A quick swipe of the thumb and the taxi is on its way. It arrives only a minute or two later, transports the customer to the designated destination, and all for a reasonable price. It is a seductively simple proposition – and one which poses serious questions about the future necessity of mass personal vehicle ownership.
Taxi app brands like Uber and Lyft have risen to remarkable prominence over the past few years. Uber alone has already raised a staggering $10bn in funding, ahead of its anticipated stock market flotation. It has expanded its operations to over 300 cities worldwide, and claims to transport millions of consumers each day.
The bubble may burst, of course. Uber has faced increasing levels of resistance from local authorities and been subject to several scandals over the behaviour of its drivers. But, irrespective of Uber’s long-term performance, a seed has been planted in the minds of consumers that they need not own a car to achieve affordable mobility.
A recent report by The Economist, ‘From horseless to driverless’, speculates that urban areas will one day be dominated by driverless “taxibots” that consumers share for cross-city transport at a fraction of current travel costs. It cites cost, safety, and traffic reduction reasons for what it believes will be a wholesale change in mobility habits.
Despite being the costliest item that most consumers own, The Economist points out that, on average, most cars are in use less than 5% of the time. It predicts a future in which carmakers sell vehicles for fleet operators, rather than to individual drivers. And just as the car evolved far from its origins as the ‘horseless carriage’, the driverless vehicle will take on a radical new identity to suit its futuristic uses, claims the report.
The provocative article accuses car industry executives of being in “denial” over the popularity of personal ownership and, increasingly, car leasing schemes. If auto brands are looking for a way to fight back, ironically it’s one of Uber’s recent innovations that may offer a clue about how to appeal to smartphone-obsessed consumers disinterested in full car ownership.
UberPool allows passengers to ride and split the cost with another person that has requested a trip along a similar route. In typical Silicon Valley-speak, Uber describes the initiative as a “bold social experiment”. Nevertheless, it is true to say such schemes may instigate a lasting change in consumer behaviour.
The so-called ‘sharing economy’ came to motoring some time ago. Zipcar, the most well-known car-sharing membership programme, was set up 15 years ago. Now owned by car rental giant Avis, Zipcar still has around a million members across the globe and boasts a dedicated following on the West Coast of the US.
A Mintel survey of UK drivers carried out in 2013 shows that, though just over a quarter of people (26%) are turned off by the idea of car-sharing services, the majority (52%) would consider taking part in locally-available programmes for reasons as diverse as saving money and helping the environment.
Some auto makers have already identified the potential for branded car-sharing services – notably ones which offer a sense of ownership, but for a fraction of the usual price.
Since last year, Swedish consumers have been able to come together to share ownership of an Audi. The company’s new Audi Unite programme allows four users to share a car for up to two years, using an app to manage access. From the A1 to the R8, the majority of Audi’s range is available to users, while rental, insurance and maintenance expenses are bundled into a monthly fee.
As we discuss in the connected car article, in-car technology is developing fast. From a digital dashboard, users can track their vehicle, manage how best to split costs and measure their own usage of the car from data gathered via an Audi Unite ‘beacon’. The brand charges for the benefit, not for the product.
Such innovations transform the relationship car manufacturers have with drivers from an annual catch-up, based around product maintenance, to a weekly or even daily interaction, where brands are constantly helping customers to manage their mobility.
It also fits a wider trend of technology brands evolving their business models away from hardware production, and towards a greater emphasis on services. Just as companies like Dell have developed service offerings as PC and laptop sales have declined, so too must automotive firms contemplate how to add greater value in a world where not every consumer will want to own a vehicle.
It is unrealistic for car makers to expect the near-ubiquitous personal vehicle ownership of old. For some consumers, occasional access is enough, as proved by the success of sharing schemes like Zipcar and the popularity of taxi apps such as Uber.
Automotive brands must drastically rethink the role they occupy in consumers’ lives, and conceive new long-term strategies centred on user-oriented digital services, using data to optimise the experience. They may not get it right first time; the smart approach is to embrace an ethos of continuous improvement through testing and learning.
This is the motor industry’s Kodak moment. Kodak thought it sold film and cameras. It didn’t – it sold the ability to capture and share memories as pictures. In the same way, car manufacturers need to keep in mind that they are in the business of providing personal mobility.
As technology improves, shared mobility options will become easier. And, as this happens, car companies will need to behave more like service brands. The future is only a finger swipe away; it could prove disastrous to any car brands caught on the wrong side of this revolution.