Of smartcars and fleet commanders

CES 2017 is right around the corner, and as last year, you should expect a lot of cars on the show floor.  So many cars in fact, that the city is now worried its convention center, one of the busiest and most impressive in the world, does not have enough space to accommodate the new trends in autonomous vehicles and connected cars.

There is hardly a better way to demonstrate how impactful a transformation the entire automotive industry is going through.  Compared to the current turmoil, peak oil prices in the recent past were only a minor disruption. Yet they fueled the rise of Tesla and induced every major car manufacturer on the planet to invest in electric vehicles.

Today, the disaffection of younger generations and urbanites for cars and their inconvenience (cost of ownership, parking, insurance, city congestion) has allowed Uber to reach an astronomical market capitalization and Lyft to receive a very sizable investment from General Motors (a mere $500 million) by focusing on mobility as a service, not on cars.  New entrants like Apple, Google and Tesla are working hard on autonomous vehicles to bring about another major disruption.  And the beauty is that the technology is there.  But is it scalable? Will such cars be affordable? Is the market ready?

So how do car manufacturers or “traditional” rental companies remain competitive?  Can they stop the bleeding?  Can they once again rely on sound market growth for their products and services to thwart all the adverse trends?  Certainly these are questions that can make (or break) quite a few billionaires in the coming years.

During our last ng Connect ideation session focused on the automotive industry, one group looked at it specifically from the manufacturer’s perspective and came up with a few ideas to address the above challenges.

The first idea is related to the one bright ray of sunshine that is growing sales, in number and value, of pickup trucks in North America.  Not every truck driver lives in a tough environment or needs a truck for professional reasons.  The occasional need to transport some heavy or bulky piece of furniture or equipment was not a factor a few years ago and it’s unlikely it became such a compelling one recently.  It is much more likely that many truck buyers identify with a lifestyle. It could be the appeal of the outdoors, adventure or, I suspect for many students, it’s the ability and freedom to throw tailgate parties, as evidenced by the fact that every time I drive past colleges in the area, I see parking lots stuffed with brand new or used pickups.

So why not build on this idea that vehicles can be promoted for uses other than mobility? It would be akin to using a mobile phone for something else than telephony and communication. Does it sound familiar? When Apple entered the mobile phone market back in 2007, nobody expected the iPhone to match Nokia, Ericsson or other heavy hitters like Blackberry and HTC on the user experience and quality of telephony or office collaboration. But everyone was swayed by the new and superior design and users completely bought into the device openness with a flurry of applications downloadable at will to ultimately deliver individualized smartphone experiences.

When I first heard rumors of Apple considering entry into the car business, I was convinced they would repeat the same approach. They would build an experience which had nothing to do with driving and mobility – yet that would remain the basic must-have feature – and everything to do with individualized experiences based on applications.  I remain disappointed at the focus on autonomous vehicles only, unless nothing has filtered on a grand plan to transform the car into an application platform, and Apple feels a technology revolution is required for them to successfully disrupt the market (like the touchscreen user experience they brought in on smartphones).

But regardless of Apple, what prevents car manufacturers from doing just that?  So our first idea was to create car designs that are (i) beautiful (but pretty much every player is aiming for that), and (ii) open and highly customizable so that drivers could transform the car into a dining room or an entertainment center, an office, a gym or more generally a living space which happens to be mobile.

During our work, we went as far as identifying companies in the ecosystem who could help build a prototype.  We also drew a list of tasks and steps to undertake, which would obviously require quite a significant investment in time and resources.  We did however lack a key sponsor, such as an OEM or a company looking to enter the industry and offer superior user experiences.  Car designers of the world, if you read this piece and think the challenge worthwhile, let us know!

The second idea certainly deals less with product innovation and more with new ways of delivering the product.  The initial thought was to come up with a way of bridging this almost generational divide between car owners and mobility service customers. How could we combine the best of both worlds, delivering the convenience, ‘a la carte’ feel of a mobility service with the pride, freedom, and status associated with car ownership?

The proposed answer is ownership of a fleet of vehicles!  Well, more precisely fleet pooling.  Instead of buying one car and making all the hard trade-offs between sedan, convertible, roadster, pickup, van, SUV or even RV, users would buy an entire fleet featuring a set of different vehicle types.  Of course, at all times they would only have one vehicle available for use.  For example, during weekdays, a comfortable, small electric car, convenient for commute and short trips would be sitting in the garage.  On a weekend in the mountains, it would be replaced with a pickup or SUV, while the next holiday at the coast, a convertible roadster would be the car of choice.  Family or friends are visiting?  No problem, just get your minivan and drive everybody around to landmarks and restaurants without worrying about losing someone or finding parking for multiple vehicles.

This idea plays on a key strength of established manufacturers: the breadth of portfolio.  They could package all their different models in the different segments and offer multiple service bundles (economic, sport, performance, luxury, electric) each featuring a choice of sedan, convertible and SUV models and more.  Further, this service would also leverage, and possibly reinvigorate, dealership networks with their space for parking and infrastructure for maintenance and servicing.

And it would be a great example of an Internet of Things service where cars would be managed and pre-configured based on current driver preferences (seat and mirror positions, navigation shortcuts, radio stations etc.), data collected (miles and time of use) so that users can be billed a monthly fee for the service (leasing model), including insurance, which would be priced according to the actual use of each vehicle.

Drive the car you want, when you want, with the convenience and flexibility of a mobility service.  Adjust your fleet to your needs and lifestyle and customize your bundle with luxury or sport vehicles.  Have your own car at the ready 24/7.  Pay the same price as a single vehicle (upfront or leasing) with adjustments, including maintenance and insurance based on actual usage.  But instead, gain access to a range of different models in perfect condition, all serviced by a dealer close to you.

Ready to ‘own’ your own fleet?

 

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