Tipping Point or Breaking Point? The Car Industry in the Vortex of Change
Trendsetters and marketers are agog with the self-driving car. To the point that the legislative agenda in the US has been set to consider how to harmonize conflicting state laws at the federal level. The self-driving car was a hot topic at SXSW with Chirs Urmson, project director for Google’s self-driving car team, weighing in on the subject.
The car industry and its innovations around connectivity, autonomy and electricity also stole the show at CES this year. Car Manufacturers foresee, and promise, that self-driving cars will be mainstream within the next decade. Meanwhile, Google don’t seem ready to build their own car (preferring instead to invest in the technology behind autonomy and to explore industrial partnerships), despite the alleged readiness of the public to buy into a new brand not coming from the historic “car-makers club”.
At a consumer level, the car is still a prized possession, the reasons cover the full spectrum of demand and desire, rational and emotional. Buying a car is the second largest purchase for the majority of consumers after buying a house, and 20th-century society has been shaped by transport, cities and infrastructures and economies built around the car. But more conflicting forces are shaping the automotive industry and have car manufacturers concerned about what effect this will have on the next chapter of the industry.
Dwindling desire drivers?
A prized possession maybe, but we are seeing new dynamics emerging in the demand for car ownership, shifting from being a status symbol to a commodity. However this essential product is losing ground, but why? What consumers’ desire in a car is just beyond reach, indeed price is a key factor here, the faltering economy and gap between the rich and the poor seems unbridgeable and growing by the minute, in 2015 62 individuals had the same wealth as 3.6 billion people. Leasing has overtaken from buying as the new form of owning a car in France and accounts for 29% of car usage in the US. The pivotal reason being that people can have greater use of a car, on their own terms and for less money. So why own?
From alternative options to cars, to cars as the last alternative to transport?
This loss of appeal does, however, go deeper than just money. The surge and success of car sharing apps, raising concerns about the effects of fossil fuels on global warming and public health, and fears of road safety are seeing both public authorities and private initiatives proposing sustainable upgrades and consumer-serving alternatives. Already we are seeing the surge of car sharing apps such as Uber, micro payment bikes and rental electric cars and rickshaws in European cities, that aren’t just for tourists.
Beyond Gen Y and Gen Z. As future buyers, are these generations lost to the car industry?
It seems the magic of the car is losing ground with new generations; a sure sign is the year on year decline in model car sales in the toys and games market. This is particularly noticeable in the mature markets of Western Europe and Australia where this dwindling desire is directly correlated to the household possession of a passenger car.
However, a growing area where cars are frequently attracting the attention of Gen Y and Gen Z audiences are video games. Whilst this isn’t the same pattern of play or role of possession, car brands are looking for ways to include their brands and models into games and drive the magic of driving and motor sports, for instance, the recent Grand Turismo Vision initiative.
Reality check: a wake-up call
Will these efforts be enough now that technology companies and, to an extent, OEMs themselves, are claiming that the line between science fiction solutions for a better world and current reality is blurring rapidly? Considering how Chinese children now perceive their highly polluted surroundings.
Expectations for radical solutions to the passenger car are much higher than mere possession – so much so that the most striking feature of visions for major urban developments is that they don’t allow for the passenger car as we know it. Closing the loop, can we assume that the autonomous car will be on our streets in the next few years? Will it appeal to the masses in a way that allows a smooth transition for the car industry so that it can protect its position as a valued brand, employer and economic force?
Autonomous conveys freedom when driverless means a vacuum
Naming showcases what sparks desire. Autonomous or driverless – these terms do not convey the same desires or semantics. Will the realities and propositions the industry wants to convey have the potential to reinvent new desire triggers? Safer, greener but still fun to drive? There is currently a huge disconnect between the real driving experience (traffic, urban landscapes) and how it is advertised (beautiful scenery and empty roads) – a key consideration in a world where the importance of experience is surpassing that of possession. These new desire drivers are already taking shape around connectivity and in-car entertainment – for example, there is an increasing tendency to advertise a car as an extension to your smartphone; cars are becoming a type of app. Taking it further, this means that time wasted in traffic will become time gained for me/us.
Doing vs. having; experience vs. possession
The car is fast becoming the new living room/control centre/entertainment pod – indeed, the car industry is at breaking point, between epitomising self-transportation and owning mobility. This opens up an all-new approach to the journey – when the journey is as much a destination as the destination itself. When the journey is the end product that we need to sell, the ‘how’ becomes richer and we can easily excite the imagination of the future car-owner. Similar to how entertainment has taken over the media-information industry, entertainment may well profoundly reshape the car industry and marketers’ propositions.