BERLIN -- Daimler and BMW Group believe trust will be the key competitive edge for their new mobility business when competing with tech companies such as Uber.
Among the fiercest of rivals when selling premium cars, the two automakers teamed up to bundle their ride hailing, short-term rental, parking and charging services into one joint venture. Together it accounts for some 60 million users and a gross value of 3 billion euros in transactions conducted.
The CEOs of both companies argued people would sooner be willing to hail a Mercedes-Benz or BMW rather than one operated by a startup thanks to strong brands and more than two centuries of combined history. Municipalities would also be more willing to work together with the two, they said.
"While our customers trust in the safety our cars provide for their lives, they trust as well in the safety of their data in our hands. That is an inherent advantage we can offer," Daimler CEO Dieter Zetsche told reporters at the unveiling of their new JV in Berlin.
Recent privacy scandals engulfed tech giants like Facebook, Uber and Google last year following revelations that data had either been shared without user consent or stolen by hackers.
Tech companies "have a shorter history and less chance to build up this foundation of trust," according to Zetsche. This could become an even bigger issue once fleets of self-driving cars are in operation.
"Autonomous driving is all about trust. You might have a strange feeling when you enter a car and there is no driver sitting in there. Then you are in the hands of the one that offers that service," the executive said.
One other aspect the two CEOs raised is their ability to collaborate constructively with local authorities. Uber has struggled to gain a foothold in Europe in part because of its reputation to begin operating its ride-hailing service with or without the legal consent from city councils.
"We're a good partner for cities and governments and we have proven that," said BMW CEO Harald Krueger. "We can offer cities complete mobility solutions for the future (…) not just one single piece. That's where we are different."
Zetsche suggested his group's commercial vehicle business could also provide valuable insight and business contacts to help the business grow.
"We have a very, very long history with our bus operations, where we operate closely with communities around the globe," Zetsche said.
The importance of strong ties with local governments were revealed when Volkswagen's new service MOIA, which pools rides of up to six people, was denied a license to operate by Berlin's own transportation authority earlier this month.
Finally, the two automakers pledged not to weaken their operations by insisting they will carefully balance management decisions in order to always ensure that for every Daimler executive in one position, someone from BMW would have to sit across from them.
Indeed, Daimler veterans will be in charge of intermodal mobility, short-term rental services and ride hailing while one BMW manager will run both the parking and EV charging business. This distribution corresponds closely to the assets that each contributed into the JV, where Daimler was leading for example with its short-term rental service Car2go.
"A very good example was when we started discussing the positions. There was no one saying, 'okay everybody has to have the same amount of people'," Zetsche said. "It didn't matter [as] we were looking for the best people to lead us in the five different verticals."
Daimler and BMW said that the new JV would start its existence with a strong balance sheet, having agreed to inject 1 billion euros in equity to strengthen its capital base.
More could potentially be provided once the various unit chiefs updated their business plans in the next three or four months, now that they have had time to consolidate their teams in the past three weeks.
Zetsche was confident that their new mobility JV would meet the companies' goals for growth as they are already established as a leading automaker's in Europe. "Nobody has all these businesses in one entity," he said.