Thursday, April 9, 2020

The corona virus speeds up the selection of mobility services

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Dusseldorf Strange scenes are part of the streets everywhere in times of the corona crisis. For example in Düsseldorf. A taxi driver wears rubber gloves and a breathing mask. In his Mercedes E-Class, he stretched aluminum foil around both front seats.

Driver and passenger are separated by the film. The passenger would stare at his silvery crumpled reflection that he could guess in the aluminum foil – but passengers are in short supply right now.

Within a few days, the corona virus has evaporated the demand for urban mobility – all over the world. Even Times Square in New York now shines with the elegance of a still life. Due to the high risk of infection, the state regulation applies to stay at home.

This affects taxi drivers, but also new mobility services. Ride savers like Uber and Lyft are no longer used, cars or e-scooters are no longer rented. The corona virus is shattering the business models of mobility services at dizzying speed and is becoming an existential threat for them.

“The corona crisis affects all mobility service providers, whether big players or start-ups,” says Daniel Schellong, mobility expert at the consulting firm Boston Consulting Group (BCG), Handelsblatt. “No company has included such massive slumps in its financial plan as we currently see in the corona crisis.”

BCG estimates that the turnover of the various mobility service providers will decrease by around 80 percent between March and May. In the full year, the drop in sales is likely to be more than 50 percent.

Displacement competition starts earlier

Less than two weeks ago, it was said that the mobility industry would not be consolidated until the coming months. But that’s no longer true.

Because of the corona pandemic, the crowding-out competition is now taking place – and neither e-scooter rentals, car or ridesharers are prepared for it. The companies act accordingly erratically.

In Germany, for example, Volkswagen temporarily pulls the plug of its ridesharing subsidiary Moia. The VW ride service started in Hamburg last April. The service is now being discontinued, 900 employees are working short-time.

The restriction of public life has “drastically reduced” the demand for trips, Moia said. In this situation it was important to protect the company and secure jobs. When Moia revives the service is uncertain.

Sixt downsizes fleet

Car sharing services such as Car2Go and DriveNow, which are operated jointly by BMW and Daimler under the Share Now label and We Share by VW, also report a massive decline in trips, but still leave their rental vehicles on the road.

Sixt already noticed a change in demand at the beginning of March. It started at the airports. Because corporate travel was banned because of Corona, the demand for rental vehicles dropped there first. In the meantime, other mobility offers from Sixt have also been affected. As a result, the company has started to reduce its vehicle fleet and is delaying investments to cut costs.

It also hits the e-scooter rental companies hard. Bird and Lime have already collected their e-scooters. Voi is setting up the e-scooter at hospitals in the hope that doctors and nursing staff will use it. In this way, Voi tries to save at least part of the lost demand.

The German provider Tier still lends its e-scooters. But according to animal manager Moritz Werner, the start-up would only operate cost-effectively in the current situation. “The drop in demand puts a strain on our cost-income structure and we are approaching our pain threshold,” says Werner the Handelsblatt.

Industry sources say that an e-scooter is currently only rented once on a good day in a large city. The scooters often stand around unused for several days.

The problem of all mobility companies: There will be no catch-up effects. If people don’t buy cars in March, they do it after the corona crisis, says Werner. This is not possible with mobility.

“If people don’t rent e-scooters in March, the demand won’t necessarily be higher later,” he says. Missed trips mean lost income with running costs.

For mobility services that have not yet completely shut down their offer, the following applies: maintain the liquidity flow by all means. Platform providers like Uber have an advantage because they have a wide range of sharing options. The U.S. corporation is also distributing meals and is also planning a drug delivery service.

Competitor Lyft wants to adopt this idea. The rail subsidiary Clevershuttle in turn continues despite the corona crisis in Berlin, Dresden, Kiel, Leipzig and Munich. The Düsseldorf location was even put into operation last Thursday.

In all cities, however, the vehicle fleet is limited and there is still a single transfer. The employees are permanently employed and sometimes work short-time. Clevershuttle currently expressly offers its driving services for “system-relevant” transports of patients, medication or employees. Sixt and Share Now have similar offers.

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