Canadian auto dealer is proud to introduce a new columnist who will be sharing his expert insights on new mobility trends that will be impacting dealers, consumers and OEMs.
There’s something interesting about industry disruption, you can almost always see it coming. Even if you’re just casually aware, you’ll notice that something unusual is up.
Just like a tsunami rolling in, the wave can be sighted and telltale signs like the ocean rising are evidence for what is coming soon.
We’ve seen it before in other industries too: digital cameras were on the market for close to 15 years before Kodak eventually went bankrupt, and the Internet and movie streaming sites were operating for several years before Blockbuster failed.
It’s the same with the new age of future automotive that is often called “New Mobility.” The signs are everywhere that change — and almost certainly large-scale industry disruption — is coming to retail automotive.
Many dealers often say to me “people will always buy cars.” They ask me why I can be so confident in future disruption and what is the evidence that changes a 100-year-old tried-and-true retail model. Let’s take a look at a few examples:
- The rise of app-based transportation such as ride hailing (Uber and Lyft) and car sharing (Car2Go and Zipcar) is incredibly convenient and relatively low cost. Who would have thought 15 years ago someone could press a few buttons on their phone and have a car come within a few minutes; or open and drive off in a car you’re standing near? Now it is ubiquitous.
- The rise of Tesla, though not without controversy, is an amazing phenomenon. Tesla, only 7 years after launching anything other than an electric kit car, now has the number one selling luxury car model in North America with its Model 3.
- The German OEMs of Volkswagen (Audi), Daimler (Mercedes-Benz) and BMW have announced that they will collectively be spending US$68 billion (that’s billion with a ‘B’) in New Mobility technologies over the next 10 years. This number is more than the capitalized market value of all but the top two or three largest OEMs.
- The market push and VC investment towards developing autonomous driving technologies is staggering. Zoox, Aurora, Cruise, Argo, Waymo, and others have all received huge levels of funding, or have been bought out by OEMs for billions of dollars.
- The rise of vehicle connectivity through Apple CarPlay and Android Auto, as well as Over the Air vehicle updates and data transmission, like that pioneered by Tesla.
- Cities, especially in Europe, are now proposing bans or very strict limits on internal combustion vehicles.
- Some OEMs are perusing direct-to-customer retailing. They’re not selling cars, but their wholly owned affiliates are sharing cars, providing rides, and creating multi-modal platforms for transportation. Many of these users would have once bought cars from dealers.
- Lastly, there’s the change to greater society that we’ve all anecdotally noted. Teenagers are waiting much longer to get their driver’s licence, cities are growing, and the cost of housing is rising. Young people congregate around social media and not at the mall. The interest in the car, a generational must-have for young baby boomers and Gen X, is no longer a focal point.
What this evidence suggests is dramatic changes in revenue for a dealership’s operations.
Service (EVs require 50 per cent less maintenance than IC vehicles), Parts (vehicles with Advanced Driver Assist or Autonomous capabilities crash less), and Sales (people are overall less inclined to purchase a car) all have the potential to be significantly hit.
Even with this evidence, many dealers say that any industry disruption is still a long way off. To this I would suggest that there is good news and bad news.
By 2030, Vision Mobility is forecasting that 30 per cent of new vehicles sold will be full battery electric (BEV) and 12 per cent will have full Level 4/5 autonomous (AV) capabilities.
This rises to 65 per cent and 55 per cent respectively for BEV and AV by 2040. In short, dealers have time to prepare for future success, but certainly not time to do nothing.
In my next column, we will explore things dealers can do now to position themselves for the new mobility future.
