Famed German carpooling firm expands in Europe and US | Business| Economy and finance news from a German perspective | DW | 19.09.2011
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Famed German carpooling firm expands in Europe and US

Germany's biggest ride sharing website, Mitfahrgelegenheit, is expanding across Europe and taking its carpooling concept to America as well. It's an ambitious move. Success in the traffic-clogged US won't come easily.

German traffic

Carpooling.com profits when more drivers ride together

Ride sharing is popular in Germany because it allows travelers to save money on gas and cut carbon emissions, even among total strangers. The dominant website that links drivers with passengers is called "Mitfahrgelegenheit."

Established a decade ago, the company says it has nearly 2 million members and has recently expanded to eight other European countries. But its managers have their eyes on a much bigger prize across the Atlantic. In 2012, the service will roll out in the United States.

Name changes

Naturally, it'll have a different name. The 18-letter word Mitfahrgelegenheit doesn't exactly roll off the tongue or into a search engine. That's why the company acquired the domain Carpooling.com and will use that to attract American users. Portals in other countries also have different names.

But it'll take more than a simple name change to expand the service beyond Germany.

"One of the challenges will be trying to develop an approach, which is simple and reasonably consistent, but is actually tailored to the individual culture that they're entering into," Forrester Research eBusiness analyst Martin Gill told Deutsche Welle in a phone interview.

That means adapting to the local language, culture and geography. Sometimes, it even means explaining what ride sharing is.

"The phenomenon has not been known to countries like Spain or Italy or even Greece," Carpooling.com managing director and founder Michael Reinicke told Deutsche Welle. "So there's not even a word for carpooling."

Carpooling.com logo

Mitfahrgelegenheit adopted a new name for English-speakers

The company had to make many adjustments when it stepped outside its home market. In many ways, Germany is perfectly suited for carpooling, with a dense population and fast, free highways. That's not the case in more rurally distributed countries, many of which are lined with toll roads.

Highway to profitability

It's free to offer or find a ride through the Carpooling site. The company makes money through ads, premium memberships, and partnerships with travel providers. It also does consulting for companies on making it easier for employees to carpool. There's barely a marketing budget.

"We are growing organically," Reinicke said, adding that word of mouth recommendations are the website's most important source of new members, multiplied by social networking.

The 10-year-old company was profitable earlier, but isn't at the moment because of investments and new hires to fuel expansion plans. The company now occupies sparkling new offices in Munich to accommodate a larger staff supporting bigger ambitions.

Fitting the casual atmosphere of an online business workspace, a visitor would hardly know Reinicke is a co-founder and managing director. He looks exactly like the other employees: young, hip, and t-shirt clad on a hot Bavarian summer day.

Reinicke says about 600,000 rides a month are organized through the company's various portals. But right now some 90 percent of the business originates in Germany. If Carpooling.com is going to return to profitability, it must grow revenue abroad.

Transatlantic ambitions

The US presents different challenges than the new European markets Carpooling.com has entered. But with a growing population of more than 313 million people, America promises a rich prize for any service that can capture the ride sharing market.

Car fueling

Demand for carpooling goes up with gas prices

Reinicke is the rare individual who cheers spiking gas prices. Increases at the pump are steering more Americans toward shared rides, and Carpooling.com hopes to capture riders and drivers seeking to lower their gas bills.

It won't be easy going though. The US is more geographically vast than any market Carpooling.com has entered. The plan is to start by localizing the American service in several densely populated regions.

There's also the issue of trust, which needs to be ample if American strangers are going to ride together. Reinicke says that can be taken care of by allowing riders and drivers to check each other out via social networks like Facebook and other systems to establish which drivers and riders are reliable.

US policymakers have made a number of attempts to promote carpooling and reduce traffic in the past. Some municipal authorities have launched programs to connect riders and drivers, while others have even offered exclusive lanes for car poolers. But results have mostly been disappointing.

Reinicke and his team are betting that they can succeed where numerous government programs have failed. A successful American launch would be their biggest achievement yet. It will not be simple, but the casually dressed young people working on the expansion say they're ready for the tough road ahead.

Author: Mark Garrison
Editor: Sam Edmonds

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