Mail.ru Group negotiates the purchase of the YouDrive car sharing service

Mail.ru Group may have its own carsharing - as The Bell found out, Alisher Usmanov's holding is negotiating the purchase of a stake in the fourth largest Russian operator YouDrive. The largest player in the Russian car sharing market is Yandex. Internet holdings are already competing in the taxi, food delivery and online retail markets.

Deal. Mail.ru Group is in talks to buy car sharing service YouDrive, three people with knowledge of the talks told The Bell. A source close to one of the parties to the deal confirmed the negotiations with YouDrive. Mail.Ru is interested in acquiring the current car sharing operator, the final decision has not yet been made, but the most likely object for the acquisition is YouDrive, says The Bell's source. Mail.ru will participate in the deal with a financial partner that is engaged in car leasing as a minority partner, he adds.

A representative of Mail.ru Group told The Bell that the holding is considering various options for strengthening its position in the transport segment. “If approved, it will be a minority investment, similar to our investment in [taxi service] Citymobil,” he confirmed. In Citymobile, Mail.ru Group and its sister Megafon own a little more than 33%, Aram Arakelyan, the founder of the service, said in December 2018.

What is YouDrive. With 2.5 thousand cars (including pool partners), YouDrive ranks fourth in the Russian car sharing market. The largest players are Yandex.Drive (6500 cars), Delimobil (6000) and BelkaСar (4050 at the end of 2018). 60% of YouDrive shares are owned by its founders Boris Golikov, Andrey Kuprikov and Alexey Nurdinov, 40% by the Moscow Mercedes-Benz dealer Panavto, which provided the service with the first Smart cars and then entered its capital.

The most growing market. The Moscow car sharing market is the fastest growing in the world, JPMorgan analysts wrote last fall. According to the Moscow government, by September last year, there were 11.5 thousand cars available in the city, on which users made more than 12 million trips - almost twice as many as in the whole of 2017.

"Yandex" and others. Since 2018, when Yandex entered the carsharing market and began to aggressively increase its car fleet, competition has increased dramatically. Yandex.Drive, launched in February 2018, managed to become the largest service in Russia in just a year. Car sharing operators lease cars, but the market is still capital-intensive enough for its participants to develop without strong financial support, says The Bell's source in one of the major services. To withstand competition, all large companies will have to attract strategic investors, he said.

• The size of the fleet is a decisive factor for car sharing: if given a choice, the client will not use a service that cannot provide him with a car within 5–10 minutes of availability. YouDrive, which was one of the first to start on the Russian market, by 2018 began to lag behind its competitors.
• In 2018, YouDrive tried to catch up by arranging to create a pool for general bookings on its platform with four smaller operators Carenda, Easyride, Timcar and Urentcar. But it turned out to be difficult for small players to survive even together. In November 2018, EasyRide closed due to debts. The rest of the companies from the pool work, but, for example, judging by the Carenda website, its entire fleet is concentrated in St. Petersburg, and there are no available cars in Moscow.
• “If the [Mail.ru Group] deal with one of the existing players takes place, the situation on the market may change: if the company receives serious funding and puts up several thousand more machines, market shares may be redistributed,” says The Bell source in one of large operators.

Mail.ru Group and Yandex are racing to capture Russian markets that are easily uber-friendly. Over the past three years, each of the holdings has bought a food delivery service (Mail.ru - Delivery Сlub, Yandex - FoodFox) and a taxi order (Yandex absorbed the Russian division of Uber, Mail.ru invested in Citymobil). The biggest market in which the two holdings are going to compete is online retail: Yandex is building its marketplace with Sberbank, and Mail.ru with Alibaba.