I’ve had several conversations recently with people who are either in or strongly connected to the auto industry, who’ve all told me the same thing:
This isn’t just interesting because it’s completely different to what they’d have told you two years ago (although that in itself is an important sign of how much the market and mindset has moved). No, it’s that in all straight-faced seriousness, they believe a majority of people will park (and own) two cars on their drive in years to come.
While conversations with people in the industry tend to be a bit abnormal anyway, as they quickly turn to talk of how many classic Porsche’s they’ve got in their garage - due to it being their passion, the stark truth is that in the UK less than 30% of people have access to more than one car, and in urban areas that figure shrinks dramatically. Most people view cars as a convenient, comfortable way of getting direct from A to B – and choose a single vehicle that best suits their need. Their car tends not to be something they’re obsessional about.
Currently, focus, energy and cash is all going into new powertrain development. In many regards it needs to. But there’s an unstated assumption (alluded to by those guys I quote above) that once we’ve overcome the current roadhump, and get workable electric / hydrogen cars to market, business in the car industry will continue pretty much as it did before. People will go down to their local car dealer and choose what suits their needs and desires, every two or three years.
There’s a problem with that though. The average person can afford to run, maintain and often only has space to park, one vehicle. Which vehicle they choose to buy right now depends on what their personal circumstances are and the types of journeys they do. Hence young people living around cities tend to buy small hatchbacks, and middle class families buy large estates or (more recently) SUVs. Both work best within a certain usage envelope, but if needed, can cover every single transport base (what I mean by this is that a city car often isn’t at home on a motorway, but if needs be, you could still drive one all the way to Milan tomorrow).
This cover-all bases approach is one of the reasons current vehicles are so comparatively inefficient. Creating right-sized vehicles with the right powertrains, for a variety of different journey scenarios, therefore makes a load of sense. But it creates a scenario where suddenly, your average one-car buyer is faced with the prospect of buying something that can no longer meet every single journey need. That the car industry’s answer to this appears to be “well, you’ll just have to buy two cars!” makes me feel a little bit sick. Reports suggest that even if we replaced most of the current gasoline vehicle fleet with EVs, the planet would still be in fairly major mess. To quote BP’s incoming Chairman: “The growth of car ownership and airtravel is unsustainable.”
This is one reason we’re seeing start-up car companies such as Riversimple promoting the idea of leasing rather than selling to customers - their argument is that it encourages them to develop long lasting vehicles, without built in obsolescence, which are absolutely optimised for their environment. It’s probably why Daimler are quietly building out a potentially very interesting next generation car club in the shape of car-2-go, and most shockingly of all – one of the reasons we’re seeing Exxon getting not only into electric cars, but vehicle sharing, with the announcement this week that they were behind an EV being dropped into a pilot programme in Baltimore.
Of course, while most customers aren’t as car obsessed as your author or those working in the car industry, they are however, quite accustomed to the idea of owning their own car. It’s a big jump to just having access to one as a means of mobility, one that other people can also use. In the average customer’s mind, this throws up a whole set of doubts and concerns.
There are ways to begin to address this, and I’d argue now’s the time to focus on doing so. Primarily, having recognised automotive brands address the issue and be present in the space is a key step. Not to do a disservice to Zipcar and their ilk who really kick-started and ‘own’ the car-share space right now, but Daimler getting into the sector excites me quite a lot more. They have the name, size and capital to lever mobility on demand/car sharing as a key part of their business, if they so choose. They can reach and communicate to people, that not only they offer such a service at all, but fundamentally, communicate what the hell it really is and why you might want to consider using it. The name, presence and PR machine means that – done wholeheartedly, they could reach millions of potential customers in a way it would take Zipcar years to do.
This leads me to the second key element, which is education. It’s easy to assume that most people now know what someone like Zipcar actually does. But the truth is, most probably still don’t. The name, ‘car sharing’ is confusing, for a start. You don’t actually get in the car at the same time as a stranger – but a lot of people think you do.
I’d advocate a large-scale education programme – which reaches all the way from teaching groups of kids about mobility and the future of cars, as demonstrated very ably by Dan Sturges:
And it should run all the way through existing industry and governmental channels, reaching right up to dealership education programmes. Helping the people in the sales end of the automotive industry not only develop new models of ‘selling’, but to assist people navigating their way through various mobility and transport options of the future may be the key to making this stuff work in a big way.
Done right, the people in the car showroom of the future could offer much more than the ability to simply sell someone a vehicle on a three year finance deal. They could help consumers overcome the misconceptions that currently surround not only diesels, hybrids, EVs, and hydrogen cars, but also car-sharing, leasing, and mobility on demand. Ultimately, the car dealership of the future becomes a one-stop mobility shop; which does much more than just sell cars. In times when many car dealerships are struggling to stay in business due to plummeting car sales, surely it’s an idea that many could embrace?
Posted by Joseph Simpson on 26th June 2009