It is inevitably causing a huge amount of disruption to the transport industry and, in particular, car manufacturing.
There are two fundamental changes that are taking place:
- The first concerns the issue of ownership. Almost since its invention, the car has been synonymous with status. In the beginning, simply owning a car demonstrated wealth and a certain social standing. Now, with car ownership nearly universal, it is the brand that does the talking. In the last couple of years, however, an interesting trend has emerged. For the first time in their history car sales in the west are trending downwards.
- The second big shift is the move towards driverless cars. In the last year or so these have shifted from theory to reality with companies like Nissan embedding a new level of automation into their vehicles and Uber has announced the launch of a range of self driving taxis.
The downward trend in car ownership is being driven by the under 25s.
This younger section of the Millennial segment appears far less interested in owning a car. They are just as interested in being mobile, but less attached to the idea of ownership. For this generation of renters, the car seems to be losing its status as the must have accessory.
We all know people who insist on travelling everywhere in their car – partly because having spent a not insubstantial amount of money on it, they want to get their money’s worth – but also because they see themselves as ‘car people’. That is starting to change.
The younger generation are much more likely to select the vehicle(s) most appropriate to the journey, rather than plan the journey around their choice of vehicle. Hence the reticence around owning a car. It is a big expense for something that you don’t plan to use all the time.
It’s all about the journey
Alongside (and helping to drive) this change are the new, innovative approaches to travel that are springing up – from car shares, like Zip Car, to urban bike rentals, bike pools and lift sharing sites.
Now there are more options for the traveller than ever before. This has encouraged a change in mind-set. It’s inspired a shift in thinking away from the vehicle itself and towards the journey.
We’ve turned route-planning on its head. We look at the path we need to take and then work out the best form (or forms!) of transport to use. Journeys are more likely to be ‘multi-modal’. Travellers might take the train and then pick up a car or bike from the station, for example.
Digital Disruption (what else!)
Behind all of this is digital technology.
Digital has enabled new services that are being launched almost daily. At any time, anyone with a mobile device can see in real time what options are available to them. They can see whether bikes are accessible at the nearest stand (and in some instances even unlock them via an app). They can see if car club vehicles are based nearby, how close a bus is, or whether a cab is round the corner.
It is not hard to see why these recent trends are creating a bit of a headache for car manufacturers. Their business is based on the need, or at least the desire, for new cars. Now, suddenly, that demand has diminished. But while digital advancements have closed off some old avenues; they’ve also opened new doors.
Destination innovation in transport
Some manufacturers have got on the front foot and are actively looking at the new revenue streams that digital technology can provide.
- Toyota have invested in Uber.
- BMW, for example, have launched their own car share operation, Drive Now, with Sixt.
- Others, including one manufacturer that Fluxx have worked with, are exploring the idea of car clubs – membership schemes where the customer pays an annual fee and has access to a range of cars over the course of a year.
It’s not just the car manufacturers that are having their traditional revenue streams disrupted. Car hire companies are suffering too. Fewer people are looking to hire cars for one week or two week blocks. They want the ability to hire vehicles for however long (or short) a time they need them. Europcar have invested in Ubeeqo, which delivers “urban mobility” on a far more flexible basis.
Of course, by their nature, trends come and go.
There is no guarantee that the move away from ownership will continue. But one thing is for sure, digital technology will continue to enable change to happen quickly. Not only does it make more things technically possible, but it makes the journey from concept to reality much faster. It allows for more ideas to be born in the first place, and even more of those to take flight and find their feet.
The companies in the transport sector that will thrive will be the ones who get on the front foot and continue to innovate. They may not know what is coming next, but, by being open to change and equipped to embrace new thinking, they can secure themselves a part in an uncertain tomorrow.
We’re currently helping Atkins to change their mind-set towards innovation: to develop an appetite to be more adventurous and more curious about the future. To find out more about how we’ve been doing this, visit our Digital Incubator page.