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Here is the future of car sharing, and carmakers have a lot to worry about

Moscow's sharing boom shows how quickly consumers can abandon the traditional car

Ilya Khrennikov I Bloomberg 

Car, vehicles, automobiles, traffic jam
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When Evgeny Barkov owned a car, the 31-year-old software salesman would often look out of his window at it with disgust. His possession sat unused more than 90 per cent of time, while sucking up money and causing him anxiety that it might break down.

He finally took out a calculator, added up all the costs and determined he was better off selling his grey and switching completely to services such as Drive, which offers cars ranging from basic models to flashy Porsches.

“That investment brought me nothing but trouble,” said Barkov as he wound through Moscow’s snowy streets in a white Skoda sedan with a bright yellow stripe on the side and Yandex’s software on the dashboard console. “Now, I’m just paying for using.”

The venture—set up last year by a local Internet company—flooded the Russian capital with more than 7,000 cars to rent for as little as 5 rubles (8 cents) per minute, including fuel, maintenance and parking. That compares to 41 cents a minute for Daimler AG’s in New York and is an offer too good to pass up for a growing number of Muscovites.

Almost out of nowhere, in boomed, with the number of vehicles more than tripling last year. The city now has the biggest shared fleet in Europe and the second-largest in the world. The rapid shift spells trouble for automakers by providing a blueprint for how a deep-pocketed technology player can move quickly to woo consumers with alternatives to traditional

“We’re approaching a point that could flip the entire on its head,” said Shwetha Surender, a London-based analyst with consultancy risk becoming mere suppliers to shared mobility services and losing direct relations with customers. That’s an unattractive proposition.”

To be sure, automakers are seeking to head off the risk. Daimler and merged their ventures to gain greater scale. is testing its MOIA ride-sharing service in Hamburg, while has invested in Lyft Inc.

They all somehow missed Russia’s biggest city, with more than 12 million people. Daimler’s Car2Go, BMW’s and Avis Budget Group Inc.’s are all no-shows, even though its notoriously clogged streets—is ranked as the world’s second-worst city for traffic congestion—were ripe for disruption and authorities were practically begging car-sharing to invest.

Paid parking was introduced in the city centre in 2013 and is generally booked via app—training residents to use features for their transport needs. A day’s worth of curbside parking could cost about $30, making it the largest daily expense for many Russian drivers. get discounted rates of roughly $400 a year.

took advantage, swarming Moscow streets last year with vehicles such as Captur crossovers, BMW 5-Series sedans and even 911 sports cars. Its aggressive investment made it the market leader ahead of local rivals Delimobil and BelkaCar. At the end of 2018, there were 16,500 in the city, and Moscow’s Transportation Department expects the number to rise by 5,000 vehicles annually in the coming years. The fleet expansion trailed a boom in users as rides more than quadrupled to 23 million.

started car-sharing later than other countries, but due to this we were able to deploy the latest technologies,” said Anton Ryazanov, head of Drive, which expanded to St. Petersburg in December. “Now, the Russian market is taken by local car-sharing firms, and the entrance of large international players is unlikely.”

is Russia’s version of and has taken advantage of its strategic position at the centre of the digital economy to deepen ties with consumers through services ranging from shopping sites to music streaming. The company began its push into transport services with cab-hailing app Yandex.Taxi in 2011, now Russia’s largest. It controls Uber Technologies Inc.’s business in the region.

Car-sharing is the next step in eventually offering a robo-taxi service—the goal of Alphabet Inc.’s By starting with car-sharing, Yandex gets a pool of customers that could easily switch from driving the company’s vehicles to riding in them.

First Published: Sat, February 09 2019. 23:07 IST
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