My next car will be a Google!
No other industry is facing such a fundamental transformation as the automotive industry. Perhaps, a change that will have a great influence on this powerful industry as the invention of the engine had. The car is becoming part of something, which has made our daily lives more and more connected for over 20 years – the Internet. And this has consequences.
In the coming years, numerous scenarios which we knew only from sci-fi movies will become reality. Cars will move completely autonomously in regular traffic, vehicles will share data in real-time and improve the flow of traffic and the overall safety on the streets many times over. Cars will know their drivers, know what they want to do and where they want to go, and provide them with the right information at the right time.These technical changes accompanied by major socio-cultural changes, and the impact that the Internet has on consumer behavior, means that the automakers are facing incredible challenges, many of which they are not prepared for today.For many decades and generations of drivers, it was normal to buy a car of the same brand over and over again and again. Children inherited the car brands of choice that their parents supported. But automobile brands have always involved a clear commitment. A car’s brand has always stood for something: safety, sportiness, extravagance and luxury, etc. Cars and their brands are status symbols. The automotive industry has built and perfected a world of brands and wants to protect it. The long product cycles, high complexity, and the corresponding capital required to build a car have made it impossible for new manufacturers to simple pop up. The buyer can rely on their brand.
A major trend in recent years is car-sharing, i.e. the possibility to rent a car, when one needs it without owning it. In many large and midsized cities there are the colorful little SMART Cars, Corollas and MINI Coopers of car sharing companies like Zipcaror Car2Go parked on many street corners, waiting for a user. One would think this would be a great trend for the auto industry. In Berlin alone there are easily over a thousand of just such car-sharing vehicles. The fact is that almost 50% of all users if offered such a deal, would never buy a car on their own – as the Wall Street Journal recently reported. Lifestyle and status seems not necessarily connected anymore, it only matters that you have access to a car and any brand will do.
This paradigm shift in the automotive industry can be shown even more impressively, on the basis of autonomously driving vehicles. The probability is currently not low, that one could meet a Toyota Prius with a strange structure on its roof on a road in Silicon Valley with six colored letters, “G-O-O-G-L-E” adorning its door and the driver’s seat empty. Not a traditional automaker, but the Internet company Google is one of the key technology drivers in this area. But the German car makers are also working intensely on similar concepts and driverless S-class Mercedes Benz’s can be seen driving autonomously, ever carefully through the narrow streets in the villages around Stuttgart.
This may all seem like a good sign for the automotive industry and that these innovations are being driven by the market leaders but two things are coming together: the consumer behavior of the future buyer groups and the fact that the Internet is driving these developments and that there are clear technology leaders. In a recent KPMG study, participants were asked which manufacturer they most likely would buy an autonomously driving car from if they would have to use it every day. The answer is not surprising in light of the recent facts here, but it can have existential implications for traditional manufacturers. Google and Apple would be the preferred companies – followed by high class manufacturers such as Mercedes but far from mass manufacturers such as Chevrolet and Nissan.
This article has been published in the May-June issue of Smart Automotive. To read the magazine online, please click here.
About the author
Having previously worked with Nokia in the mobile mapping segment, Holger helped to start AUPEO! In 2008 which is now a leading player in music streaming for automotive and mobile devices. He has served as a startup mentor for companies in Germany, UK and USA. His specializations include business development, contract negotiations, strategic alliances, leadership and sales.