ParkMobile Finds a Spot at BMW
Why did the storied German carmaker buy an American mobile parking app?
“My goal is that in three years’ time, not a single driver gets into their car without knowing where their car will come to rest at the end of their journey — I don’t believe that’s an unachievable thing.” — John Ziglar, ParkMobile CEO
According to a study published by INRIX in 2017, each car driver in New York “spends 107 hours per year searching for a parking spot at a cost $2,243 per driver in wasted time, fuel and emissions, amounting to $4.3 billion in costs”. In highly-populated urban areas, finding a parking space within walking distance of one’s location can be a challenging feat.
In January 2018, luxury automotive manufacturer BMW acquired ParkMobile, a mobile parking service which provides its users with the ability to seek out and pay for parking while on the go. Though ParkMobile’s services are certainly convenient, BMW’s plans went well beyond equipping its sedans with a fancy new digital parking app.
Who is BMW?
Founded in 1916, German automotive manufacturer Bayerische Motoren Werke AG, is known for its luxury automobiles. BMW stands among the German Big 3–the three largest automobile manufacturers in Germany, with annual global production of 2.5 million vehicles and sales of EUR 97 billion. At 140,000 vehicles worldwide in 2018, BMW range of electrified vehicles represents still tiny share of its total volume, but one that is growing fast — Approximately 40% YoY.
Historically, but in particular since the 80s, BMW has focused on innovation and R&D as core to the automaker continued success. In 1985 it established BMW Technik GmbH as a place where the best designers and engineers could develop new ideas, which led to the launch of the Z1 in 1988. In 1990, BMW led the industry in consolidating all of its 7,000 R&D researchers, engineers and designers to work under one roof at its new FIZ Research and Innovation Centre in Munich.
More recently, in 2007, the company launched its 2020 vision, called Strategy Number ONE with its four pillars: “Growth”, “Shaping the future”, “Profitability” and “Access to technology and customers”. The main mission of BMW became then to “become the world’s leading provider of premium products and premium services for individual mobility.” This opened up the door for the transformation of BMW from a car manufacturer to a player in the emerging space of technology-enabled mobility products and services. In 2011, BMW partnered with Sixt AG to launch DriveNow, the first electric-vehicle only car-sharing service at the time, that launched in Munich and soon expanded to Berlin, Hamburg, London, Milan, Brussels and more cities.
In 2011, BMW also established BMW i Ventures, its corporate venture capital fund, with the goal of investing in “cutting-edge technology companies redefining the automotive industry.” In addition to on-board and automotive technology, BMW i Ventures has also invested in a range of mobility apps, services and infrastructure companies, such as MyCityWay (2011), JustPark (2011), ChargePoint (2012), Embark (2012), Chargemaster (2013), Summon (2014), Zendrive (2014), Moovit (2015), STRATIM (2016), Ridecell (2016), Scoop Technologies (2016), Skurt (2017) Bus.com (2017), Urgent.ly (2019) and Zum (2018).
Despite challenging financial conditions and trade headwinds in the foreseeable future, BMW continues to invest in a strategy that is focused on multimodal mobility, autonomous driving, services and in general a different kind of automotive future. As Nicolas Peter, member of the board of BMW, stated, the company remains “unconditionally focused on the issues of crucial importance for the future, while at the same time optimising our internal processes. The BMW Group’s strong financial performance remains the basis for sustained success, enabling our company to play a key role in shaping the transformation currently taking place in our industry.”
Who is ParkMobile?
ParkMobile LLC is an Atlanta-based startup behind the ParkMobile free mobile app. The app, with the tagline “A Smarter Way to Park,” provides its users with the capabilities to find parking, reserve, and pay for parking without going to the meter. Seeking reserved parking, the customer would use the app’s map to locate a garage near their destination. ParkMobile’s app provides consistent updates on open garages and pricing, providing consumers with ease of use.
Additionally, ParkMobile offers parking for campuses, events, concerts and conferences. When the user searches for a local event, ParkMobile lists nearby garages that have openings during the time of the event. ParkMobile’s simple process and design offers its users with the most efficient way to discover parking for any situation.
With an estimated annual revenue of approximately $24 million and presence in 300 cities, ParkMobile has gained significant traction with municipalities in the United States, where is present in several of the largest urban areas. In many cities, ParkMobile manages the mobile payment system for on-street parking on behalf of city agencies.
ParkMobile received funding venture capital firm Frontalis Partners and from Bluefield Investments, an investment company which provides project finance and infrastructure finance services. ParkMobile raised a grand total of $6.3 million before their deal with BMW.
The Deal
Historically, BMW has not employed a strategy of digital M&A, but that may be changing. In 2016 BMW bought ParkMobile Group Europe, ParkMobile’s European subsidiary and in 2018 it bought DriveNow, the car-sharing joint venture it had launched 7 years prior. Also in January 2018, it finalized their purchase of ParkMobile LLC for an undisclosed sum.
“Our aim is to win 100 million customers for our premium mobility services by 2025.”
The deal was squarely aligned with BMW’s update to its “Number ONE” strategy, called “Number ONE > NEXT”, which, among other goals, it aims to significantly increase BMW’s investment and footprint in mobility services. On the occasion of BMW’s integration of DriveNow as a wholly-owned subsidiary, Peter Schwarzenbauer, the BMW Group’s head of Digital Business Innovation, stated it as clearly as it gets: “Our aim is to win 100 million customers for our premium mobility services by 2025.” Our experience with mobility services supports our development of future autonomous, electrified and connected fleets.”
The ParkMobile acquisition gave BMW instant access to parking services, payment, user base and data in 300 US cities. It also gave BMW a lock on ParkMobile’s integration into onboard navigation systems, which BMW in fact started rolling out first on the 5-series in 2017.
What Happened Since?
Adding users and capabilities is not enough though. To compete in the digital-enabled mobility space, scale and integration are key. BMW and other automotive giants must fend off not only each other, but also a new breed of competitors with deep expertise in software and services and deep pockets.
One way to do that is to roll up individual investments and acquisitions in integrated mobility services platform. This platform strategy has three fundamental benefits:
- Data. A single platform enables companies to aggregate real-world data across services and applications, creating an uninterrupted data pipeline from vehicles usage, traffic data, routing, commutes, digital payments, real-time parking, charging and resources availability. Automotive incumbents are well aware, from what happened in the publishing industry for example, of the catastrophic consequences of relinquishing control of customer data to digital upstarts.
- Integration. As car ownership declines and cars progressively lose their status as statements of personal identity, automotive brands will face increasing pressure to find new ways to deliver meaningful and convenient branded experience to their customers. Mobility platforms are emerging as an opportunity to lock customers in, no longer at the dealership, but by helping them in the daily mobility choices they make, in and outside the car. Seamless integration of identity, payments and contextual data means a smoother user experience and higher switching costs.
- Scale. A platform with sufficient scale creates a formidable ecosystem moat around customers. Network effects take hold. The largest the number the users of the platform, the bigger the incentive to be in it for parking operators, payment apps, charging networks and transit agencies. Which in turn makes the platform even more attractive to consumers, and so forth. Frequency of usage also increases with scale and service density, creating powerful habits and behavioral inertia in customers.
Immediately following the ParkMobile acquisition, in March 2018, BMW and fellow German automotive giant Daimler AG announced that they had decided to join forces to create a mobility services joint venture “to combine and strategically expand their existing on-demand mobility offering in the areas of CarSharing, Ride-Hailing, Parking, Charging and Multimodality”, investing over $1 billion in the joint venture.
As part of the deal, DriveNow and Car2Go, BMW’s and Daimler’s respective car-sharing subsidiaries, were merged to become a new car-sharing service named SHARE NOW. To further harness economies of scale and build barriers to entry through service integration, the joint venture rolled up disparate mobility subsidiaries and investments under a cohesive brand and strategy:
- SHARE NOW: Car-sharing with Car2Go and DriveNow, with a combined fleet of 20,000 vehicles in 30+ major international cities.
- REACH NOW: Multimodal and on-demand mobility with moovel and ReachNow ride-hailing, transit and payment apps and services.
- FREE NOW: Taxi-hailing brands such as mytaxi, Chauffeur Privé, Clever Taxi and Beat, with a total of 140,000 drivers.
- CHARGE NOW: Charging services, with ChargeNow and Digital Charging Solutions, creating the world’s largest network of public charging stations with more than 143,000 charging points worldwide.
- PARK NOW: Parking apps with ParkNow and ParkMobile, with their search, booking and payment capabilities.
With their new mobility services joint venture, BMW Group and Daimler can offer people “as many options as possible for getting from point A to B,” says Dieter Zetsche, Chairman of the Board of Management of Daimler, all the while locking them into a potent digital ecosystem.
Recently, in July 2019, the venture enter a new phase of further integration and consolidation, by combining PARK NOW and CHARGE NOW into a single operation and consolidating all ride-hailing services globally under the SHARE NOW brand.
Why It Matters
In this context, the ParkMobile acquisition can be seen as an integral part of a much broader platform strategy.
In itself, digitized parking search, booking and payment, offers convenience to drivers and better asset utilization. But, when integrated in a range of services that cover the spectrum of transportation options and digital mobility applications at scale, it becomes a lot more valuable.
Global competition in Autonomy, Connectivity, Electrification and Sharing (ACES) is formidable, with heavenly-funded incumbents and upstarts in a variety of industries jumping into the fray. Global automotive groups suddenly compete with software, robotics, energy, utility, ecommerce and internet companies. It is crucial for companies like BMW to not surrender the emerging space of digital and on-demand mobility services and transform their offerings to meet ever-changing consumer demands. Doing so means building, or controlling, complex and integrated ecosystems, with different approaches and priorities in different global markets.
In Europe, car sharing is bigger than ever. With limitations imposed by local authorities on ride-sharing apps like Uber and Lyft in many cities, an increasing amount of commuters are turning toward car-sharing and other transportation options to get to their destinations. All the while in the US and China ride-hailing apps have spread fast to meet the mobility demands of millions of urban dwellers.
While urban density and proximity favor transit, bicycles and scooters, in suburban areas, intelligent parking, autonomous driving and charging distribution are more critical. According to a McKinsey survey, “67 percent of all US respondents prefer driving their own cars over using ride-hailing apps, and 63 percent aren’t interested in trading their vehicles for shared-mobility rides — even if they’re free.”
It makes for a complex picture where services, data, technologies and regulation intersect to unlock potential trillion dollar markets. One sensible options for automotive manufacturing companies, like BMW, is to pursue a mobility services platform strategy. Alone, if they have the heft, or in partnership with other automotive companies or their global suppliers if they don’t.
Either way, the ability to reach large scale and bring a range of mobility options to consumers, wrapped up in a cohesive end-to-end mobility experience, will be a must, not only in Munich, but also in Shanghai, Chicago, Kuala Lumpur, Cape Town, Buenos Aires and everywhere in between.
TL;DR
- ParkMobile was purchased by BMW on January 16th, 2018.
- ParkMobile technology allows users to find, reserve and pay parking using their mobile phones.
- BMW started integrating ParkMobile’s software into their vehicles, offering their services on car touch screen systems.
- Shortly after the acquisition, BMW rolled ParkMobile up in a wide mobility services joint venture with Daimler AG.
- ParkMobile is just one piece of a much wider and more ambitious mobility platform strategy, encompassing ride-hailing, charging, transit, car-sharing, payments and parking.
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