BMW is making inroads in the millennial market. BMW Financial Services, not so much.
How to grab the attention of the Millennial generation has long been a question for auto lenders and manufactures. BMW, the OEM, is hoping that DriveNow, the company’s car share program currently available in San Francisco, will be the answer for the German auto manufacturer, and it offers valuable lessons for auto financiers, too.
First, some details about DriveNow. DriveNow “is our own sort of unique variation on the car-sharing theme that you may have heard in the past with other traditional competitors,” DriveNow Chief Executive Rich Steinberg said.
A large part of what sets BMW’s program apart from others, Steinberg said, is its all-electric car fleet.
“California, and San Francisco in particular, is sort of the Ground Zero when it comes to electric vehicle adaptation. So we wanted to get some experience in car sharing, and also expose our electric vehicle product to the members.”
The program, which is just over two years old now, is an offshoot of a similar program started in Germany almost four years back, Steinberg said. In Europe, however, the majority of the vehicles in the program are traditional fuel cars, not electric. In San Francisco, BMW launched the program with a fleet of about 70 BMW model i3 electrics.
“It was good to get quite a few of the members and drivers behind the wheel of our electric product,” Steinberg said. “So that when the opportunity came that they were ready to buy a car, they would be familiar with the BMW Group’s electric vehicles.”
Pervasiveness Counts
But where is BMW FS in all this brand building for the carmaker? Not involved in DriveNow it seems — which begs the question, does DriveNow imply a means of staking out a corner of the millennial auto finance market?
The short answer is, yes. DriveNow is pervasive and, to be blunt, trendy. “Car sharing,” in part because of Uber’s success, is the rage among millennials, which is why BMW is using it as a brand-building wedge. The feedback from the program – which now has just short of 10,000 members, according to Steinberg – has been positive, he said.
“The only negative we hear back is that they wish we were in more locations,” Steinberg said. “We’re only in a number of street-based neighborhoods in San Francisco, so we’re in the process of working with the city to expand our offering, to some of the more densely populated parts of the city.”
Part of that expansion plan is to obtain what Steinberg describes as an “all-access” pass to park DriveNow’s vehicles in “pretty much, any legal parking spot” in the program’s European cities, as well as San Francisco and future North American cities.
“When we launched in San Francisco, we did not have, and still do not have, that all-access pass,” Steinberg said. “So there are certain cities that we’re restricted in, so we are trying to work with [San Francisco] to make that possible.”
Currently, DriveNow is concentrating on expanding into the Pacific Northwest, and is working with certain cities from a “legislative perspective,” Steinberg said, to ensure support of the program’s one-way concept and that it launches in more cities “this year, or next year.”
The pervasiveness of the program has been a boon to its acceptance.
There is also, obviously, a heavy technology angle to DriveNow, which matters to millennials. Steinberg calls DriveNow “A-to-B car sharing.” A customer can drop the car off at a different location than from where it was picked up, Steinberg said. This is facilitated by the fact that the car would then show up as available for the next driver through the program’s smartphone app. The company has a fleet maintenance unit that also picks up vehicles and transports them to a central hub for charging.
Ubiquity and the mobile device are at the center of DriveNow, and they are crucial to its success, Steinberg said. BMW FS — and auto finance professionals — should take note.
