Business

Car sharing: Miles from Berlin shows BMW and Mercedes how it’s done – economics

Who would have thought six years ago when it was founded: the market leader in Berlin, at least that’s what the car sharing company Miles says. And now the mobile service provider wants to push the boundaries. Starting this Wednesday, the company will also provide car rentals in Ghent, Belgium, which can be easily booked using the mobile app. They are followed by Brussels and Antwerp.

If this expansion works, then not only will managing director Oliver McPrang and his 300 employees be happy, it will also be good proof that the startup has mastered a business that has already driven some corporations to despair: short-term car rentals. , better known as carsharing. This is an industry that is either seen as the future of transportation or largely a failed experiment.

Of course, Oliver McPrang and his people believe in the former. And the starting point of their overseas expansion is consistent. They seek the least resistance, go where they are welcome, not where they came from. In Berlin, city politicians are hardly interested in the mode of transportation, as long as the ticket office is in order, they complain to Miles: the parking fee will average 150 euros per car per month. On the other hand, in Ghent, Mayor Matthias de Klerk has set a goal of having 25,000 car sharing companies in his city by 2025, one in ten residents. This is the “mobility of the future,” says De Klerk, and all “shared cars” are valuable along the way. Of course, there is no parking fee here.

This philosophy is the same as that of the Berlin start-up, which included the billing method in its name as a central idea of ​​the company: Miles Mobility bills not by the minute, but by the route. As a result, it’s often significantly more expensive than the competition, especially when traffic is running smoothly, but it’s just as impressively simple that the number of customers grows: one kilometer, one euro, as a rule of thumb.

Simplicity seems to be the recipe for success for the company headquartered in Berlin-Charlottenburg. Two floors are enough for business: there is a table for table football and table tennis, but they are empty. Instead, everyone works quietly, glass door to glass door: they organize customer service themselves, and do not outsource to a call center. Application programmers. The fleet manager, who currently leases or buys 7,000 vehicles, finances them partly through banks and partly through equity. Bosses around Makprang, squatting together in a nook.

It’s about leadership in a billion dollar market

Overall goal: to dominate a European market that will be worth nearly ten billion euros by the end of the decade, according to management consultants Oliver Wyman, though Miles thinks that’s a pretty conservative estimate. But it’s also a market that is generally considered incredibly difficult to master. BMW and Mercedes are the best examples: car manufacturers once wanted to be mobility providers themselves and launched Drivenow and Car2go car sharing offerings very early on. We added cities in Europe and the USA, removed them again, experimented with prices. Finally, the two groups combined their competing offerings into: Sharenow. But the rental business was still not very fun – and so, with the help of a number of bankers and lawyers, they recently sold the service to Stellantis, the parent company of Opel, Fiat and Peugeot. Volkswagen is also trying its hand at carsharing, but the project is stagnating and the business is not considered particularly promising. Even reputable car rental company Sixt now believes that car sharing will remain a “niche product” that cannot be profitable on its own.

What about Miles? Like all sharing providers, people complain about the subsidization of private property, for example through resident parking permits (about 80 cents per month in Berlin) or company car privileges, and aim for cars to find at least three customers per day. This is considered the threshold for making money. But at least you have “slimter designs” than the competition, says Managing Director Makprang, and another goal: “Our main goal is to reduce traffic and generally reduce the number of cars on the streets because more trips are made together.” The main goal of the automaker, of course, is different: to sell as many cars as possible, regardless of the form of ownership. Still, or maybe that’s what made Miles successful, McPrang says. “You can definitely turn a profit with this business, and we’re already doing that.” Ebitda is positive. In addition, they had a 100 percent increase in sales last year. Car sharing is for the higher paid, which is why this concept is popular. And growth should continue at the same pace, which is entirely feasible: Miles is currently “fortunately not in need of additional capital,” says Makprang. “For example, we can manage our expansion into Belgium with the funds available.”

There is one important financier known in the startup scene.

This, in turn, is linked to a man well known among German startups: Lukasz Gadowski. He once made his first millions with T-shirt printing company Spreadshirt, followed by a number of other start-ups such as delivery service Delivery Hero or online optical store Mister Spex. And also those who work in the field of mobility, because he is inspired by technology and material things. His money is in Volocopter drone constructor, he was part of the scooter wave, which is how he met Miles.

According to the investor, at that time a small company did not attract financiers. “When I arrived, they had 120 cars. But their perseverance deserves support.” And then lists the factors that made him stick to it: “The team works lean. They look at a product in terms of value, simplicity, and customer satisfaction.” After all, Miles capitalizes on two trends. Environmental and resource protection, and a scalable business platform.

For Gadowski, the premise of great things is: “He could be one of the top DAX companies.” He claims that this is not just a beautiful dream, but quite feasible, because one thing speaks in favor of carsharing: “The denser the offer, the more useful it becomes for all users.” At least the next step has already been taken – to Ghent.

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