Car-sharing companies still looking for right business model
The car- and scooter-sharing service, Poppy, which is a subsidiary from VW importer, D’Ieteren, wants to become profitable within two to three years with new CEO Sylvain Niset. Because whichever way you look at it, the model of car-sharing services remains a serious economic challenge. “I want to rethink everything at Poppy to reassure investors about the future.”
Poppy has about a hundred ‘clean’ shared-cars in Brussels and a little less than 200 in Antwerp. It’s also the first car-sharing service to allow cars to be taken in one city and parked in another. It’s also the first in Belgium to offer several means of transport – from e-steps to e-scooters – in a single offer.
But until now, it was often heard from competitors that the problem of a car-sharing service, often unprofitable, was mainly a problem of use. They had to convince more people. The increased use of the service would make it possible to earn money.
Sylvain Niset, one of the founders of Take Eat Easy, the Belgian Deliveroo that closed a few years ago, and Doctoranytime, an app that allows you to find a doctor in the speciality you need quickly, has another approach to the problem. He believes that first and foremost, the use of existing vehicles must be maximized.
DriveNow lost 8.4 million euros
The financial situation of many car sharing-platforms does not look rosy at the moment. Citybee in Eastern Europe makes a profit, but it remains the exception. The Brussels-based DriveNow, BMW’s shared cars, has already lost more than 8.4 million euros. Last February, it has merged with Daimler’s Car2Go (Mercedes) into ShareNow, but the challenges remain the same: people need to use cars more intensively to achieve profitability.
ShareNow is undoubtedly not the only one suffering. Avis had a similar service in Brussels via its subsidiary, Zipcar, but decided to drop the service last January. According to figures reported by the newspaper L’Echo, Zipcar lost 2,7 million in its 2017 financial year. Finally, the Zipcar activities were taken over by Poppy.
Right option at the right time
Meanwhile, Sharenow is doing better. In July, it reported that its customer base had increased by 30% and that nearly 1.000 self-service trips were made per day in Brussels. At the airport, for example, at the end of the day, Sharenow’s cars are often all gone.
Sylvain Niset does not exclude increasing Poppy’s fleet a little bit in Brussels, but never to the level of Sharenow that has some 400 vehicles in the capital. “In shared mobility, the challenge is to always have the right option at the right time. It is necessary to have an excellent network in the city in terms of supply. This includes our e-steps or e-scooters, but also public transport.”
“Simply adding vehicles to the street in a silly and mean way increases demand and turnover, but requires costs at the same time. In the end, the risk is never to make all these vehicles profitable,” insists the CEO. “You have to reinvent the way you work to become profitable.”
For him, Poppy’s profitability is possible within two to three years. He wants to apply his cost optimization recipes, particularly in terms of car fleets and operations, two of Poppy’s most substantial cost items at the moment.
Fear of vandalism
Vandalism also causes the business model to cost more than initially anticipated. Poppy now has about 285 cars in total and more than a thousand e-scooters en e-steps in Brussels and Antwerp. The recent departure of Jump’s shared e-bikes and Felyx scooters from some regions of the capital has shown that vandalism can cause considerable damage to these new services.
Poppy found twice as much vandalism in Brussels as in Antwerp on the e-steps. “In Antwerp, the lifespan of our e-steps is expected to exceed our expectations. Legislation in Antwerp requires us to bring the e-steps in at night, not in Brussels. We may have to bring them in at night in Brussels as well, but that involves logistical costs,” says Niset.