Daimler Expands Into Ride Sharing
Company Becomes First Car Maker Enter Fast-Growing Market Dominated by Startups Like Uber and Lyft
Updated Sept. 3, 2014 4:52 p.m. ET
Daimler AG Wednesday became the first major car maker to enter the ride-sharing business, a fast-growing market currently dominated by startups like Uber Technologies Inc.
Daimler, whose Mercedes-Benz cars are popular with taxi services in parts of Europe, said it would acquire the U.S.'s RideScout LLC and Germany-based Intelligent Apps GmbH, which operates the mytaxi cab-booking app.
The value of the acquisitions is small at less than $100 million, according to people familiar with the situation. Daimler is making the acquisitions through its Moovel GmbH unit, in which Daimler has consolidated its mobility services business, including Car2Go GmbH. Car2Go acquired a minority stake in mytaxi in 2012.
A spokeswoman for Moovel declined to comment on the price of the deals. A spokeswoman for Uber didn't immediately respond to a request for comment.
Young urban consumers who have grown up sharing music, movies and other services over the Internet now realize that it is often cheaper to share a car than to shoulder the costs of insurance and gas. As ride sharing increases in popularity, the cost of a ride is nearly the same or lower than taking a taxi, making ride sharing an alternative to the traditional cab.
The ride-sharing market has largely been controlled by technology startups like Uber and Lyft Inc. Both are based in San Francisco, but Lyft only operates in U.S. cities, while Uber is present in 45 countries.
Investors recently gave Uber an $18.2 billion valuation. Other, smaller ride-sharing companies, such as Sidecar, have also tried to gain market share.
RideScout, which started operating last November, is present in 69 cities in North America. The smartphone app helps users find the easiest way to get from one point to another using different modes of transportation, including public transit, car- or bike-share.
Mytaxi, on the other hand, acts as a middleman, connecting taxi users and taxi drivers world-wide by allowing users to order taxis with an app.
One of the reasons Daimler chose to acquire these companies was to hire the entrepreneurs behind the technology at each firm, said one of the people.
Online car-services companies, and market leader Uber in particular, have faced stiff opposition from established taxi operators in several countries. Uber's smartphone app, UberPop, lets users hail cars driven by both professional and nonprofessional drivers.
A German court recently banned UberPop service pending a hearing into whether the company poses unfair competition to taxi-service companies. The court ruled that UberPop doesn't have the necessary licenses and driver insurance that taxi operators are required to have to transport passengers. Uber is challenging the ruling.
In France, the Senate in July passed a bill that would require online car-service companies to return to their headquarters or a parking garage between each client, unless they have a prior reservation. The bill, which heads to the National Assembly for a vote in the fall, would also forbid the companies from showing live locations of available cars on a map.
In June, thousands of European taxi drivers snarled traffic in cities across the continent, protesting car-hailing services provided by Uber and others. Drivers have complained that the services aren't competing on a level playing field.
Daimler's Mercedes-Benz is the world's third-largest maker of premium cars by sales. It has been racing to retake the lead from Munich-based rival BMW, which passed Mercedes in 2005. Audi AG is the world's second-largest seller of luxury cars. Daimler chalked up revenue of nearly €118 billion ($155 billion) last year and net profit of €8.7 billion. The company sold 1.6 million cars world-wide in 2013.
—Douglas MacMillan in San Francisco contributed to this article.