Car Leasing, Car Sharing Don’t Mix

Not to be outdone by General Motors with its investment in Lyft, its acquisition of Cruise and its launch of Maven, BMW is in the process of relaunching and expanding the DriveNow car share service in the U.S. and may soon provide aftermarket hardware to enable Mini lessees to rent their cars, according to a Bloomberg report.

“BMW to Let Car Owners Rent Out Vehicles Like ‘Airbnb on Wheels”

Bloomberg says Mini plans soon “to make its new cars available with devices that enable owners to rent out their vehicles … the system includes features that accept payment and track the vehicle to make sure the renter doesn’t go for a one-way joyride.” Further details regarding the add-on system were not available, although the functional description is reminiscent of Berlin startup Carzapp’s device for car sharing applications.

The news arrives in connection with the Beijing Auto Show, though it’s not clear what geography will first see the new device. My heart sank, though, when I read the words of a senior Mini executive: “…there’ll be others who’ll love the idea of halving their leasing rate.”

There are some excellent value propositions in car sharing – especially if you own your car. There are some excellent value propositions in car leasing – especially if you like driving a new car every 2-3 years. But leasing and sharing do not go together.

Leasing is a very popular option for drivers of German luxury cars. According to U.S. car shopping service Cartelligent the Mini Hardtop is the fifth most frequently leased vehicle. It is exceeded in leasing popularity by the BMW 3 Series – third most frequently leased (70%), according to Cartelligent.

Leasing is on the rise in the U.S. according to figures shared last year by Experian. Some leasing analysts have noted that the typical 2-3-year leases are starting to extend to four and five years.

Leasing a car is one of those things that your friends and family members tell you to NEVER DO! I usually listen to that advice, but since I have a BMW in a long-term lease right now, I can tell you I did not listen and I am not happy and I watch my car’s mileage carefully. I do not want to get dinged for per-mile charges over and above my annual limit.

By the way, I am also notorious (to my wife and sons) for parking in remote areas of parking lots – not wanting to acquire any door dents or rim scrapes that might crop up during the inspection when I return the vehicle at the end of the lease. Can a lessee count on a car sharer to be so careful with the vehicle? I don’t think so.

Share it if you own it, not if you lease it, I say.

Adding an aftermarket device to a leased Mini or BMW is the equivalent of attaching an explosive device to the customer’s credit report. It is not a good idea. It is not a good business model. It is not a good marketing practice.

If the test of Mini car sharing goes well, Bloomberg reports, BMW will expand the offer to the parent brand. It’s all part of BMW’s larger plan to become a mobility company. It may take time for a determination to be reached regarding the program’s success, but I can say without equivocation: car leasing and car sharing do not mix. It’s only hip up until the point that someone bends a rim.

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/access-services/automotive#.VuGdXfkrKUk