When Evgeny Barkov owned a car, the 31-year-old software vendor often watched with disgust from his window in Moscow. His property was unused for more than ninety percent of the time, while he was sucking up money and giving him the fear that it would be destroyed.
He eventually pulled up a calculator, added all the costs and determined that he could better sell his gray Peugeot and switch completely to car-sharing services like Yandex.Drive, which offers cars ranging from simple Kia models to flashy Porsches.
"That investment brought me nothing but trouble," said Barkov, swinging through the snow-covered streets of Moscow in a white Skoda sedan with a bright yellow stripe on the side and Yandex's software on the dashboard console. "Now I just pay for the use."
The company set up by a local internet company last year flooded the Russian capital with more than 7,000 cars to rent for just 5 rubles (8 cents) per minute, including fuel, maintenance and parking. That is 41 cents per minute for the Car2Go of Daimler AG in New York and is an offer that is too good to pass up for a growing number of Muscovites.
Almost out of nowhere car parts in Moscow rose, with the number of vehicles that more than tripled last year. The city now has the largest shared fleet in Europe and the second largest in the world. The rapid switchover means problems for car manufacturers by offering a blueprint for how a deeply advanced technology player can quickly move to consumers with alternatives to traditional car ownership.
"We're approaching a point that could turn the whole car market upside down," said Shwetha Surender, an London analyst with consulting firm Frost & Sullivan. "Car manufacturers run the risk of becoming a sole supplier of shared mobility services and losing direct relationships with customers, which is an unattractive proposition."
To be sure, car manufacturers try to control the risk. Daimler and BMW AG have combined their car sharing companies to achieve greater economies of scale. Volkswagen AG is testing its MOIA service for journeys in Hamburg, while General Motors Co. has invested in Lyft Inc.
They somehow missed the largest city in Russia, with more than 12 million people. Daimler & # 39; s Car2Go, BMW & # 39; s DriveNow and the Zipcar of Avis Budget Group Inc. are all no-shows, although the infamous streets – Moscow has been ranked as the world's worst city for traffic congestion – were ripe for disruption and authorities were almost begging for car sharing companies to invest.
Paid parking was introduced in the center of the city in 2013 and is usually booked by app-based residents to use smartphone functions for their transport needs. A day at the edge of the road may cost around $ 30, making it the biggest daily cost for many Russian drivers. Car service providers receive discounted rates of about $ 400 per year.
Yandex used the streets of Moscow that swarmed last year with vehicles such as Renault Captur crossovers, BMW 5-series sedans and even Porsche 911 sports cars. The aggressive investment made it the market leader for local rivals Delimobil and BelkaCar.
At the end of 2018 there were 16,500 auto-sharing vehicles in the city and the Transportation Department of Moscow expects that the number will increase by 5,000 vehicles annually in the coming years. The expansion of the fleet followed a boom in users as journeys more than quadrupled to 23 million.
"Russia later started car sharing than other countries, but this allowed us to use the latest technologies," says Anton Ryazanov, head of Yandex.Drive, which expanded to St. Petersburg in December. "Now the Russian market is occupied by local car-sharing companies and the entry of large international players is unlikely."
Yandex NV is the Russian version of Google and has used its strategic position in the center of the digital economy to deepen its ties with consumers through services ranging from shopping centers to music streaming. The company started its push in transport services with cab-hailing app Yandex.Taxi in 2011, now the largest in Russia. It controls the activities of Uber Technologies Inc. in the region.
Car-sharing is the next step to eventually offer a robo-taxi service, the goal of Waymo of Alphabet Inc. By starting with carpooling Yandex gets a pool of customers that can easily switch from driving the company's vehicles to driving. The company also develops the know-how of managing and maintaining a large fleet.
"At the moment we see that use-case scenarios of taxi and car sharing are different," Ryazanov said. "But it is clear that in a number of years, when self-propelled technologies become widespread, these two services will eventually become one.You have the choice to sit in the back seat and the robot will drive or be behind the wheel."
Like most other carpooling services, the vehicles are booked through the app. Yandex & # 39; s has a "radar" function that encourages users when a car is available nearby. After Yandex has introduced the dynamic pricing, the tariffs for services in Moscow can rise when demand is high and vehicles are scarce, but generally around 8 rubles per minute for an ordinary car and 16 rubles for a luxury model. The costs are considerably lower than in the United States and Europe, mainly because of lower labor costs, maintenance and fuel.
There are also important benefits for users who share cars, such as Barkov. Once a vehicle has been booked, it can be preheated – a useful feature during the cold winters in Russia. When he had his own car, Barkov remembered the gnawing feeling of an upgrade to a more beautiful, more expensive model. But now he enjoys the variety of driving a Russian Lada one day and a Mercedes-Benz the next day.
"I only use cars for utilitarian reasons," Barkov said. "For me it is no difference to drive a car with a cheap interior or a copy with all the leather."
Copyright 2019 Bloomberg.