Automakers, tech companies decide to make deals, not war

Thu May 26, 2016 3:32am EDT
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By Joseph White and Paul Lienert

DETROIT (Reuters) - A flurry of deals between big automakers and ride hailing and transportation startups is rewriting the playbook in the contest to control the future of personal transportation.

Automakers now recognize they may turn ride-hailing services and car sharing companies into steady customers for all sorts of vehicles, particularly hybrid and electric cars, industry executives and analysts say.

Tie-ups with carpooling services or short-term rental companies help automakers expose consumers to brands they might otherwise ignore. Technology companies offer access to troves of consumer data, and sophisticated ways to analyze them.

From the automakers, the Silicon Valley mobility companies obtain fresh capital, access to auto industry engineers who know how cars work and discounts on vehicles for their drivers.

In the latest tie-up between an automaker and a transportation technology startup, German luxury car maker BMW AG said on Wednesday its BMW iVentures venture capital arm has invested an undisclosed amount in California-based Scoop Technologies, which offers a smartphone-powered carpooling service called Scoop.

On Tuesday, Toyota Motor Corp, the world's No. 1 automaker by vehicle sales, said it was investing an undisclosed amount of money in Uber. Germany's Volkswagen AG (VOWG_p.DE: Quote) said on the same day it would invest $300 million in Gett, a smaller ride-hailing company.

Earlier this year, General Motors Co acquired a stake in Uber rival Lyft, and the Detroit automaker is launching its own car-sharing and mobility ventures under the Maven brand. Ford Motor Co, Daimler AG and other major automakers have unveiled efforts to embrace ride-hailing and car-sharing services.

Automakers "want to make sure they are in the game," as more consumers use ride sharing or carpooling, said Mark Short, an Ernst and Young partner who advises automakers on transactions. "To be in the game, you have to make investments in these companies."   Continued...

A driver displays Uber and Lyft ride sharing signs in his car windscreen in Santa Monica, California, U.S., May 23, 2016.   REUTERS/Lucy Nicholson/Files