Is technology threatening the concept of car ownership?

Posted by

Dealers need to find a role in this new mobility ecosystem.

For most people in this country, owning a car or truck is a given. It’s not just a matter of choice; it’s a necessity.

According to the most-recent annual figures available (for 2014), 77.8 per cent of driving-age individuals in Canada own at least one vehicle, and the average Canadian household includes 1.5 vehicles.

Those figures are key to the record new-vehicle sales we’ve become accustomed to for the past four years. But advances in technology — one of the things that has made those vehicles so salable — may be threatening that success.

It’s not just that the Gen X and Millennial generations, which have surpassed the Boomers as the biggest buying group ever, exude more interest in their smartphones and related devices than in cars. It’s that the technology enabling those devices, along with other social factors, is making car ownership less-and-less necessary.

Those other factors include a global migration of people into more-and-more densely populated cityscapes, where simply getting around by car is becoming increasingly difficult — and where social and political pressures, such as restricted access and prohibitive tolls discourage their use.

People still like cars, people still like to drive cars, but not all people still want to have the asset with all the obligations linked to it.

At the same time, alternatives to car ownership are expanding at a furious rate. Not just additional mass-transit options but access to private vehicles on an as-needed basis, through car-sharing services, like Car2Go, or ride-hailing services such as Uber.

“People still like cars, people still like to drive cars, but not all people still want to have the asset with all the obligations linked to it,” explained Thomas Beermann, CEO of Car2Go Europe, at a recent TU-Automotive Europe conference in Munich on the future of the auto industry.

Car2Go, a subsidiary of Daimler AG, is just one of several car-sharing services owned by OEMs themselves.

And several more have invested in or affiliated with ride-hailing services. General Motors, for example, has launched its own car-sharing program called Maven (in Canada with a pilot program in Kitchener, Ont.), invested in Uber competitor Lyft (not yet in Canada) and partnered with Uber.

Other alternatives gaining favour, especially in the U.S, include real-time ride sharing. Unlike ride-hailing services, which are in effect just taxi services), real-time ride sharing matches potential riders with drivers who are already going to the same or a nearby destination.

The enabling keys to all these services are smartphones and their associated apps, social networks, and GPS navigation devices. And the net result of their adoption, extrapolated to the next level, will be a reduction in the number of private vehicles needed and sold.

While the number of car trips taken, at least within a city, may not be reduced, the number of cars required to take them will be, as each vehicle will be in near continuous use, not parked for most of its life. Fewer vehicles will be needed to cover the same total distances.

The enabling keys to all these services are smartphones and their associated apps, social networks, and GPS navigation devices.

That’s a prospect that hasn’t been lost on the automakers. And it’s why many, if not most, are now talking about becoming mobility providers rather than just car makers.

Although it has only recently gained mantra status, the concept is far from new. It was espoused as far back as 2001, when Dr. Wolfgang Reitzle, then head of Ford’s Premier Automotive Group, gave the keynote address at the opening of the Los Angeles Auto Show.

Among the futuristic ideas he pitched was that of selling not cars but mobility packages, so that, for example, a customer could have a choice of any vehicle within the paid-for model range, on 24-hours’ notice, anywhere in the world.

Ford and its short-lived PAG subsidiary didn’t follow through on the idea back then but arch-competitor GM has done so recently through its Cadillac division — at least on a trial basis.

Cadillac’s new “Book” service, available in New York City, is a $1,500/month subscription to a choice of cars — like subscribing to Netflix — with all associated fees, including insurance, included. Requests for a specific model can be made via a smartphone app and it will be delivered to the customer by a concierge service.

A similar approach is being pursued by a new Chinese brand, called LYNK & CO, which is expected to arrive in the U.S. market in 2018.

Owned by Volvo’s parent company, Geely Auto Group, it promises to offer, “New solutions for car usage and access… from traditional ownership and leasing to subscription and sharing-membership… online or in owned stores in strategic retail locations.”

All of which raises one huge question. Just what will be the dealer’s role in this brave new world?

Comments are closed.

Canadian auto dealer