5 Scenarios for the future of the automotive industry.
That guy who does rockets and toxic social media and sometimes cars has received a lot of coverage for a stunt purporting to show that driverless taxis are here. Of course they are. They have been for a while. Anyone who has any experience of countries outside of the USA knows that.
So the fanboys lose their minds with enthusiasm, while those who actually understand how autonomous vehicles work and the various pieces of legislation that are in place for the public’s safety say that driverless taxis are 50 years away. Some people think about the implications of making an estimated 289,000 taxi drivers redundant in the United States alone while others wonder why taxis need to have wheels and drive on roads.
Whatever you think about the specific piece of theatre that happened last week, if you are in the automotive, transportation or mobility or real-estate space, you need to decide what your strategy for dealing with autonomous vehicles and other disruptive technologies are.
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Here are some things that you need to be thinking about. We have used car dealerships as our stakeholder group, but similar thinking could be applied for others in the value chain and ecosystem. Companies need to really think about their value proposition in light of rapidly changing technology and consumer attitudes.
Of course some of these are more likely to happen than others, and each scenario will have a different level of impact in the short and long term. If you decide that there is no reason to change your strategy in light of these scenarios, at least you have addressed them and you won’t be accused of being blindsided later.
Scenario 1: The Autonomous Revolution
- Key Drivers: Advancements in artificial intelligence, sensor technology, and changes to autonomous vehicle legislation.
- Scenario Narrative: Fully autonomous vehicles become the norm, eliminating or significantly reducing the need for human drivers.
- The utility of a car will change. Fewer cars will be required.
- Car dealerships transition from selling vehicles to providing mobility services, such as subscription-based access to autonomous fleets.
- A segment of the population will NOT want an autonomous vehicle and demand for ‘classic’ cars and ‘driving experiences’ will increase. These changes in consumer attitudes and behaviour will have large regional variations. E.g. city versus country.
- Implications: Dealerships need to think hard about their real customer value proposition.
- Dealers need to understand their customers’ real needs, their motivations and their preferences.
- Customer relationships shift from vehicle ownership to different models like mobility services that include access to ‘classic’ cars.
- The role of dealerships may evolve into mobility hubs, offering charging stations, maintenance, and customer experience centers.
- Dealerships will not need as much real-estate as is currently used for selling cars.
Scenario 2: Subscription-Based Mobility
- Key Drivers: Changing consumer preferences, advancements in technology, and economic factors. While there is some dependence on autonomous vehicle technology, this scenario is independent of technology and relates more to the economics of owning a car.
- Scenario Narrative: Subscription-based mobility models, such as car-sharing services and subscription-based vehicle ownership, become increasingly popular based on price comparison of ownership versus other options.
- Implications: Dealerships need to think hard about their real customer value proposition.
- Dealerships need to explore new revenue streams beyond traditional vehicle sales, such as subscription services and fleet management.
- The role of dealerships will shift towards providing value-added services and being a hub for mobility options.
- Dealerships may need more real-estate if customers require different kinds of vehicles at different times and do not keep them at home or work.
Scenario 3: The Circular Economy
- Key Drivers: Growing environmental concerns, regulatory pressures, and advancements in recycling technology.
- Scenario Narrative: Question – Do any more new cars need to be built? Or do we have enough already? The automotive industry adopts a circular economy model, focusing on sustainability, reducing waste and end-of-life considerations.
- Implications:
- An increase in demand for used or restored cars. Dealers will need to maintain their relevance against marketplaces by providing instant, secure customer experiences.
- An increase in demand for extending the lifetime of a vehicle by 20-30-75%, reducing new car sales.
Scenario 4: Cars are replaced by something else.
- Key Drivers: Technology, environmental concerns, population density
- Scenario Narrative: Technology makes the car as we know it redundant.
- Drones, electric bikes, public transportation options or hoverboards become the dominant form of personal transportation.
- People ask – Why are we still using this machine in this form, which hasn’t really changed since it was invented 138 years ago?
- Implications: People swap their car for something else.
- Car sales are significantly impacted.
- Dealers need to pivot to offer new forms of transportation.
- Attitudes will differ widely by region.
- Expect significant lobbying against new forms of transportation.
Be Prepared….
The automotive industry is facing a future of uncertainty, with the potential for disruptive technologies like driverless taxis to revolutionise the way we travel. To stay ahead of the curve, automotive companies, dealerships and marketplaces need to develop a comprehensive strategy to address the various scenarios that may arise. This includes considering the potential impact on their business model, customer value proposition, and operational processes.
Engaging a consultant to conduct a strategy workshop provides valuable insights and helps companies develop a robust plan to navigate the challenges and opportunities presented by the evolving landscape. Get in Touch.
