Why a start-up succeeds where BMW and Mercedes gave up – economy

Who would have thought it six years ago when it was founded: the market leader in Berlin, at least that’s what they say at the car sharing provider Miles. And now the mobility service provider wants to push boundaries. Starting this Wednesday, the company will also be lending vehicles in Ghent, Belgium, which can be easily booked using a mobile phone app. Brussels and Antwerp are to follow.

If this expansion works, then not only will managing director Oliver Mackprang and his 300 employees be happy, it would also be nice proof that a start-up has mastered a business that has already caused some corporations to despair: short-term rental of cars, better known as car sharing. It’s an industry that’s either seen as the future of transportation, or as a largely failed experiment.

Of course, Oliver Mackprang and his people believe in the former. And the starting point of their foreign expansion is consistent. They seek the least resistance, go where they are welcome, other than where they come from. In Berlin, city politicians are hardly interested in the way you get around, the main thing is that the cash register is right, they complain to Miles: the parking license costs an average of 150 euros per car per month. In Ghent, on the other hand, Mayor Mathias De Clercq has set the goal that there should be 25,000 car sharers in his city by 2025, one in ten residents. This is the “mobility of the future,” says De Clercq, and on the way there, all “shared cars” are valuable. Of course there are no parking fees here.

This philosophy coincides with that of the Berlin start-up, which has put the billing method in its name as a central company idea: Miles Mobility does not bill per minute, but per route. As a result, this is often significantly more expensive than the competition, especially when traffic flows smoothly, but it is impressively simple: one kilometer, one euro, according to the rule of thumb.

Simplicity seems to be the company’s recipe for success, which has its headquarters in Berlin-Charlottenburg. Two floors are enough for business: There is a table football and a table tennis table, but they are deserted. Instead, everyone works quietly, glass door to glass door: the customer service that they organize themselves and have not outsourced to a call center. The app programmers. The fleet manager, who now leases or buys the 7,000 cars, finances them partly through banks and partly through equity. The bosses around Mackprang, who are squatting together in a cubbyhole.

It’s about leadership in a billion-dollar market

The common goal: to dominate a market that will be worth almost ten billion euros in Europe by the end of the decade, according to the management consultants at Oliver Wyman, although Miles considers that to be a rather conservative estimate. But it is also a market that is generally considered incredibly difficult to master. BMW and Mercedes are the best examples: The car manufacturers once wanted to be mobility providers themselves and launched the Drivenow and Car2go car-sharing offers very early on. They added cities in Europe and the USA, withdrew again, experimented. Finally, the two groups combined their competing offerings into: Sharenow. But the rental business was still not really fun – and so, with the help of a number of bankers and lawyers, they recently sold this service to Stellantis, the parent company of Opel, Fiat and Peugeot. Volkswagen is also trying its hand at car sharing, but the project is stagnating and the business is not considered particularly promising. Even the established car rental company Sixt now believes that car sharing will remain “a niche product” that cannot be operated profitably on its own.

What about Miles? Like all sharing providers, people complain about the subsidization of private property, for example through resident parking permits (80 cents per month in Berlin) or company car privileges, and they strive to ensure that the vehicles find at least three customers a day. This is considered the threshold for making money. But at least you have “slimmer structures” than the competition, says Managing Director Mackprang, and another goal: “Our main goal is to relieve traffic and have fewer cars on the streets overall because more trips are shared.” The main goal of a car manufacturer is of course different: to sell as many cars as possible, regardless of ownership type. And yet, or perhaps because of it, Miles is successful, says Mackprang. “You can definitely get into the black with this business and we’re already doing that.” The Ebitda is positive, i.e. the profit figure in which no depreciation has yet been taken into account. In addition, they had a 100 percent growth in sales last year. This is how it should continue – and the conditions for this are good. Currently, Miles “fortunately doesn’t need any additional equity,” says Mackprang. “For example, we can manage our expansion into Belgium with the available funds.”

One important donor is known in the start-up scene

This in turn has to do with a man who is well known in the German start-up scene: Lukasz Gadowski. He once earned his first millions with the T-shirt printing company Spreadshirt, followed by a number of other start-ups, such as the delivery service Delivery Hero or the online optician Mister Spex. And also those in the mobility sector, because technology and tangible things inspire him. His money is in the drone designer Volocopter, he was part of the scooter wave – and that’s how he met Miles.

At the time, the small company wasn’t actually “sexy” for financiers, says the investor. “When I got in, they had 120 cars. But they have a persistence that deserves support.” And then he lists the factors that made him stick with it: “The team works thriftily. They look at the product for cost, simplicity and customer satisfaction.” After all, there are two trends that Miles is benefiting from. Environment and resource conservation as well as a scalable platform business.

For Gadowski, the prerequisites for great things: “It can become one of the top DAX companies.” Because there is one more thing that speaks in favor of car sharing: “The denser the offer, the more useful it becomes for all users.” At least the next step has already been taken, to Ghent.

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