Big automakers continue to make defensive moves against the competitive threat posed by ride-hailing services, such as Uber and Lyft. General Motors has acquired most of the assets of the recently shuttered Sidecar Technologies, according to a report today from Bloomberg.
As part of the deal, GM is obtaining Sidecar’s technology, Bloomberg reported, and will hire 20 of Sidecar’s former employees, including co-founder and Chief Technology Officer Jahan Khanna. CEO Sunil Paul won’t be joining GM. Financial terms weren’t disclosed.
Like most of the other car manufacturers, GM is investing larger and larger sums into ride sharing. The Sidecar acquisition comes two weeks after GM announced it was investing $500 million into Lyft. GM also has plans to introduce its own competing transportation services, which the automaker calls Maven, according to Bloomberg’s story. The news service added that GM may enable its car owners to offer rides to others commuting in the same direction.
The foray into ride sharing by the carmakers is easy to explain. The data show they face a real threat from the likes of Uber and Lyft. A report last year from Alix Partners found that, over the previous decade, the auto industry sold 500,000 fewer new cars because of ride-sharing services, which also include Zipcar and RelayRides. Alix also predicted that the industry would lose an additional 1.2 million sales by 2021.
Like GM, other car manufacturers are trying their hand at ride sharing. Mercedes has rolled out its Car2go program, which enables consumers to rent a Smart Fortwo compact. Daimler AG has acquired German ridesharing apps myTaxi and RideScout. But GM can probably learn how difficult it is to compete in this sector from the former Sidecar employees it hired. Sidecar was an industry pioneer but didn’t possess a big enough bankroll to compete with Uber, which has recently been valued at more than $60 billion.
And not even Uber is having an easy time expanding its business. The company has been tripped up by all kinds of regulatory obstacles and legal challenges made by traditional taxi services in such countries as France, Germany and Spain. The automakers are unlikely to have an easier time, as evidenced today: A German court found that discounts offered by Daimler’s myTaxi were an “unfair commercial practice” and illegal. MyTaxi offered to halve the price of cab rides if customers paid electronically rather than in cash. Daimler says it will appeal.