27 Apr 2020

President of Delimobil and Founder of Mikro Kapital Group Vincenzo Trani: Nobody tried to explain things, nobody even warned us about the suspension of carsharing

The coronavirus lockdown measures have once again shown how carsharing has succeeded in the space of only a few years in becoming part of the backbone of Russia’s urban transit systems. Residents of major cities shunned public transport due to the coronavirus epidemic in favor of carsharing, and the percentage of such vehicles on the roads grew considerably as overall traffic declined.

But Moscow’s mayor, Sergei Sobyanin, in the middle of April banned carsharing, first until April 19 and then until May 1. Vincenzo Trani, the president of carsharing service Delimobil and founder of Mikro Kapital Group, tells Interfax in an interview about why despite Covid-19 carsharing services continue to operate in other countries, about how the restrictions in Russia might affect the car hire market and how Delimobil is adapting to the new realities during the pandemic.

Question: Did the capital’s authorities give you any reasons for restricting carsharing in Moscow during the lockdown?

Answer: No, nobody even tried to explain things, and nobody warned us about the restrictions either. When they want investment for the city they all pick their phones up, they come to see you, show you things, tell you things, why it’s good to invest in something. But when problems arise nobody gets back to you, your phone number is forgotten. That doesn’t look very good.

I recall the approaches the Russian president takes with his long-term partners. He always remembers Russia’s partners, in good times and in bad. Unfortunately we see that the president’s “school” does not entirely work at all levels of state power. It turns out that carsharing companies are good partners only when the weather is good, and they are not partners when the weather is bad.

I chair the Italian-Russian Chamber of Commerce and I am supposed to attract investment for Russia - that’s what the head of the chamber does. But the situation that has emerged, especially with Delimobil, gets in the way somewhat. And for me there is more to Russia than just Moscow. I’ve lived in Russia for 20 years, and in that time I’ve grown used to viewing myself as a partner of this country. I’ve lived and worked here in good times and in bad. I’d like the state bodies to hold investors in the same regard as those investors, myself included, regard them.

Q.: Are you planning to ask the federal authorities for support or to include carsharing in the list of sectors most affected by the pandemic?

A.: We appealed to the city authorities among others when carsharing was suspended. The city promised us some sort of compensation, but none has been forthcoming yet. The city asked us for information – what specific losses we incurred – and now they are probably assessing the information we gave them.

It is of course good that the city authorities are ready to discuss compensation. But in this particular situation I’m more concerned about communications, because it is crucial to have contact and discuss what actions are being taken. We really miss this, and the lack of communication is not quite correct in the situation that has arisen. The city probably has other problems apart from carsharing.

Q.: How much compensation were they talking about?

A.: They asked us to say exactly what losses we had incurred so they could determine how much compensation. They haven’t yet said in what form it might be given.

Q.: What losses has Delimobil suffered? How many regions has the service been suspended in? How many cars are not in use? From the financial point of view, how much are you losing per day?

A.: We operate in 12 Russian cities, and carsharing has come to a halt in four of them, in Moscow, St. Petersburg, Nizhny Novgorod and Krasnodar. At present, 8,500 of our fleet of more than 12,000 vehicles are idle. We are not disclosing the actual losses.

Q.: Are the restrictions the same abroad for Anytime, or are the restrictions more relaxed there?

A.: There are no restrictions for carsharing at all abroad. Indeed carsharing has been recognized throughout the world as the safest and most comfortable means of transport during the pandemic, because customers use the vehicle on their own.

More often than not, people are infected by those within a radius of less than 1 meter. So carsharing does not carry as many risks as other forms of transport – there’s nobody in the vehicle except the customer. It’s likely even after quarantine measures are lifted that psychologically, people will want to maintain the social distancing that carsharing affords them rather than taxis, buses and metro trains.

So nowhere has carsharing been stopped, not even in northern Italy, where the number of infections was among the very highest.

From this point of view the Moscow authorities found a very original solution.

Q.: Delimobil had launched a delivery service in partnership with Pyaterochka to keep some of its vehicles running. What other options to support business are being discussed?

A.: Our approach to deliveries is to lease vehicles to companies. We are working with the food retailer Pyaterochka, and with the Samokat delivery service. We came up with that solution very quickly, and it will save a lot of vehicles from idling. Right now that’s 200-300 cars, but we plan to increase that to 500.

We plan to develop the deliveries business after lockdown, but we’ll be allocating a separate fleet of automobiles for it. Deliveries will be part of our B2B segment.

Q.: Is there a tipping point from the Covid-19 restrictions that puts Delimobil at risk of cutbacks or closure?

A.: Delimobil is a subsidiary of the Mikro Kapital Group. Any decision regarding lockdowns is a temporary one. A Restriction of one month or six means serious losses and if the courts allow it we’ll look for ways to compensate them. But we certainly won’t allow a situation where we risk losing the company.

But I am concerned for the Russian carsharing market in general. There were 14 carsharing companies operating in Moscow prior to the pandemic. This was a distributed market, a free one with no monopoly. In current conditions this market could be destroyed. There are some small companies, some of which will not be able to survive them for a month. I consider it necessary to protect the market in this situation, because we’re talking about safeguarding jobs.

Delomobil has 1,200 employees. I have an idea of how many people work for the other companies. So those taking decisions regarding restrictions need to be sure they are really necessary for people’s health and wellbeing. Such measures are usually based on international practice as well. But as we see, a unique situation has emerged in Russia.

Before carsharing launched in Russia, Moscow Mayor Sergei Sobyanin flew to Milan to see how such services operated. It might be a good idea to look at Milan and cities in other countries during the coronavirus pandemic.

Q.: Am I right in thinking staff cuts are not currently on the agenda at your company?

A.: Our company employs people at various levels, and we also work with smaller service providers – tyre fitting, car washes, call centers – which also have their own staff. So far we haven’t laid anybody off. But if the restrictions last too much longer then we’ll have to streamline costs.

Q.: You said that in current conditions there is a risk of the carsharing market in Russian shrinking. By how much?

A.: It depends when the city grants its subsidies and to what extent. If cash subsidies are forthcoming in the next couple of weeks then the market will stay intact. But if they take until May then I think four to six companies might not hold out and might not be able to honor their commitments. They might go bankrupt, or their owners might simply not be prepared or able to put more money into a project. Most of the companies on this market really are small.

Extending the restrictions for even one week beyond April 30 might result in only three carsharing companies being left on this market.

We saw a similar tendency on the market for electric scooters, when restrictions in Moscow were imposed on those. We launched Delisamokat in 2018 and you may have noticed that all similar projects launched at the time have shut down. There’s just one scooter hire firm left in Moscow, but I doubt it will last very long. And one company doesn’t constitute a market.

Q.: Will you not be reviving the scooter business after the pandemic?

A.: Definitely not. The scooter market in Moscow is no longer of interest to us. Most of our investment there went on buying scooters. But we sold them, we didn’t suffer any major losses when the project was discontinued.

Our franchise partners in Nizhny Novgorod and Stavropol launched scooter services under our brand name last year.

Q.: Are you still planning to increase the Delomobil and Anytime fleets to 80,000 vehicles by 2022?

A.: Yes, those plans still stand. We’ll be working overtime to diversify risks so we’ll be focusing on development in other cities and countries. At the same time we have decided not to augment the fleet in Moscow, which is about 9,000 cars.

Q.: Are you still planning an IPO before the end of 2021, and a pre-IPO round of investment for the carsharing business?

A.: Our main focus is on the IPO, which we want to hold at the end of 2021. We originally saw this as a relatively long-term prospect, so it is insured against the pandemic risks.

Our plans for a private equity deal with the investors we’d like to involve in the IPO also still stand. But we know this is not something for the present time. You have to realize that investors are looking for cheap investments during the pandemic, but Delimobil is not a cheap business. We’ll return to this issue when the lockdown ends.

Q.: Do you have any details about the IPO?

A.: We’ll have them closer to the end of May.

Q.: Investors from which countries are showing the most interest in the IPO?

A.: There are a lot of European investors, especially from Switzerland, Britain and Germany, and a few U.S. funds.