By Marie Fearnley
According to USA Today, traditional automakers have been increasing their investments in alternative modes of transportation. Last week, Ford Motor Company announced to the public that it would be purchasing an electric-scooter startup, Spin, for over $40 million. Recently General Motors additionally announced that it would begin selling two electric bicycles next year. The rising influence of technology on culture is affecting businesses now more than ever. The company Spin uses an app to go along with their scooters which allows customers to easily access their riding data and pay for their rides. With the increasing use of mobile devices, the appeal of simply downloading an app and unlocking a scooter is perfect for those in a rush. Spin scooters cost an average of $1 to rent and 15 cents per minute. The scooters are left in public locations, especially near major cities and college campuses where usage rates are high. Automobile companies have been making strategic moves in acquiring company’s in relation to their market in order to build a mobility portfolio. By purchasing Spin, Ford is reaching into a newer more modern consumer market. By assisting consumers in getting places more easily, quickly, and less expensively, they are creating a higher value for their consumers.
For well over a century now the three largest automobile manufacturers, General Motors, Fiat Chrysler, and Ford have dominated the consumer marketplace for cars. In the years since their initial creation the companies have showcased their superior quality and designs through commercials, billboard ads, and by the sharing of consumer’s personal experiences with the brands. Yet, in the past 10 years, the automobile market has become increasingly competitive with new brands, such as Tesla, surfacing with new technology allowing cars to run on electricity rather than on natural gas. According to Automotive News, sales competition between current and emerging car manufacturers has tightened among brands. The typical best-selling automakers have lost considerable shares which smaller companies have used in their own favor to come out on top. IHS Markit registration data shows that Ford market share since 2000 has fallen from 24.1 percent to 14.7 percent. Competition between automakers for market share will push them to use the most effective solutions to gain a competitive advantage.
With the purchase of the scooter company, Ford is expanding its presence in alternative modes of transportation as well as gaining a competitive advantage. By entering into different types of transportation offerings, it is giving company the chance to reach customers that it would not have been able to before. By tapping into the rapidly growing market that is “mobility” businesses, it is growing Ford’s holdings in the market. Unlike Uber and Lyft’s ride-sharing influence, micro-mobility, referenced by CNBC, is growing very differently. Cities across the globe are now requiring certain permits and putting caps on the number of scooters that a company can put and place in certain areas. Whereas with Uber, workers can drive anywhere to pick up anyone without the need for a permit. With the addition of daughter companies to their portfolios, companies are creating profitable alternatives that fit the needs of millennials. By combining similar practices together, it is establishing a larger umbrella under the automobile business.