You might have heard that Daimler, parent company of Mercedes-Benz, and BMW have joined together in a joint venture. The two have (sort of) set aside their rivalry in pursuit of a profitable—and, presumably, leading—position in the future mobility market.
This announcement took so many people aback that Daimler Chairman of the Board of Daimler AG and Head of Mercedes-Benz Cars Dieter Zetsche took to the brand’s blog to spell out five reasons for the joint venture.
The two German auto giants will invest €1 billion across five joint ventures that cover charging infrastructure, car sharing, door-to-door transportation solutions, ride sharing, and parking encompassing 14 individual brands.
In his blog post, Zetsche spells out some reasons for getting into bed with Bimmer. However, he didn’t do a brilliant—or completely transparent—job with it. So, let’s see if we can look behind the curtain a bit and decipher the reasons for the joint venture. That way, we can understand it a bit better.
1. Stronger together
Amusingly, in the intro to his blog post, Zetsche refers to a sentiment he attributes to German Chancellor Angela Merkel, “We’re stronger together.” If this sounds familiar, it’s because it was Hilary Clinton’s campaign slogan from 2016: Stronger Together.
Irrespective of its political ties, this attitude is likely the driving force behind this entire joint venture. Daimler and BMW are hedging their bets. Neither leader really wants to see the ruin of their fellow countryman’s company—chief competitor or otherwise.
Remember, it’s not clear how this whole mobility business will shake out. However, if the two brands can make the journey together, thereby creating a huge force to be reckoned with, they have a better chance of making it through to the other side.
Zetsche tries to sell this first point as a fulfilling vision for lower emissions and enhanced customer comfort. Sure, both companies probably want to pollute less and keep customers cozy. Really, though, this whole thing is about survival.
2. Completing the puzzle
Here, Zetsche is more direct and to-the-point. Each company has several pieces that a robust mobility company would be composed of. None, however, has all the parts to make one whole soup-to-nuts, A-to-Z firm. Together, though, they can combine forces and fill out all corners of the mobility business, from getting customers on trains and buses to parking and charging their cars.
Tied to point number two, succeeding in the mobility business will all take a huge infusion of cash. If Bimmer and Daimler can split the bill and lessen their own financial burden, both will fare even better in the end.
Again, it’s not totally clear how traditional carmakers will transition from a car sales business model to a mobility model and stay financially viable. Diminishing investment burden will reduce the blow to both companies’ bottom line.
The blog post boasts that, with the joint venture, Daimler and BMW “want to create up to 1,000 new jobs.” This seems like another way to reshape points two and three.
Together, they’ll be a force to be reckoned with in the mobility space and they won’t have to spend a ton of money individually to do so. It’s simple as that.
“Is the positive competition between Stuttgart and Munich now a thing of the past? Hell no, of course not.” Zetsche said.
They’ll be competitors when it comes to styling, efficiency, and brand perception. Behind the scenes, however, they’ll be in cahoots.
BMW and Daimler (Mercedes-Benz) know really well how to duke it out with performance, styling, and brand perception. And they clearly don’t want to lose that part of the business. After all, body lines and lap times are the fun part.
If, together, they can segment out the scary, hard-to-imagine, and questionably profitable parts of the coming urban mobility business and sort it out together, meanwhile remaining superficial competitors, both companies will be better off.
So, from the customer’s point of view, they will still have the opportunity to ostensibly choose between BMW and Mercedes. That is, when it comes to which brand they want to represent them to the outside world, as they move about their lives—from the driver seat, back seat, or bus seat.
However, dig a little deeper than the brand logo, and the inner workings might be much the same.