While I would like to stay in holiday spirit and cheer I can’t help to get your attention to the topic of future of mobility, especially if you are a car dealer today. As we move into an era of mobility transformation, let’s take a look at the predicted calendar of change in the next 10 years and its effects on auto retailing.
- Starting in 2017, cyclical down turn will cause new vehicle sales to drop by about 500,000 units.
- Ride sharing companies will continue to grow in human driven stage and more businesses will emerge to provide various venues of ride share. This will further contribute to drop in new vehicle sales in metro markets.
- Manufacturers will increasingly build special ride share fleet vehicles with technology which will make them more accessible, affordable and convenient with increased data sharing and phone apps.
- Some companies will expand their autonomous ride share experiments to additional markets.
- Hyundai’s “Vehicle Subscription” concept will spread to other manufacturers and eliminate the legal obstacle of conventional price fixing laws. Consumers will subscribe at fixed prices at automaker’s web-sites and pick up their vehicle at their local dealer. Dealers will also be offered a fixed margin for every one of the subscribers based on their selection of price range.
- Finance department revenue will start sharply declining
- Ride share companies will become increasingly autonomous. This will make cost of ride share more affordable and convenient which will cause privately owned vehicle sales to decline even further.
- Anticipated number of dealers in 2025 will be below 10,000 in the U.S. Total new vehicle sales will also drop below 9MM units.
- Autonomous vehicles for private ownership will become available at an outrageously expensive price tag.
- Human driven vehicles insurance will become increasingly unaffordable.
- Conventional auto dealer concept as we know it today will cease to exist.
- Retailing privately owned fully autonomous vehicles will take on a new identity of design, feature and benefit consciousness to offer ultra comfort and luxury.
- Fully autonomous fleets and ride share companies will move people at a rate of 90%.
TRANSFORMATION OF AUTO RETAILING:
- Some conventional large size rental car companies and large dealer groups may enter into the new world of ride share fleets that are 100% autonomous.
- They will then simply maintain a large fleet of ride share vehicles and become service providers.
- Under the prevailing rules of manufacturer warranties at that time, their service departments will maintain and repair their own fleets.
- Possibly same entities will sell the high end fully autonomous vehicles to private owners much like the yacht or private airplane business today.
This brings up the subject of our relationship with our clients. I mentioned in our last news letter that Convergent Alliance now is a “Mobility Strategist” to help the auto dealers to make the transition of their choice. While our conventional services and workshops focused on ROS, Process and Organizational culture will continue, in the interest of the chronology described above, there is an extreme sense of urgency to make decisions in order to protect your investments. We made the leap of faith to become a pioneer in helping our clients in their expected turmoil in a way that is totally unconventional.
If you consider the cyclical decline we just talked about, you should expect your revenue to start declining as of 2017. The difference is; don’t expect another upturn due to all the transformation coming up. Your business is probably worth the most it will ever be in the next 12-18 months. After that once all this stuff becomes eminent you will have a tough time to find a buyer who is willing to pay you blue-sky for a business about to become extinct. As to the manufacturers, all you have to remember is 2008 when GM and Chrysler decided to go bankrupt and took down a bunch of dealers with them. Once sales decline and ride share fleets start growing, they have a way out.
So we are now in your court to help you with the decision making process and the transition. If you think this new game is not for you, you must start immediately and move forward and maximize the return on your investment. Our expertise has all of the elements to realize that. But if you want to stay in the game and join the new world of mobility, there is a lot of work to do and you must start now, with first improving the environmental self image of your organization and take necessary steps to adopt mobility concepts and build your infrastructure.
MOBILITY IS THE NEW STRATEGY…..
I WISH YOU ALL A HAPPY, HEALTHY AND PROSPEROUS HOLIDAYS AND NEW YEAR, MAY THE NEW WORLD OF MOBILITY SHINE YOUR STAR.
Hope to hear from you next year!
Mobility Development Strategist