Foreign Direct Investment in Latin America and the Caribbean 2017

Foreign Direct Investment in Latin America and the Caribbean • 2017
Chapter II
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• Daimler AG set up its Moovel subsidiary to address the new challenges of urban
mobility, and developed the sophisticated Car2Go car rental service. It also acquired
the RideScout taxi booking service in the United States and Germany’s Mytaxi,
which later merged with its UK partner, Hailo, to become the European leader
in private passenger transport applications. More recently it invested in Uber’s
German competitor Blacklane (Bloomberg, 2014, 2016f and 2016g; Forbes, 2016f).
• BMW has invested in several companies linked to the mobility business, including:
Ridecell, a leading provider of software to promote mobility as a service (MaaS),
including automobile services and shared travel (BMW Group, 2016b); JustPark and
ZIRX, parking location services (Business Insider, 2015); Moovit, a public transport
application and mapping service (BMW Group, 2015); and Zendrive, a firm that
uses data and analytics to improve driving (BMW Group, 2014). Since 2011, the
German manufacturer has invested in DriveNow, a firm that provides temporary
vehicle use services in several European cities and under the name ReachNow in
the United States. It recently also invested in the emerging United States firms
Scoop and Summon: in the former to develop a platform enabling people living in
the same neighbourhood or working nearby to contact each other for car sharing;
and in the latter to offer chauffeur-driven car reservation services via a smartphone
application, which recently moved from India to San Francisco (Fortune, 2016c).
• In some cases, these agreements allow manufacturers to supply vehicles to
mobility platforms. Examples are Toyota and General Motors, which have designed
a financing mechanism enabling Uber and Lyft drivers to purchase their vehicles.
To shift the balance from ownership to use, automakers need to change their mode
of operation. Thus far, their dominance of the automobile manufacturing business has
kept competitors at bay; but they often lack the skills needed to address new service
areas that rely on constant interaction with customers and the handling large amounts
of information. Thus, the momentum demonstrated by manufacturers in their recent
investments in mobility services probably reflects their need to learn how these new
business segments work and benefit, as much as possible, in the short run.
Enterprises based exclusively on data management and sales services can hit limits,
especially given the spread of platforms combining the digital domain with in-house or
outsourced manufacturing capabilities. Google is moving ahead in the production of an
autonomous vehicle, followed closely by Apple, which is also exploring options in the private
transport market following an investment of about US$ 1 billion in Didi Chuxing, the largest
Chinese platform (Fortune, 2016d). There are also several start-ups looking for innovative
formulas enabling rapid generalization of mobility services (The Economist, 2016b).
In the future, more efficient use of public transport, growth of shared cars and
the increasing number of journeys made by private transport services will discourage
vehicle sales and confront vehicle manufacturers with a more dynamic scenario or
even a fall in demand.
Electromobility and
the new materials
will become more
prominent and
generate significant
changes in the
automotive value chain.
3. A regulatory context for sustainability
Vehicle manufacturers will start to target their innovation effort on areas such as the
environment and energy efficiency. Moreover, electromobility and the new materials for
light vehicles will become more prominent and generate significant changes in the industry
value chain. Nonetheless, these changes will not mean a reduction in cost pressure, as
consumers will demand better-quality vehicles with more features; and the authorities
will demand safer and more efficient cars. However, given the strong competition, it will
be hard, or even impossible, to compensate for these increases by raising vehicle prices.