Awto: an innovative proposal to urban mobility in Chile

Abstract

In June 2016, Awto, the first carsharing system in Chile, was launched through an initiative of the Kaufmann group, representative of Mercedes Benz in the country since 1950. After an investment of 2 million dollars, this business was put into operation with 5 stations and 45 cars. A year later they had 2,500 users, a fleet of 90 cars and 45 stations, and they were also located in 12 of the 32 districts of Santiago, where 5.6 million people lived in 2016. The company pointed out: “The Kaufmann group was aware that, in Chile, it was looking for new measures for high congestion, users were willing to change their lifestyle given the high pollution, noise and stress…and simply… you no longer know what to do…”. The proposal consisted of the implementation of a system that sought the entry of a carsharing car to replace the use of 10 private cars, allowing the clearing of streets, since there was no longer enough space for each inhabitant to have a car. By using Awto, environmental pollution was reduced, since the emission of carbon dioxide (CO2) was reduced by generating a charge for use and time, creating a more rational use of the car. The creation of comfort for the user was encouraged, since he or she did not have to deal with “third parties” or do paperwork, maximizing his or her time to dedicate it to other activities. At the same time, car expenses for the customer were optimized because they were included (gasoline, insurance, maintenance, cleaning, etc.), which generated very significant savings in the consumer’s pocket. Strictly speaking, the private car was unoccupied 95% of the time, while carsharing cars could be in use up to 50% of the time (Awto, 2020).

The company’s results so far were encouraging. Since its inception in 2016, and in a sustained manner, Awto has managed to increase its monthly income by 19%, as well as the average number of trips that amounted to 60 in mid-2017. Aspects such as flexibility, ease of use, savings for customers, improvements in the user experience, environmental and sustainability benefits associated with the service, as well as a marketing strategy to reach the appropriate customer, were important advantages that explained the success of the company to that date. Encouraged by the results, in mid-2017, Francisco Loehnert, who was the CEO of Awto, was analyzing with his team what the next step would be to continue growing. In particular, he wondered how attractive the business model was in a way that would allow Awto to continue to grow successfully. Undoubtedly, there were significant challenges and barriers to continue growing, so the executives asked themselves: will the company have to modify its operating model to address the different characteristics of location and market? How relevant is the eventual existing competition? What does Awto face? What should be the strategic planning for future growth in the Chilean market? And are the marketing and communications strategies used in Santiago easily replicable for other cities?