Accenture Study Reveals That a Few Companies Could Dominate Public Transportation in Germany by 2010

FRANKFURT; Nov. 26, 2002 The German public transportation sector is about to undergo a wave of alliances and mergers, according to a new study by Accenture. More than half of the nearly 100 experts from public transportation enterprises, municipal transportation authorities, associations and regional public administrative bodies who participated in the study predicted that a few companies will dominate the public transportation market by 2010, despite the fact that today there are more than 400 transportation companies, with no dominant providers.

This consolidation will result from increasing competition within the public transportation market involving busses, subways and tramways. The study also revealed that the successful management of mergers and alliances, known as horizontal integration, will play a much more important role than the improvement of internal processes in determining the overall success of transportation companies.

The primary factor driving the increase in competition is the anticipated withdrawal of funding from public administrative bodies, in addition to the increased European-wide market liberalization of municipal and regional transportation. Nearly three quarters of survey respondents (71 percent) said they believe that public funding for municipal transportation will decrease by 2010, and two-thirds (68 percent) said they believe that public transportation will be separated from municipal services and turned into independent, private enterprises.

"The underlying dilemma of public transportation enterprises is represented by the fact that only a minority of experts believe German public transportation companies will operate abroad," said Henning Todte, a partner at Accenture who leads the company’s transportation practice in Austria, Switzerland and Germany. "On the one hand, there is a desire to create private transportation enterprises; but on the other hand, governments do not want private enterprises that have complete entrepreneurial freedom."

Other key results from the study revealed the following:

The study, "Public Transport 2010," consisted of 94 questionnaire-based interviews with experts from public transportation enterprises, municipal transportation authorities, associations and regional public administrative bodies in Germany; more than half of the respondents were managing directors and executive board members of these institutions. The study was conducted in September and October 2002.

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