The shift from car ownership to usership brings new challenges
Since the birth of the car industry, brand strength has been a powerful influencer of consumer choice in the automotive marketplace. From family favourites and symbols of status, through to reputations for safety, environmental respect and reliability, manufacturers have long depended on brand positioning and perception to attract buyers of both new and used cars.
However, with a marked shift from car ownership to usership, there are new challenges ahead for vehicle manufacturers. Ian Robertson, Business Champion of the Government’s Future of Mobility Challenge, said: “A transport revolution in the way people and goods move around will see more changes in the next 10 years than the previous 100.”
There’s been plenty of recent reporting on the increasing reluctance towards car buying amongst urban-dwelling millennials with the costs of ownership, insurance and parking, plus environmental considerations all being cited as reasons not to buy. The range of convenient transport service alternatives continues to expand with car sharing, ride-hailing and autonomous vehicles soon to become a reality. But perhaps the biggest disincentive to ownership is that on average our cars sit idle for some 95% of the time, according to Transportation adviser Paul Barter in Fortune Magazine. What’s more, according to a study by Zipcar, owning a car in London can cost a staggering £3,435.87 a year; that’s almost £19 per hour, for a car we may seldom use.
So how can individual car brands remain relevant and important to consumers with the advent of new business models termed Mobility as a Service (Maas)? Perhaps the answer lies in manufacturers adopting a ‘fleet car’ marketing mindset to maximise future ‘private car’ sales opportunities. Manufacturers have always looked to supplying rental companies, taxi firms and driving school fleets with vehicles as a means of exposing consumers to their products and the same opportunity exists with car share and ride-hailing models. This is especially relevant when considering that many of today’s young townsfolk will reconsider car ownership later in life when starting families or relocating to out-of-town locations.
Of course, some auto brands have already made headway in this approach with Toyota’s Prius dominating the Uber driver network and Volkswagen ruling the fleet of Zipcar (an Avis subsidiary). Other examples include Daimler’s investment in US-based peer-to-peer rental group Turo, BMW Group’s acquisition of Sixt’s stake in DriveNow and Toyota’s launch of app-based subscription service Hui in Hawaii.
Most recently, Volvo Car’s president and chief executive, Håkan Samuelsson, announced the launch of Volvo M, a new brand for 2019 that will expand the company’s global mobility operations by providing dependable, on-demand access to cars and services through an intuitive app. “Volvo Cars is becoming more than just a car company. We recognise that urban consumers are rethinking traditional car ownership. M is part of our answer. We are evolving to become a direct-to-consumer services provider under our new mission ‘Freedom to Move’,” said Mr Samuelsson.
Carplus, an independent charity which monitors the car-sharing industry, identified a 765% growth in car club membership across the UK in the last decade from 32,000 members in 2007-8 to more than 245,000 members in 2016-17, using more than 4,000 cars. During the same period, they also stated that more than 250,000 privately owned cars had been sold by club members who have adopted vehicle sharing.
Whether by designing and launching new service wrappers around their own products and channels to market, or by forging partnerships with tech start-ups and disruptors, it’s clear that the growth and popularity of car sharing, and other alterative ‘Mobility as a Service’ options, are becoming too significant for Auto brands to ignore. We’ve already seen manufacturers diversifying their retail estates into shopping centres and pop-up locations in an effort to offer more customer-centric and convenient access to their products and services.
As more technology and connectivity is built into cars, we can expect car makers to further push the boundaries of what’s possible as they further develop their strategies for keeping their brands front of mind amongst both prospective buyers and importantly, business partners. The latter should not overlook the customer appeal that leading automotive brands have spent billions on building over the last century, which could have reciprocal value in accelerating the adoption of new-to-market mobility services.