Daimler, BMW to invest $1.13 billion in venture to rival Uber

Daimler Dieter Zetsche chief executive, right, and BMW chief Harald Krueger present the merger of their car sharing activities on Friday, February 22 in Berlin. (AFP)
Updated 22 February 2019

Daimler, BMW to invest $1.13 billion in venture to rival Uber

  • Carmakers Shifting beyond manufacturing and car sales toward pay-per-minute or pay-per-mile systems
  • Carmakers face marginalization by cash-rich technology firms unless they develop services based on vehicle usage

BERLIN: German carmakers Daimler and BMW unveiled a joint ride-hailing, parking and electric car charging business on Friday to compete with mobility services provided by Uber and other tech firms.
The luxury car firms said they would invest more than €1 billion ($1.13 billion) to expand the joint venture, shifting beyond manufacturing and car sales toward pay-per-minute or pay-per-mile systems.
Consultancy PwC has said carmakers face marginalization by cash-rich technology firms unless they develop services based on vehicle usage.
Established ride-hailing firms have been expanding. China’s Didi Chuxing aims to build its business in Latin America and Uber is gaining a stranglehold on its US market.
“Further cooperation with other providers, including stakes in startups and established players, are also a possible option,” Daimler’s Chief Executive Dieter Zetsche said.
Daimler’s Car2Go car-sharing brand will be combined with BMW’s DriveNow, ParkNow and ChargeNow businesses, with both carmakers holding 50 percent stake in the venture.
The venture has five strands: REACH NOW, a smartphone-based route management and booking service, CHARGE NOW for electric car charging, FREE NOW for taxi ride-hailing, PARK NOW for parking services and SHARE NOW for car-sharing.
“These five services will merge ever more closely to form a single mobility service portfolio with an all-electric, self-driving fleet of vehicles that charge and park autonomously,” said BMW Chief Executive Harald Krueger.
BMW and Daimler are working to develop autonomous cars, vehicles which could enable them to up-end the market for taxi and ride-hailing services.


British fashion linchpin gets post-lockdown trading lift

Updated 27 min 59 sec ago

British fashion linchpin gets post-lockdown trading lift

  • Primark ‘back to business’ as curbs ease, but still faces full-year profit slump

LONDON: Trading in British fashion chain Primark’s reopened stores has been encouraging, but the prolonged coronavirus lockdown means the retailer’s full-year profit is likely to slump by about two-thirds, owner Associated British Foods said.

All 375 Primark stores were shuttered in March as the pandemic spread. As governments eased lockdown restrictions the stores reopened, including all 153 stores in England on June 15.

AB Foods said on Thursday that since the reopening of the first Primark stores on May 4, cumulative sales for the seven weeks to June 20 were £322 million ($403 million) and were 12 percent lower than last year on a like-for-like basis.

It said sales in the week ended June 20, with more than 90 percent of selling space reopened, were £133 million, and trading in England and Ireland was ahead of the same week last year.

“We’re really getting back to business here. That number (down 12 percent) is much better than people were expecting,” AB Foods finance chief John Bason told Reuters.

However, the lockdown means Primark’s profit will be substantially down. The retailer has no online offer.

For the full 2019-20 year, Primark forecast adjusted operating profit in a range of £300-£350 million, down from the £913 million made in 2018-19.

Bason said that Primark has also placed more than £800 million of orders for the autumn/winter season and expects the total to exceed £1 billion.

AB Foods said that overall group revenue from continuing businesses for the 40 weeks to June 20 was 13 percent lower than the same period last year at constant currency.

For 2019-20 it expects “strong progress” in adjusted operating profit at its sugar, grocery, agriculture and ingredients businesses.

The grocery division, whose brands include Kingsmill bread, Twinings tea, Ovaltine and Jordans cereal, had a 9 percent increase in third-quarter revenue, with higher sales through retail channels more than offsetting weaker demand from foodservice businesses closed during the lockdown.

The group expects to end the year with net cash of more than £750 million.