BERLIN (Bloomberg) -- Daimler is flooding Berlin with Smart cars to claim a greater share of Europe's burgeoning rent-by-the-minute urban auto market.
The maker of Mercedes-Benz cars installed the largest fleet of its Car2go short-term rental service in the German capital last month, overwhelming BMW's DriveNow offerings two-to-one.
The pursuit of Berlin drivers is part of a broader effort to win over urban consumers and boost sales from services as the allure of car ownership in cities wanes.
"It's natural that competition shows up," said Robert Henrich, Car2go's chief. "It shows that we have the right business idea. Our intention is clearly to remain the leader."
Daimler and BMW are ramping up city-based services that allow drivers to rent by the minute, tapping a growing customer base. Car-sharing membership in Europe is projected to surge to about 15 million people by 2020 from 700,000 at the end of last year, according to consulting group Frost & Sullivan. There were 13.6 million cars sold in the region last year.
For Daimler the Car2go service, which like DriveNow costs 29 cents a minute in Berlin, is part of a strategy to retake the luxury-car lead from BMW by the end of the decade. Achieving the goal rests on its success in expanding its appeal, especially with younger drivers.
"Car-sharing is like a test drive that's paid for," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. "It offers a chance to open the door to customers that might not have considered a car and helps the image."