GM to compete directly with Uber and Lyft
posted at 5:21 pm on January 21, 2016 by Jazz Shaw
With the success of ride sharing services like Uber, I’m sure they expected some competition. But instead of another young app developer from Silicon Valley, they probably didn’t expect to be challenged by General Motors. I’ll confess that I did a double take when I saw the headline because, well… why would a car manufacturer care about who is driving their vehicles or using them as cabs? (Beyond some possible advertising purposes anyway.) As it turns out, they’ve got an eye toward a future where people aren’t as interested in owning cars. (Yahoo News)
GM is launching a “personal mobility” service called Maven that will kick off in Ann Arbor and spread to other major U.S. cities throughout 2016. Participants will use a smartphone app to locate GM vehicles for rent at parking spots throughout the city, unlocking the car using the app and a wireless connection to the car, instead of a key. The service is a blend of Uber, Zipcar and bike-sharing programs in many cities, since it allows users to find a short term rental closes to them using an app.
GM also invested $500 million in the ride-sharing company Lyft recently, while also scooping up the remnants of Sidecar, an early ride-sharing venture that failed for lack of funding. GM president Dan Ammann will sit on Lyft’s board and oversee GM’s new ride-sharing projects.
GM is talking about the decline of the “ownership model” in America, particularly among younger and urban dwelling consumers. It’s not that they expect private owners to stop buying cars entirely, but in large segments of the market there are plenty of people who are already doing away with the parking hassles and other related expenses that come with having a car. For such consumers, a single day (or even four hour) rental of a vehicle on occasion works out to be far cheaper than car payments, insurance, parking fees and all the rest. If you add into that the appeal of having an app that will direct you to a car which is parked in your neighborhood and can be unlocked and started with your phone… well, that’s a pretty appealing marketing pitch. Further, if they can cash in on the ride sharing idea by getting a cut of it through providing the vehicles that the drivers commute in, it works out to another revenue stream.
At first glance this sounded kind of silly for a major auto manufacturer, but the more I read about it the more it made sense. It might even challenge Uber more effectively than somebody starting what would essentially be a copy cat service. The big expense for prospective Uber drivers is having a car that passes muster for the service. When the service starts with providing the car, the direct pay for a driver may go down, but so do their expenses. Personally, I think I’d be tempted to use a service like this so GM may be onto something here.