Interviews
13 Jun 18

Leasing or Mobility in China according to Daimler

Daimler has a track record of mobility initiatives that are being rolled out, tested and improved across the world. Clear is that Daimler is consciously building a set of user-centric, combined solutions, having understood that the consumer and corporate client are not looking for isolated services, but for a total mobility offering.

Based in Beijing, Berlin-born Bjoern Avemark leads the “Mobility and Autonomous Services” department. Bjoern converted to a car guy after the financial crisis hit Europe, back in 2006. A successful MBA thesis led him to Daimler, where he’s taken up several roles in Japan and South-Korea to end up in China. Soon, Bjoern will be heading back to Germany for his next challenge, but more about that in a later article. Today, we’re catching Bjoern on the way home from work. He’s not sitting at the steering wheel though. Car ownership is a thing of the past, remember?

Assessment of the Daimler mobility solutions on the Chinese market?

Bjoern starts: “car2go and Car2Share have, combined, about a 1000 vehicles across different cities in China. Both work pretty well and are relatively successful, also due to the fact that our internal organisation is well aligned. We all understand that mobility offering will be at the centre of Daimler’s future in China. Daimler Leasing complements the mobility offering and bridges between the Mobility Services and the corporate client. In March 2018, we have decided to merge car2go and Car2Share into one service offering, combining station based cars and free-floating cars into one stronger product. This was a significant and strategic next step to become even more relevant on the Chinese market.”

The reality behind the Chinese mobility market?

“Looking at the supply chain, it’s a complex evolution,” says Bjoern. “The traditional scheme is the following: there’s a pioneer, then other people copy the pioneer, then they start a price battle and end up being absorbed by the fittest of the players. Most of the mobility suppliers are now at the price battle stage. It might sound like a good deal for the consumer, who’s definitely benefiting from the momentum, but at the same time, we’re seeing that the same consumer has started to appreciate service differentiation and is willing to pay a fair price for better service. That’s where we come in.”

“From Daimler’s point of view, a price battle is not where we want to be. We don’t aim to become the next big IPO; instead, we’re executing a strategy that’s appropriate for our brand, which means that scaling at any price is right now not the objective. Offering the right solution at a fair price, however, is our goal.”

Are Leasing and Mobility complimentary in China?

“It’s a tough question, especially in an immature leasing market such as China.” Bjoern explains: “The corporate client is not necessarily a leasing client, but once they become one, they initially reproduce the behaviour of a car buyer: negotiating the monthly instalment down as much as possible without considering the level of service or operational excellence. Nevertheless, when the clients reach a level of maturity, they understand and appreciate the concepts of price setting and efficient operations. For this type of customer, leasing and mobility solutions go hand in hand and that’s also how Daimler conceives the total package. In case of Daimler China, both the leasing company and the car2go/Car2Share are managed by the same person, which underlines our strategy.”

What would your advice be for a Global or Regional Fleet Manager who’s trying to figure out what to do in China?

“Firstly, they need to understand the Chinese reality. Obtaining a plate is not as easy here as in other countries in the world. Imagine: you know what you want, you have the money, but you just can’t buy what you need. Even if you have the plate, it might very well be that you can’t drive your car today, because your plate is an even number and today’s the day for uneven numbers… These factors define car ownership in China.”

Bjoern continues: “Secondly, consider either leasing, mobility or a combination of both as strategy for your fleets, but make sure you select a sustainable supplier who can demonstrate a solid operational base. Some corporates in China are even adopting mobility solutions without ever having leased their fleets – the Chinese tend to skip steps and move ahead much quicker than the Europeans or the Americans. We’ve seen the same phenomenon with digital payments in China: they skipped the credit cards and moved to mobile phone payments right away.”

How does Daimler define success on the Chinese market, as far as mobility services are concerned?

“As mentioned before, we’re in it for the long run. For example, Daimler launched car2go for the first time in China in the city of Chongqing in 2016. In a year’s time, we’ve been able to activate 600 vehicles, making Chongqing the largest car2go location in the world. This is exactly how Daimler wants to operate, we test our services before going nationwide and we do things one step at a time, and we do it right.”

“The next big milestone will be the autonomous vehicle. This is when we can start thinking about bigger volumes. Until then, we are focusing on coverage across China, we’re working on charging points for electric vehicles and building a good and loyal client base.”

Thanks for the interview, Bjoern, and let’s have another chat once you’re in your new role!

Authored by: Yves Helven