Millennials, New Business Models, Create Challenge and Opportunities for Automotives

[Former Member]

Changing automotive ownership models, connected vehicles, technology disruptions, and millennial shifts.  These are some of the trends that were discussed as panelists responded to audience questions and Twitter posts at a recent SAP Automotive gathering in Southeast Michigan.

Nearly 200 attendees joined the ASUG Michigan chapter and the ASUG Automotive SIG for its annual joint meeting co-sponsored by SAP at the Michigan State University Management Education Center in Troy (MI) this week. I had the pleasure to convene the connected vehicle panel during the morning general sessions featuring Richard Wallace from the Center of Automotive Research (www.cargroup.org) who was joined by Sara Hagopian of General Motors (ASUG Automotive Chair) and Doug Maulbetsch of CSC (ASUG Automotive Program Chair) to field a number of topics and questions.

Here are some of the highlights from our panel discussion:

• Consumer behaviors are shifting in terms of ownership.  Today's automotive owner holds a vehicle for nearly 12-13 years on average, while the average household is reducing its reliance on the second and third vehicle.  20 years ago people moved to good neighborhoods featuring good schools and services, today people are more inclined to move to areas where there is good public transit systems (light rail, bus, trains) and access via that network to good schools and services.  The third family car is becoming the second family car, and the third car use (to pick up materials at home supply stores or for that long weekend getaway) are shifting towards shared ownership models, like the Zipcar.
• Changing Business Models will Blur Industry Segments. While GM, Ford and Volvo brands among others have significantly increased in-car services to their customers through OnStar, Synch and other platforms, Apple recently announced Apple CarPlay which is a brand agnostic approach to provide services directly to drivers through its existing iMessage and network infrastructure.  Tesla, the upstart electric car company founded by entrepreneur Elod Musk, considers itself a technology company.  Google meanwhile has already implemented driverless vehicles in many US markets in support of its Google Maps project and has hinted that it may develop its own vehicle platform.  The lines of industry segmentation are growing very, very blurry.
• While the Car will Get Connected, it May be Years before Drivers Can Join an Automated Highway Platoon.  Given CAR's estimate of around 2020 to have the infrastructure in place for a fully connected vehicle - where drivers can subscribe to and join so-called "platoons" (think the digital and automated version of Burt Reynolds and Sally Fields in the movie "Convoy") - technology supported by big data services is a reality.  Two things though that get in the way. First, remember all of those cars that folks will hold for 12-13 years?  That means on average half of the vehicles around today will likely still be around by 2020, suggesting more of a hybrid model of the connected vehicle than a fully automated model.
• All of these Changes Mean the Art of Driving (and our Responsibilities) May Change.  While we don't envision (at least in the mid-future) a scenario where we can drop off a car for servicing and it would drive itself home, or send the car to the airport to drop off our spouse and have it return automatically to our homes, the need for current driving skills is changing. This will pose societal questions.  Already park assist enabled vehicles make the art of parallel parking (which I rather pride myself on based on many years of driving in Southern California) nearly an afterthought.  Does this mean that in the future, drivers taking their drive tests won't need to parallel park? The Digital ON generation (followers of the Millennials) may not have to ever learn to drive. On the other side of the demographic age bell curve, seniors who would otherwise lose their freedom of driving may not lose much indeed as automated, lease to use, vehicles could pick them up from home and run to the shopping store and doctor's office.  Another funny factoid: Digital ON generation believes that the act of driving is the distraction - since you can't text or use social media.  So for them unplugging is an annoyance to drive.  Think about that for a few minutes (but not while you are driving).

Watch this video from the 2013 CES discussing where a "hybrid" connected car - with fully integrated location based services - would look like in the very near future.  Need to order that pizza and get a special deal on a new route home? No problem.

A more advanced version of this in a more autonomous model was demonstrated earlier this year by Volvo Cars which completed a first main test of the SARTRE road train project  Take a look to find out. (Note: one of the benefits of autonomous vehicles in a platoon model is the reduced need for spacing between and apart from vehicles since acceleration and deceleration are automatically managed.  According to CAR's Mr. Wallace, reducing the safety distance - both laterally and longitudinally - between vehicles could increase current road capacity of vehicles by nearly 500% in the US.

Many many thanks to the Center for Automotive Research and for SAP for supporting such a great ASUG program this week.