LONDON: Volkswagen (VOWG_p.DE) is making a timid bet on an optimistic future for cars. A group led by the German automaker on Thursday unveiled a deal to take control of Europcar Mobility (EUCAR.PA) for 2.9 billion euros, including debt. But keeping the rental company at arm’s length suggests VW’s vision is tempered with caution.
Reversing into the car rental business is a trip down the auto industry’s memory lane. U.S. carmaker Ford Motor (F.N) owned Hertz until 2005. Europcar was a VW subsidiary until 2006, when the German group sold it to French buyout fund Eurazeo (EURA.PA) for roughly 3 billion euros. Hefty borrowings and a pandemic-induced business crunch forced the company into a recapitalisation last year.
The takeover is part of VW Chief Executive Herbert Diess’s plan to turn the $150 billion company into a tech-enabled provider of “mobility services”, a market he reckons will grow 10-fold to $100 billion globally by 2030. As younger drivers eschew car ownership, they are more likely to opt for alternatives like ride-sharing and monthly subscriptions. Further out, passengers will order driverless “robotaxis” whizzing around city centres with a swipe on a mobility app.
Europcar’s 3,500 sites in 140 countries should help. Their proximity to airports and city centres will enable VW to meet demand from customers and better manage its fleet of autonomous vehicles.
The hesitant bet is at odds with Diess’s sweeping vision. Although VW will own a majority stake, it will not control Europcar nor consolidate the company into the broader VW group. Indeed, Diess stressed that future transactions between VW and Europcar would take place at an “arms’ length” basis. As big journeys go, it’s an oddly nervous start.
