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Why auto makers encourage car sharing despite trend away from ownership

It would not be unreasonable to assume that car manufacturers would resist a trend that seeks to reduce car ownership, yet the major automotive companies have embraced car sharing with open arms.

The membership-based programs typically provide individuals temporary use of a variety of shared cars located throughout major urban centres, which can be accessed and used as needed. While such programs – which have grown in popularity since the early 2000s – eliminate the need for many urban dwellers to own their own vehicle, it also provides a variety of benefits to car manufacturers over the long run.

"We definitely get lots of people excited about being behind the wheel of a premium product," says Rich Steinberg, CEO of DriveNow USA, a BMW-owned car-sharing program that launched in Germany in 2011, and now provides an electric fleet of BMW models in San Francisco. "As their life stage changes – maybe they move out of the city or have a bigger family – they would have had some positive experiences driving our cars, so when they are in the market to buy than we can be at the top of their list."

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In recognizing the importance of the sharing economy for auto manufacturers, Steinberg says that BMW Management Group recently changed its mission statement, from "the world's leading provider of premium products," to include the words "and premium services for individual mobility."

"That addition to our mission statement of 'mobility services' encompasses the idea of car sharing," he says, adding that the change in focus is largely due to the growth of mega-cities, as well as the lesser value younger generations have put on car ownership by comparison to their parents. "The interest in the millennial generation to buy cars is starting to diminish, but we still want to be in the business of providing them mobility when they need it. That's where car sharing fits in."

This focus on attracting young drivers, even if they aren't yet interested in purchasing a car, is key to the manufacturers' long-term relationship building strategy. No car manufacturer has, as of yet, requested to not be part of ZipCar's fleet.

"One of the benefits to car manufacturers is that we have a special program where we allow 18-year-olds and older to reserve vehicles," says Nicola Mcleod, general manager of ZipCar Toronto, which boasts a fleet of more than 500 vehicles parked in more than 200 locations. "We provide the opportunity for these car manufacturers to connect, at a very early stage, with future consumers and end users of their products, with high standards and the freshest models, which is a huge benefit."

Whereas previous generations may have been introduced to particular brands through the older models driven off used-car lots by their peers, car sharing is providing the next generation with the opportunity to experience the newest, cleanest products those manufacturers have to offer.

"Manufacturers are really pleased with the ability to have exposure to a large demographic who might not otherwise have the opportunity to drive their vehicles," says McLeod. "There is great potential for that segment of the population to develop a loyalty to their brand and a relationship with their brand, despite the fact that they're not purchasing."

Some manufacturers are even seeing direct sales benefits from developing and participating in car-sharing programs, especially those models that were built for life in the city.

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"It provides a visibility to people who may have never considered owning a car in the first place, and now they have a chance to experience the Smart fortwo," says JoAnne Caza, director of communications and public relations for Mercedes-Benz Canada, which provides Smart cars to its sister car sharing company, Car2Go. "We have seen sales as a result of that, and it gives visibility to the brand beyond the general touch points we have through advertising and other marketing initiatives."

Unlike DriveNow or ZipCar, however, Car2Go isn't focused on building a long-term relationship between drivers and its ultra-compact urban vehicles, in hopes of turning that relationship into direct sales.

"The people who drive the Car2Go cars aren't necessarily going to be eventual car buyers," says Caza. "This is an opportunity for us to expose our brand and our product."

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