VW's plans for Europcar include autonomous vehicles after 2025

Volkswagen Group has finalized its acquisition of a controlling stake in rental car giant Europcar, with partners Pon Holdings, a Dutch mobility conglomerate, and Attestor, a British asset manager. 

The consortium, known as Green Mobility Holding, plans to take Europcar private after securing 94 percent of the share capital through a tender offer, VW said Tuesday. VW itself will hold about 67 percent of the company.

VW will position Europcar at the center of its mobility services strategy, which will encompass traditional rentals, car-sharing, subscriptions, leasing -- and autonomous vehicles after 2025.

Volkswagen Financial Services will host the new central platform, although all VW Group brands will have their own services tailored to their customers’ needs, the automaker said.

Christian Dahlheim, the head of VW Financial Services, said diversifying mobility services was a response to changing customer habits.

“People increasingly want to use their vehicles and not buy them, which is a trend we have seen over the last decades,” he said in a news conference on Tuesday. 

VW will roll out its new mobility services in several phases, starting with pilot projects in Vienna in the fourth quarter of this year, with another project in Hamburg, Germany, planned for the first quarter of 2023.

Eventually, VW could offer such services in North America, where Europcar already has a small subsidiary, Fox, Dahlheim said. 

Europcar has a presence in about 140 countries and has some 232,000 vehicles in its rental fleet -- a smaller number than usual because of the semiconductor shortage, Dahlheim said.

This is the second time VW has taken control of Europcar, which was founded in France in 1949. It took over Europcar in the late 1990s, then sold it to a buyout firm, Eurazeo, in 2006 for 1.26 billion euros.

The acquisition reflects a shift in the mobility services landscape. Previous efforts centered on so-called car-sharing, or short-term rentals, often in city centers. That model has not proved to be sustainably profitable -- largely due to high running costs and lack of scale -- and early programs such as the city of Paris’ Autolib and Daimler’s Car2Go have been disbanded.

BMW and Mercedes in 2019 combined forces on a mobility venture called Share Now -- with an investment of more than 1 billion euros -- with plans to rival Uber, but sold the business to Stellantis earlier this year.

Analysts said Share Now was losing an estimated 200 million euros a year.

Stellantis will integrate Share Now’s 3.4 million customers into its Free2Move mobility ecosystem, with a revenue target of about 3 billion euros by 2030. 

Renault has also spun off its mobility efforts into a separate brand, called Mobilize, that integrates the automaker’s captive RCI Bank.

In addition to RCI’s financial activities, Mobilize includes dedicated "vehicles as a service" such as the Limo, a Chinese-built electric sedan for taxis and ride-hailing; car-sharing programs; and "second-life” battery use and recycling.

Dahlheim said an expanded Europcar could succeed where others have not because it is based on the "fundamentally profitable” traditional car rental.

"If you look at sharing and subscription business in isolation, which we have done in the past, let's be honest, no one has managed to do that profitably in a reasonable manner,” he said.

"The rental car business is a profitable business,” he added. "Sharing and subscription are fundamentally renting a car, so we believe if you have one fleet that you offer as rentals, sharing or subscriptions, depending on customer needs, that is a successful business model.”

Dahlheim said VW would draw on Europcar’s expertise in fleet management to ensure cars were cycled in and out of the program and utilization rates were kept high. "If you optimize that game over the vehicle life cycle, we can get a competitive advantage on the residual value,” he said. 

For example, he said, a year-old used car could be "in-fleeted” into the program as a subscription or sharing car, then "out-fleeted” when residual value was maximized.

Other potential revenue streams could come from dealers offering vehicles in their inventories as rental cars and opening Europcar counters in their showrooms.