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Understanding General Motors’ On-Demand Mobility Business

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Jul. 8 2016, Updated 8:06 a.m. ET

The General Motors-Lyft partnership

After realizing the potential growth in on-demand mobility services, General Motors (GM) became one of a few automakers to get involved in the business. In January 2016, GM entered into a strategic alliance with Lyft, a San Francisco-based company that provides car-sharing services in the United States. Currently, these services are available in over 200 cities. GM made a half-billion dollar investment in Lyft and reserved a seat on Lyft’s board of directors. Let’s take a look at how this partnership could help GM grow.

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How could GM benefit?

After the alliance with Lyft, General Motors will become the preferred provider of short-term use vehicles to Lyft drivers through GM’s rental hubs in various US cities. Automakers (XLY) often sell or lease their vehicles to car-sharing service providers. Sales data are recorded under fleet sales. Although an automaker’s margins from these fleet sales are typically lower than those of its retail sales, they help increase market share.

General Motors also plans to develop an on-demand autonomous (driverless) vehicle network with Lyft. This should help GM with Maven, its personal mobility car-sharing service. Launched in January 2016, Maven provides residential and peer-to-peer car-sharing services.

Maven

Currently, Maven services are available in four locations in the United States. In the future, GM intends to expand its Maven services to other markets and add a fleet of autonomous vehicles.

Google (GOOGL), Ford (F), and Toyota (TM) are also developing technology for autonomous vehicles. However, GM is one of the first companies to announce its intention to use autonomous vehicles in its car-sharing business, which could be advantageous.

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