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GM's Maven exits show tough road for mobility

DETROIT — General Motors and other automakers envision bringing in significant profits from alternative ownership models such as car-sharing and subscription programs. Someday.

But for now, such mobility services are generally big money losers. And executives are increasingly discovering that they don't have the stomachs to let those businesses hemorrhage so much cash while they wait for technology and demand to reach the point where the services help the bottom line instead of hurt it.

GM, after expanding its Maven mobility brand to 17 metropolitan markets in the U.S. and Canada since January 2016, last week announced a "shift in strategy" that included exiting eight U.S. cities to concentrate on areas with "the strongest current demand and growth potential," the company said.

The pullback is the latest example of the balancing act automakers face between spending on unproven business models based on emerging technologies and reinvesting in their profitable primary business, manufacturing and selling vehicles.

"Alternative ownership, ride-hailing and car-sharing is still the Wild West," IHS Markit principal automotive analyst Stephanie Brinley said. "The opportunity for mobility services to generate revenue is there, and it's true, but getting from here to there is messy. And the scale, we don't fully know."

While Maven and other mobility operations have been hailed by Wall Street for their profit potential, automakers that have hedged their bets through broad strategies are having to better prioritize where profits should be reinvested as they brace for slowing vehicle sales and a potential economic downturn.

In GM's case, autonomous and electrified vehicle technologies — also highly unprofitable for now — appear to be a higher priority than alternative ownership models, in part because they can support mobility businesses later.

Automakers refining or even ending operations such as Maven shouldn't be considered an "automatic failure," Brinley said. It's about learning the business models and the habits of consumers, many of whom are trying to figure out what might make sense for them.

"If you don't explore it or have pilot programs," she said, "then you won't understand the business model if or when it does build into something more, but it does cost a company to have those learnings."

The changes for Maven come six months after GM's Cadillac brand suspended its vehicle subscription service to re-evaluate the operations, which have not yet relaunched as expected.

A Cadillac spokeswoman said Book by Cadillac would resume this year but declined to be more specific.

"Book by Cadillac has provided valuable customer insights and helped create new luxury ownership experiences," the spokeswoman said in an emailed statement. "We will use these insights to adjust the Book strategy moving forward and plan to re-introduce the program in 2019."

In January, Cadillac marketing chief Deborah Wahl, who oversees the program, said the next version of Book by Cadillac, Book 2.0, plans to take advantage of the brand's roughly 900 dealers for several facets, including business operations and vehicle service.

Other automakers, such as Ford and BMW, have had to pull back or rethink their mobility operations as well.

Ford Motor Co. in March shut down Chariot, a Silicon Valley shuttle service it bought in 2016 to be a key cog in its mobility future.

Ford expanded Chariot to New York and three other U.S. markets, as well as the United Kingdom. But last August, Streetsblog NYC called the service "a big, expensive failure," using company-provided data to show that each of the vans in New York was averaging just five riders per day.

BMW adjusted the pricing and tiers of its subscription program, mostly due to increased competition from Mercedes-Benz. BMW of North America CEO Bernhard Kuhnt told Automotive News that the jury is out on the future of the subscription program.

"It's at a very early stage, and it could go either way. It could be something very successful or something we say we're no longer going to do," Kuhnt said. "The subscription model is something we have to learn as we go along."

The changes Maven revealed last week included exiting almost half of its markets in North America, including New York and Chicago.

In some cities, the brand will keep car-sharing services available for consumers while shuttering Maven Gig, which provides short-term leases for vehicles used in ride-hailing or delivery services. The opposite will be true in other markets, a spokeswoman said. In some markets, both Maven and Maven Gig will end. The cutbacks are scheduled to happen over the next several months.

"We're shifting Maven's offerings to concentrate on markets in which we have the strongest current demand and growth potential," the company said in an emailed statement.

Maven was GM's first significant foray into the car-sharing and mobility space. It debuted in Ann Arbor, Mich., as a short-term vehicle rental service before expanding with Maven Gig and peer-to-peer car-sharing, which involves private owners listing their vehicles for use through Maven's app.

GM has broadly used Maven as a laboratory to gather information for its autonomous vehicle and connected-car plans, but it is not believed to be profitable.

In 2016, GM's then-president, Dan Ammann, said the automaker viewed Maven as a long-term investment that might not make money at first but would as the program expanded.

Pete Bigelow and Urvaksh Karkaria contributed to this report.

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