How the Automotive industry will be changing: Predictions or Nonesense?
When looking back at all the events that happened around the world this year and how it’s affected the car industry, I can’t help but wonder how it will affect business in the very near future. More importantly, how it may affect the people in the business. I’m putting on my special “iC FewTure” glasses and attempting to put the flashes of images I see into a list of predictions, and possibly a glimpse into what the next few years in the car industry has in store for us.
Rest assured, these predictions are not just a figment of my imagination (although it may sound like it). These predictions are derived from following the development (or lack thereof) of manufactures, reading works from automotive journalists, speaking with veteran dealership professionals and from watching countries around the world make changes to their transportation and Greenhouse Gas Emission policies.
Here we go;
1. The Price Tag: Cost of vehicle ownership is increasing. Our world relies on global trade, which has allowed all vehicle manufacturers to benefit. However, with so much political uncertainty, trade wars are common place. New tariffs are levied against rival nations which have a direct impact on manufacturing costs. These costs, unfortunately, are passed on to the consumer. That’s not including increasing labor costs, environmental taxes and the increasing popularity of road tolls. All things considered, owning a vehicle will undoubtedly be a luxury.
2. The Community: The Future is sharing, and fewer people will own cars while more people will use ride shares as a way to get around. With Uber, Lyft, Ride2Go and other services becoming more popular, it will be more cost effective for some to use ride share programs than to own a car. Ride-sharing allows the convenience of being chauffeured around without having to worry about parking, insurance, gas or maintenance fees. Manufacturers will also be competing to monetize their fleet in car-sharing services as well. GM launched its car sharing service; Maven, two years ago in three US cities and has since grown to 11 major cities and counting (Daimler is trying to catch up as a mobility service provider too). Also with autonomous driving as a major advancement in mobile driving, companies like Googles’ Waymo will be providing autonomous driving services more readily. According to their website; “Waymo is rolling out in the Metro Phoenix area first. Over time, we hope to expand to new places and more people.” (Alexa; when will Google rule the world?)
3. The Shopping Experience: With manufactures streamlining their lineups, and simplifying the specifications on models, dealerships will first minimize in size, then slowly transition to service only centers. Right now, the car shopping process already starts online. Customers will spend hours online doing research, reading reviews and watching videos on the vehicle they wish to purchase. Some manufacturers have already made the transition to online ordering such as Hyundai with the Genesis. Boutique style spaces in shopping malls, airports and downtown streets will become more popular to retail vehicles. Tesla has proved the template works with their retail shops in malls and soon other manufacturers will realize that there is more value in being present in the right location and providing an experience versus having a large dealership with high overhead. The trend has already started in large cities with boutiques popping up on busy city streets. Cadillac opened Cadillac House in 2016 in New York City; an experiential location for guests to “Visit, Collaborate, be inspired.” The space allows customers to browse through Cadillac's vehicle lineup while admiring art and fashion in the gallery from upcoming artist and enjoying a coffee in the stylish café.
4.The Technology: The new generation of car buyers are also conscious buyers who will want to own an electric car to have an impact on our carbon footprint for the future of our planet. Also, as the price of gas continues to go up, electric vehicles will start to make more sense and will take over a larger part of the market. As the demand grows, so will charging options and accessibility. Retailers, offices, and any entertainment spaces will install charging stations to accommodate their customers, and employees. With new companies like Tesla and Rivian focused solely on electric vehicles, there has been massive development on battery and range technology that has proved EVs can be more robust and more efficient than ever before. These advancements will drive demand and encourage other manufacturers to invest in their electric vehicle line up as well. The manufactures who can offer options in their EV selections will be the ones who make it through this shift.
5.The Marketing: In the next few years, many of the existing manufactures won’t make it through these changes. Some will not survive because they refuse to see the signs and they are determined to continue to do business as before because “that’s how we’ve always done it.” These brands are not ready for the shift and will not survive (Tic Toc Mercedes-Benz). Brands will merge or dissolve, and only five or six will remain. Acquisitions have already started to happen (Toyota buying out shares of Mazda), and we will see some major deals made in the near future. Many brands will disappear completely, and we may see this happening very soon (farewell Chrysler). There will be less “luxury” brands; Toyota and Honda will cut out Lexus and Acura for example. Owning a car, whether it’s Toyota or Honda will be a luxury in itself. However, this can be a huge opportunity for the almost-forgotten-brands to make a comeback and rebrand themselves. Which is exactly what Volvo is doing when they announced that starting from 2019, every car in their line up will have an electric powertrain available.
Some of these predictions may sound very extreme right now, but it’s only a matter of time. Just like the housing crash in 2008, the automotive industry is in for a major change, and although it may seem scary as we don’t know what to expect, I find it all quite exciting. It’s usually out of major chaos that new ideas and innovations are possible. Many people will be affected by these changes in the next few years, but it’s also anyone’s game at this point. I’m personally affected by all these changes. My current job may or may not be relevant going forward, but I’m not scared. There are 101 outcomes from these predictions, and I’m just happy to have a place in it and continue to create. A new era is upon us, and new driving and shopping behaviors mean that there will be opportunities in all parts of this industry to innovate new solutions and to think outside the box. With all the latest technology for apps and portals, we will need more security on the roads and online for parking payments, carpooling, car purchasing, and these will provide areas of growth for existing businesses and perhaps invent new businesses that don’t even exist yet. I do ask that you to take some time and see where you are in this industry and how it may affect you. Rather than worrying and fighting these changes, I ask you to be open to new ideas and new possibilities and see where it may take you.