Should Car Manufacturers Stop Selling Cars

By Eicorn’s Founding Partner Christian Lauritzen

“Change has never happened this fast before, and it will never be this slow again.”  – Graeme Wood

We are at the doorstep of exciting times, especially in automotive. Daily, we can read about autonomous driving and shared ownership and how new technologies and companies are transforming the car experience. 3D printing is transforming production, especially for spare parts, and the Internet of Things means everything can share information. Augmented reality is reaching a mass audience and VR is becoming trendy (finally) – and will massively affect the future in-car experience. The implications of what happens when all these trends converge is hard to predict, but it is interesting to speculate. Living in Gothenburg, with cars as a passion, it is certainly a topic that is hard to stop thinking about. What could a car manufacturer provide in the future given all ongoing change?

With autonomous driving and an increasing preference towards shared ownership, it becomes harder and harder for individuals to motivate spending money on a vehicle that you only use for a small fraction of your time. Especially when that vehicle could do other things during the day, such as picking up a package, driving the kids home from school etc. And in the hours in between, why not lower the cost further by letting other people use it too? The argument for having “my own” car weakens. Of course, there is the convenience of having your car outside the door. No waiting times. For some, the status aspect can be important. For others, the passion of being able to drive something astounding can be a strong motivator. But for most however, my guess is that it does not make sense.

So who will buy cars? One likely scenario is that it will be fleet operators that can provide transportation services. These will have a strong negotiation power as they would buy loads of vehicles, and would become tough counter parts for the auto manufacturers. As a consequence, margins would go down. And if cars would be operated be independent fleet owners, who would control the in-car experience? Who would perform service and print spare parts? Should car manufacturers instead continue to own their vehicles and instead provide transportation services? That would keep control over margins and they would secure control of the aftermarket. Time will tell. Interesting times await us!

2018-02-11T17:37:37+00:00 October 22nd, 2016|