Friday, January 29, 2016

General Motors Prepares to Become More Involved in "Ride-Sharing" Economy

Companies like Airbnb, Uber, and Lyft work based on opportunities available in what is called the "sharing economy." This generally means that their businesses run on the principle of connecting individuals that are willing to share their home or vehicle, for the right price. This type of business model is also known as "crowdsourcing" or "crowdfunding," and mainly involves the business creating an app or website, and acting as an impartial mediator between owners and consumers. Samantha Masunaga and Charles Fleming discuss, in their L.A. Times article, a new type of crowdsourced company called Maven, which involves the short-term rental of vehicles.

Just as Airbnb involves the short-term rental of a home, condominium, or apartment, Maven allows for users to "rent" a car for a short time. While the service has recently started in Ann Arbor, catering toward students at the University of Michigan, the company has plans to expand to other cities as the year progresses. Through this car sharing service, launched by General Motors, provides a free app on smartphones, which can be used to reserve a vehicle and unlock it. GM expects that a relationship with ride-sharing Lyft and its experience with services like OnTrac will help to make Maven a success.

General Motors is not the only company trying to get its foot in the door of this potentially lucrative business opportunity. Ford started a similar service in June and GM started a version in Germany called Car-Unity, which allowed rental to Facebook friends or members of the app's network. BMW has even begun to include features on their newest cars to allow for app-based connectivity. Everyone benefits: people have the ability to borrow a vehicle when they need one, and the owners of the vehicles are able to somewhat subsidize the costs of purchasing the vehicle in the first place.

Analysts wonder whether GM's decision, while bold, has long-term potential for the future. GM recently bought a failing ride-hailing company called Sidecar Technologies, Inc. and invested $500 million in Lyft. It seems that GM is trying to be prepared for any possible entrance into the ride-sharing market, and plans to do so by partnering with the best in the business. One day, GM hopes to partner with Lyft on an Autonomous On-Demand Network, which would even allow users to reserve self-driving cars. Although the market for self-driving cars has yet to fully expand, GM is planning ahead, predicting that today's investments will ensure success down the line.

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