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GM in the Middle of Mobility Muddle

GM in the Middle of Mobility Muddle
by Roger C. Lanctot on 03-25-2016 at 4:00 pm

 General Motors has made a flurry of announcements around its Maven mobility brand for car sharing and its investment in Lyft. The latest news, first reported by re/code, is that Lyft and Maven will be rolling out a short-term rental program for Lyft drivers to use Chevy Equinoxes in Chicago later this month. The program is called Express Ride.

“Lyft Will Subsidize Car Rentals for Drivers Who Do 65 Rides a Week”

GM’s $500M investment in Lyft showed the car maker affirmatively picking a side in the ride hailing duopoly between Lyft and Uber. It was a bold move and one that could alter the competitive balance in the market between Lyft and Uber.

Following up the Lyft investment with the launch of the Maven car sharing initiative and the acquisition of Cruise Automation (aftermarket self-driving car system) suggested an extraordinary vision of vertical integration leading, within a few years, to a driverless ride hailing service. But strange twists and turns may already be unfolding.

For one thing, it may be time for GM to contact its dealers and let them in on these new enterprises. Strategy Analytics reached out and found GM dealer sales managers unaware of either the Maven or Lyft initiatives. One dealer sales manager referred a caller to his “Uber” desk.

I’ve written previously about what I think GM ought to do with Lyft – ie. get its own dealers using the service, for one. Lyft drivers are in desperate need of fares.

As with most things in marketing, the phrase go big or go home applies. The question is whether GM is going big enough or going big in the right way.

The long-term play is clearly implied in a driverless fleet of taxis. GM has the long-term plan sorted and it is sound. The short-term prospect is less clear and indications are that GM may already be outflanked and may have outwitted itself.

GM may be outflanked because it looks like GM new car dealers are already using Uber for ad hoc customer rides. GM may have outwitted itself because it seems that Uber may have already begun courting new car dealers for this very purpose. GM’s investment in Lyft puts Lyft at a disadvantage trying to attract business from competing dealers.

Uber may have its own challenges recruiting new car dealers in the future given the company’s rumored order placed for Mercedes S Class sedans. Uber may be a classy ride, but the brand orientation may start to get in the way, though a Mercedes S Class will be less provocative to a dealer than a Tesla Model S.

Mercedes is playing Switzerland in this game having previously acquired Ridescout which provides access to multiple ride hailing service providers with price comparisons – something which Google has recently replicated. Mercedes also owns Mytaxi, which competes with Uber and Lyft in select global markets but has a near monopoly in Germany. Mercedes is effectively supporting both Lyft and Uber via Ridescout.
A segmentation is occurring between ride hailing and ride sharing services. Ride hailing services are going lux while ride sharing is skewing utilitarian. There is zero chance that Mercedes dealers would tap Car2Go and its tiny Smart cars for customer pickups and dropoffs.

Uber and Lyft and the rest well know the word of mouth generated by a customer delivered in a late model Toyota, Audi or Tesla. I haven’t ridden Lyft since a ride I had in Chicago in a beat up old Toyota. Lyft is presumably raising its standards to compete with Uber.

It will be sad if the Lyft/Maven program is somehow coming out of the blocks sideways. The Maven car sharing opportunity raises all kinds of possibilities for boutique sales offices in cities where Lyft drivers could sign up, Maven users could register, consumers could rent cars or arrange rides, and car buyers could configure new cars – ie. the kind of mobility marketing venue that Ford has alluded to as part of its FordPass initiative.

These boutiques might serve as useful lead generation opportunities for GM new car dealerships located, in most cases, well outside of town. In fact, the existing dealer base could be leveraged by GM to evaluate, repair and replace the cars of potential or existing Lyft drivers.

Some observers can be forgiven for viewing the Lyft subsidized short-term rentals as a way for GM to “sell” cars directly, in competition with dealers. Today, GM is making Chevy Equinoxes available to prospective Lyft drivers, but has made no secret of its plan to deploy Chevy Bolt extended range electric vehicles through Lyft.

The number of Chevy Equinoxes involved in the current Lyft offer will be too small to concern dealers, who will likely benefit anyway from the need to service vehicles getting heavy daily use. Dealers might be more concerned about the Bolt part of the deal. Dealers would surely like to be involved in the delivery process for those vehicles.

If Bolt buyers embrace the Bolt with the same enthusiasm as Volt customers, dealers will want to be a part of that action.

Of greater concern is the fact that GM seems determined to leave its own dealers out of the Lyft/Maven business. The irony is palpable, because GM’s dealers are clearly using Uber, not Lyft, to move customers around. Either dealers have gravitated to Uber out of convenience or Uber has a business development team directly recruiting dealers. I’d vote for the latter.

It’s also possible that GM is still feeling its way forward in the launch of Maven and isn’t prepared to hassle its dealers just yet. Maybe. But I can’t see how or why dealers would not be given some kind of strategic input or right of first refusal to participate.

It may not be too late to weave dealers into the Maven/Lyft mix. But there are some other loose ends to attend to including, but not limited to:

  • Will new Lyft drivers who participate in the GM Lyft program based on subsidized rentals of Chevy Equinoxes have access to OnStar and SiriusXM services? Will they have a discounted rate and/or will they be able to sell Wi-Fi service to their passengers?
  • Will there be a process for converting the short-term rentals of Equinoxes to sales? Will short-term Equinox renters be able to swap for Chevy Bolts when they arrive?
  • Will GM’s new car dealers have their own fast-track customer referral program connected to Lyft?
  • Will GM’s new car dealers get discounted corporate accounts for using Lyft to assist their customers?
  • Will signing up for Lyft be enabled via an OnStar application for all GM vehicles? In other words, will GM owners have an express sign-up procedure for joining Lyft?
  • Will Lyft be leveraged as part of OnStar roadside assistance or car crash aftercare?

If GM is going to be successful in mobility services the organization needs to go all in. The initial investment of $500M in Lyft suggests a major commitment. There’s no such thing as being half pregnant here.

Tying off loose ends and leveraging and integrating existing assets (such as its dealer network) will be essential to finding the greatest possible success with Lyft. GM needs to demonstrate that it’s in the driver’s seat – especially now that it is directly competing with Uber.

Roger C. Lanctot is Associate Director in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/ac…e#.VuGdXfkrKUk


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