If you ask anyone in the industry about the reality of autonomous, they’ll say it’s not a matter of 'if' it will happen, but 'when'. Given this certainty, everyone in the transportation world should at least be thinking about their place in the autonomous future. From automakers to software providers to fleet operators, there are a lot of yet-to-be-determined market leaders in a market that is estimated to be worth $800B in 2035. Whether you’re an OEM, a dealer group, or a fleet manager, smart moves to prepare yourself for a role in that future will pay huge dividends.
Not everyone has to build autonomous tech
With Waymo launching their autonomous vehicle (AV) service to the public this year, and GM’s Cruise slated to launch in 2019, many OEMs trying to develop autonomous technology in-house will likely have to play catch-up. To make up for lost time, some OEMs have bought autonomous tech companies (e.g. Ford with Argo) and others have forged partnerships to serve as vehicle producers (e.g. FCA & Jaguar with Waymo). These are just the start in a series of critical build-buy-or-partner decisions that prospective players must make to secure their autonomous futures.
Some have argued, however, that there are far more valuable endeavors than winning the race to self-driving technology. While vehicles certainly will be an important component of a successful AV business, Goldman Sachs predicts that service operation and fleet management will become far bigger profit drivers in the shared-autonomous transportation market. Forward-thinking companies are already developing these new skills, but there is still plenty of time before a victor is crowned.
Ownership models are changing...
Autonomous doesn’t just change the vehicle – it also changes how people buy and use cars. Personal car ownership is expected to fall significantly, as commuters will opt toward cheaper shared modes of transport that optimize for asset utilization, service networks, and parking. Studies have shown that one shared autonomous vehicle can replace approximately 11-14 private vehicles. As an automaker or dealer group, this marks a paradigm shift – instead of selling as many cars as possible to end-consumers, brands must sell to or operate fleets of heavily-utilized vehicles.
Luckily, you don’t have to wait for autonomous to start developing these capabilities. Car-sharing represents the first step toward this future, and GM’s Maven is a great example of an OEM experimenting in new models of ownership. When end-consumers no longer own the vehicles, fleet operations become a crucial differentiator in providing an efficient, reliable, and clean ride to a passenger or driver. Through Maven, GM is able to gather insights on operating and maintaining a well-utilized fleet while also learning the operational and customer-service challenges that come with being a mobility service provider rather than just a hardware manufacturer.
...setting up a pivotal moment for dealerships
Dealers have been built to sell to and service cars for individuals, and autonomous vehicles threaten the dealer’s primary sales channel – private drivers. While private vehicle ownership won’t completely disappear, most trips in urban areas will be handled by shared fleets. Dealer groups have already seen massive consolidation, and with a push toward shared and autonomous, further consolidation is imminent. There are 2,000 fewer dealerships today from 10 years ago, and Cox Automotive expects the number of dealer groups to fall from 9,000 today to fewer than 1,000 in 2030.
Many dealers will be rolled into large consolidated dealer groups, but local capabilities will still be paramount. Given their geographic footprint and service know-how, dealers are well positioned to serve as the primary fleet operators in the autonomous ecosystem. All of the autonomous vehicles roaming about the city will need a place to be serviced, maintained, and cleaned.
The bigger change in this future lies in the primary customer relationship -- rather than selling to and working with individual customers, the dealer will need to find new ways to provide connected services to end-consumers or work with mobility service providers who are connecting passengers with these vehicles.
Developing these relationships early and learning how to work with fleets will pay dividends in ensuring survival in the autonomous world. Hyundai has offered service valet and concierge services through their Genesis dealerships to shift the dealer’s role toward service; and through Animo, Toyota has given its dealerships the opportunity to develop their fleet management capabilities.
We may still be 5-15 years from fully-autonomous vehicles roaming about our cities, but the service and ownership models are already shifting. To solidify their future profit potential, aspiring players should be looking beyond autonomous driving technology and experimenting with new business models to build capabilities as a mobility service provider. Dealerships must also adapt early, as ownership goes from private to fleet, and experiment with new services of their own.
Building these capabilities now will ensure your survival in the autonomous world, but given the industry’s infancy, they will also give you the opportunity to emerge as a leader.
Photo courtesy Popular Mechanics