It might seem an odd time to consider ridesharing programs at your dealership, but other forces might be fueling growth in the sector.
We’re in the middle of a scary time right now with COVID-19 — the almost omnipresent threat of infection and resultant physical distancing is difficult for most people.
Not only that, the economic impacts are huge. I am sure each one of you has felt a severe bite as customers and their wallets have evaporated, yet all the overheads, wages and bills still have to be paid.
Rightly so, this is forefront in everyone’s minds — no one really knows where it goes from here.
However, there is one key that no one in business should forget: disruption always brings both pain AND opportunity.
The automotive industry is going to come out of the COVID-19 scare and the resulting recession looking quite different from what it did just a few weeks ago, yet unlike other previous recessions, we’re also on the verge of a technological revolution, driven by what most OEMs see as their guiding North Star — the CASE (or ACES) technologies, being Connected, Autonomous, Shared and Electric vehicles.
Dealers will need to consider a triple impact (or opportunity triple) to their future, based on Recession, Technological Change and Health.
This means dealers will need to consider a triple impact (or opportunity triple) to their future, based on Recession, Technological Change and Health. Let’s take a look at these:
Recession
Recessions drive a need to emphasize efficient, low cost transportation.
Right now most OEMs have been moving in exactly the opposite direction, particularly D3, who have discontinued most of their car lines and focus on gas swilling pickups and SUVs.
This, plus the high cost of car ownership itself, will result in many not wanting to buy a new car.
In the past people have just shifted to used cars, however back in 2009 during the last recession, our transportation options were much more limited.
Now with Uber, micro-mobility and car sharing; there are many new options available. While this doesn’t mean households will abandon car ownership, they may well question the need for a second or third car as their ability to “make do” has become much easier — indeed this is something our household recently did.
Technological Change
While fully autonomous may still be some ways off for series production vehicles, connected and electric vehicles are becoming much more prominent.
A passing study of what Tesla is doing, and its almost logarithmic recent growth speaks to exactly that. Yet, it’s not just Tesla, every OEM has plans to introduce an EV and regular OTA updates.
However, the big opportunities for dealers could well be shared technologies.
Sharing opens up a whole new sales channel for dealers, and it allows them to sell a service into a market they have never taken much notice of. The main problem is that most dealers have always been attuned to selling ‘Cars as a Product,’ but not been well attuned to selling ‘Cars as a Service’ — and in fact most dealers would just rather farm out short term car usage to a rental company, not wanting to deal with the administration that goes with fleet management.
However, this seems like giving away business to a competitor, without trying. Why not provide mobility for your customer base, in the way they want it, especially during their hour of need?
New platforms and fleet management tools are now being developed to make this opportunity far easier for dealers, which will make the ability for dealers to move in this direction much easier.
To this end, we’ve seen dealers begin to recognise this inconsistency, and target the ‘gig’ economy, like ride sharing and courier drivers, with shared vehicles.
Many of the people looking to get into these roles have poor or no credit, making it difficult for them to get a loan.
Car sharing platforms, with pay per use, can allow drivers to pay for their vehicle as they earn money, resulting in them building up credit, and eventually buying a vehicle. An observation has been that when dealers provide a pathway for customers to establish themselves, they remain intensely loyal – a customer for life.
Health
I hear you say “Who in their right mind would share a vehicle in this current coronavirus climate?”
Practically, this is not likely to be an issue as most dealers have detailing facilities, and there are ways to deal with cleaning and sterilizing relatively quickly. However, for some the enduring coronavirus fear could well remain, and you still will have a car to sell them.
For others, the thought of a shared vehicle that offers them a pathway to future success is a tantalizing prospect.
Even if you determine that a Shared Mobility operation may not be right for your dealership, I would encourage everyone to take time to think about post COVID-19, and look at ways to capitalize on disruption that is innovative and forward thinking — it could well determine what your future looks like.
