General Motors (NYSE:GM)
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By Mike Colias
General Motors Co. plans to wind down its Maven car-sharing service in more than a half-dozen cities, the latest car company to encounter challenges as it works to expand new transportation ventures.
Maven, a car-sharing brand launched in 2016 by GM, will end service in eight of the 17 North American cities it currently operates in within the next few months, a GM spokeswoman said.
The cities where it plans to terminate business include major markets, such as Chicago and Boston. Maven will continue to operate in Los Angeles, Washington, D.C., Detroit, Toronto and other cities, she said, declining to provide a full list of closures.
"We're shifting Maven's offerings to concentrate on markets in which we have the strongest current demand and growth potential," the company said in a statement. GM declined to elaborate on the specific reasons why it was ending service in the eight markets.
An email sent to one Maven customer in Chicago said the service would wind down there by July 26.
The move comes as Uber Technologies Inc. -- a ride-hailing firm that served as a model for many car makers trying to diversify into new transportation ventures -- has continued to post sharp losses and its stock has slumped following its IPO earlier this month.
In January, Maven chief Julia Steyn left GM after leading the division since its inception. GM didn't give a reason for her departure. Ms. Steyn, a former Goldman Sachs and Alcoa executive, didn't reply to requests for comment.
Like other car makers, GM has been testing new services that allow people to get around without owing a car, including a plan to launch a ride-hailing business powered by self-driving taxis by the end of this year.
With Maven, GM is hoping to respond to the proliferation of app-based transportation services that have become popular in today's economy, which many auto executives view as a long-term threat to car ownership.
Maven lets customers in urban areas to rent cars on a short-term basis using an app on their smartphone. The brand also provides short-term vehicle rentals to Uber Technologies Inc. and Lyft Inc. drivers for their ride-hailing operations. Private car owners can also use the Maven app to rent out their vehicles to other individuals.
The car-sharing business, while around for many years, is still tiny compared to the ride-hailing industry, according to consultancy AlixPartners LLP. Car-sharing generated an estimated $2 billion in global revenue in 2016 and is forecast to grow to $5 billion by 2030, the firm said. Ride-hailing generated $36 billion in 2016 and is set to grow to nearly $300 billion annually by 2030, the consultancy said.
Other traditional auto makers have scaled back or scrapped similar services in recent years after struggling to scale them up.
In January, Ford Motor Co. pulled the plug on Chariot, a private-shuttle service it purchased several years ago in a push to diversify beyond its core car-manufacturing business. Chariot operated van fleets in San Francisco, New York and Austin, Texas, but struggled to expand beyond a fixed, bus-like route and was losing money, according to people familiar with the matter.
Several other car makers, including GM's Cadillac brand, have dabbled in subscription services for cars that let customers pay one monthly fee to swap in and out of models. But some car executives have said the business model is a logistical challenge and difficult to grow.
Cadillac canceled its subscription business late last year but plans to relaunch the services after making adjustments.
Austen Hufford contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
May 20, 2019 17:37 ET (21:37 GMT)
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