The automotive industry is facing a new era of changes: 3 revolutionary developments are forcing the global players to rethink their business strategies.
For a whole century car manufacturers’ business models have not undergone major changes. While many other industries have gone through a radical transition over the last 50 years, the established car manufacturers have been able to dominate their market further on. But that time is over – 3 fundamental principles, on which the whole industry has built upon, are now faltering.
- The combustion engine is the heart of the automobile
- The customer wants to own a personal automobile and with this demonstrate social status
- The car needs an educated driver who is driving it
In the current market these traditional principles are no longer valid. In 20 years the electric motor could replace the combustion engine as the dominant driving technology. Additionally the privately-owned car is losing its position as a status symbol, especially when it comes to urban areas.
Every 30 minutes a new car is bought in the USA. At the same time, more than 125.000 people take a cab or use car sharing service. And the future car will not necessarily need a human driver as autonomous driving technology is evolving. For 2021 BMW plans to bring the first autonomous vehicle series vehicle to the roads – together with Intel and the Israeli camera technology expert MobileEye. Other brands are also working towards the market launch for robotic cars in the nearby future.
These trends lead to 3 mobility revolutions from the customer perspective that are the cornerstone for new business models and innovations:
Currently cars are not in use for 95% of the time. And even during the use phase there is an average utilization of about 33%. Plus the cars use finite fossil fuels on a low efficiency level. Many new business models try to tackle the issue of inefficiency: transport services promise a high car utilization with low costs while the use of renewable resources provides higher efficiency and lower environmental costs.
According to a study by the French car manufacturer Citroën the average European spends 4 years and 1 month in a car. People who use their car on a daily basis are estimated to sing a song 4,171 times, eat a meal 1,648 times, kiss someone 1,163 times, doze off 60 times, play a game with other passengers 20 times and make love 3 times. If a driver did not have to concentrate on the traffic, these numbers would rise significantly or new activities would appear on the list. The newly available time in the car can be used for attractive services. Individual services could emerge in the fields of business, information, entertainment, wellness or consumption.
Smartphones with GPS function already allow users to plan routes taking into account all modes of transportation and look for the fastest and cheapest alternatives. In the future information will be linked even stronger so that software systems may check the availability of transportation modes and interfaces in real-time. Multimodal mobility will be settled up highly accurate via an automatic payment process.
Based on these 3 converging mobility revolutions we will witness completely different business models in the future. Here “Big Data Players” like Apple, Google, Amazon, Alibaba and Baidu are already starting to penetrate the automotive sector. For the first time in about 100 years the traditional manufacturers are not alone in the automotive universe. The top dogs of the industry should take the new “war of the worlds” seriously because they are facing really strong opponents that are capable of harming them and disrupting the whole automotive ecosystem.
About the author:
Prof. Dr. Stefan Bratzel is the director and founder of the independent Center of Automotive Management (CAM) at the University of Applied Sciences in Bergisch Gladbach. His main research topics are innovation trends and performance dynamics of the automotive industry. Website: www.auto-institute.com