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We recently wrote about the massive impact autonomous (i.e. driverless) cars are likely to have on society in general, and financial institutions in particular.  Since that writing, virtually every day has brought news of technology breakthroughs in driverless cars and new players entering the space. 


Yesterday the Financial Times carried a story titled: “Uber Self-Driving Plan Defies California Regulators”.  The FT reports that Uber is preparing to launch autonomous cars in San Francisco that will carry paying passengers. The Uber cars will have a person sitting in the driver’s seat to monitor performance and intervene if necessary, but the car will be self-driving and will collect passengers via the Uber app.  


Interestingly, Uber – whose most recent valuation tops $68 billion, making Uber the most valuable Silicon Valley private company – is bypassing the California DMV approval process claiming that the human monitoring means the car is not truly “autonomous”.  The DMV disagrees. Time will tell who wins that battle.    

The FT also noted that more than 20 companies, including Google, Tesla, VW, and Mercedes Benz have already received permits allowing them to test autonomous vehicles in California.  Many experts now believe we will see autonomous cars on the road in significant numbers by 2020 or 2021.


Today, however, another story broke on a related topic regarding Mercedes Benz’s plans to launch a new car-sharing initiative called Croove.  The service launched in Munich this month and is a peer-to-peer carsharing service accessed via mobile app.  Using the app, any car owner owning a reliable car less than 15 years old can rent their car on a short-term basis to a renter who is licensed and over 21 years of age.


You might think of Croove as a new version of Airbnb, except that cars are the items being rented rather than properties.  Croove is another classic platform strategy using a software platform to link people who have a car sitting idle with someone who needs a car for short-term use.  


TechCrunch (12/16/16) had this to say about the Mercedes announcement: “For something like a century car makers have sold one car to one person one time and then waited for them to wear out that car and come back to the dealership for another one. Increasingly, that model is outmoded, and Mercedes is putting another nail in that coffin with Croove.”


Croove, and other similar P2P auto rental platforms, are important for several reasons.  First, unlike autonomous cars that will require at least a few years to become technologically perfected and approved by the regulators, P2P auto lending is available today.  Second, P2P auto renting is following a path paved by Airbnb and many other P2P platforms.  Third, the cost of a car rental via Croove or a competitor is likely to be substantially lower than a typical car rental company because the entire rental process is being handled with minimal infrastructure.


How rapidly will the market adopt this new phenomenon?  If Airbnb is any indication, I expect adoption – particularly among Millennials – to be rapid. Consider these recent (July 2016) statistics from DMR regarding Airbnb’s performance:


  •     Number of Airbnb users       100 million


  •     Number of Airbnb listings    23 million


  •     Airbnb valuation                  30 billion


  •     Number of nightly stays      500,000


  •     Active NYC listings              41,373 active listings


Croove is a part of what Mercedes calls its “CASE” strategy.  CASE stands for connectivity, autonomous driving, sharing and electric drive systems. Mercedes – along with BMW, Volvo and other manufacturers – realize that these four items now represent the true value in the automotive sector, not the car itself.  This is a huge shift in perspective.  With Croove, Mercedes has launched a new product that will cannibalize its core product.  That is exactly what a product leader must do – cannibalize yourself before someone else does it to you.  


The convergence of autonomous cars, car sharing services, the rapid emergence of intelligent networks linking all cars on the road, and electric drive systems will lead to fewer accidents, more efficient cars, and most importantly fewer cars per capita.  This is not science fiction; this is here and now.  The implications for financial services firms are enormous, both in terms of threats and opportunities. It is not too soon to consider what lending strategies – both offensive and defensive – will survive and thrive in this bold new world of autonomous and shared vehicles.

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