’ preferences. — Bloomberg