Thursday, 9 November 2017

What happens to a car brand when all cars drive themselves?

Autonomous cars are coming. The technology is improving all the time. Consumer acceptance will take time but once exposed to the advantages I think all but the most ardent petrol head will succumb.  In the same time space, say over 10 years, legislation, the main brake on their deployment will change. In a future where cars can drive themselves, how will consumer behaviour change?

We own a car so we are able to travel when and where we want. It boils down to freedom and control. Since the Ford Model T this was the dream delivered by car ownership. Ownership allows us to commute, have time for fun with our family and friends, go to the shops when we want and have occasional trips or holidays. But the downside of this freedom is the need to purchase a machine which sits unused for the majority of the time. Every second it is slowly decaying and loosing value. We gain freedom but at a cost.

Integrated public transport systems would provide a lot of the benefits of car ownership and are viable alternatives in large cities. However, they require the user to adapt to their models and timetables and routes.

Imagine a transport system where there was no walking to bus stops. The vehicle collects you where you need it, and drops you exactly at your desired destination. There is no timetable you have to fit into. No other unwanted passengers. Boot space for your belongings, comfortable seated environment – where you control the temperature, safe and reliable. Like busses, trains and tubes you don’t have to do any driving. Like existing public transport systems, you only paid for the times when one was in transport and actively using the system ( I know I am simplifying things by not acknowledging taxation and subsidies).

Autonomous cars allow this form of pay as you go services. Transport from your A, to your B, when you want it. Reliable and with the potential to select the type of vehicle for your journey: 2 seater, four seater, estate, 7 seater etc.

Ownership or pay as you go
Given a pay as you go model, and the demise of the individual car owner, what is the role of car marketing or even car brands? Today manufacturers spend millions trying to make a consumer purchase one car over another, one grade over another. Marketing tries to persuade consumers to feel their purchase is the right one for their aspirations, lifestyle, fits with their values, is more fun to drive or own or simply is better value than another. If the consumer no longer buys a vehicle and becomes a service user the whole model has to change.

The perceived value of a pay as you go service will be based on cost, reliability and availability. All vehicles will have a minimum level of comfort and equipment. The consumer may be willing to pay more for a car with a better in car entertainment or productivity system or more luxurious interior. The key point is that they will pay for the service which provides it rather than select to only travel in an autonomous BMW or Toyota etc. The automotive brand disappears, and is replaces by the brand of the service provider. The king is dead long live the king.

In this world car brands have to adapt to survive. With autonomous vehicles we will not need as many cars on the road. Initially there may be a bounty period when the existing fleet is switches to autonomous vehicles. But then, because ownership drops and cars are not sitting idly on peoples drives and parked blocking up our streets, the number of cars needed to transport everyone will drop.
Think of how we choose a flight.

First choice point is about is there a flight from where I want to start my journey to where I want to finish up. If you are lucky enough to be in the position to have several possible flights then you have to weigh up, cost, reliability of airline, level of service.

The passenger is highly unlikely to factor in the specific aircraft in the equation:  I will only fly if it is an Airbus, and I really want to be in a A321 rather than the A320. (possible exception is flyers selecting one flight over another because of radically new planes such as the Airbus A380)
This will be the mindset of the autonomous car service user. They will select one provider, or one service package based on reliability, ability to deliver a vehicle whenever I need it, if they do discounts for non peak travel, cleanliness of the fleet, comfort, etc. But not the make of the car.

In this new world car manufacturers will play second fiddle to the service providers. It may be Uber or re-invigorated rental firms that dominate. The manufacturers should tailor their products to the needs of the service but also enter this space and become the service providers themselves.  They should set up new brands which are about the service and not about the vehicles. The vehicles become the facilitators and not objects of desire and status symbols.

(Post originally on my Linkedin profile)

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