GM takes stake in China car-sharing

Updated: 2016-10-13 11:38

By Paul Welitzkin in New York(China Daily)

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One of Detroit's Big Three making bid to access China market with local partner

General Motors' motivation for investing in a Chinese car-sharing app developer goes beyond just acquiring technology, according to one expert.

GM on Wednesday declined to reveal the size of its investment in Yi Wei Xing (Beijing) Technology Co Ltd, which developed Feezu, a car-rental and car-sharing app that merges hardware and software and enables users to rent vehicles by the minute, hour or day.

"GM would have no reason to invest in Yi Wei Xing for access to technology or talent," Eric Dennis of the Center for Automotive Research in Ann Arbor, Michigan, said in an email. He said the technology supporting car-sharing and ride-sharing services is rather simple.

"Most likely, this investment is for access to China's car-sharing market. Entering the market without an established local partner would be very difficult," he said.

"GM already sells a fair amount of vehicles in China (and) getting a toehold in the mobility sector is probably a smart move," Dennis said. "(It's) likely GM is looking to find a revenue stream from mobility services in China, as well as a partner who will have a large demand for fleet vehicle sales."

"It is GM's first investment in a startup in China related to urban mobility," a company spokeswoman told Reuters. "This cooperation is very important to our company to explore the ride-sharing market in China."

"Every market has its unique requirements for car-sharing services," Julia Steyn, GM vice-president of urban mobility programs, said in a statement. "Yi Wei Xing has solid technologies and innovations that will help us explore more efficient and personalized mobility solutions for consumers in China."

As ride-hailing services like Uber in the US and Didi Chuxing in China have grown, GM and other major automakers have been quick to partner with companies and participate in this fast-growing segment of what is referred to as the "sharing economy".

Earlier this year, GM invested $500 million in the ride-hailing company Lyft and also launched Maven, which provides short-term car rentals.

"This is an important step for GM to explore and engage with new mobility markets in China, in particular with a company who already has a presence in that market," Jeremy Carlson, principal automotive analyst for IHS Markit, said in an email.

"GM has been aggressively building up the Maven brand, and the investment in Yi Wei Xing may be a signal that the automaker is likely looking to bring its Maven brand to China, a very important market both for new mobility solutions and for the company overall," he said.

"Only time will tell if this move is significant, but it shows that GM is paying close attention to the Chinese market," Dennis said.