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Blog

Sep 08, 2016

The Changing Customer Experience, Part 4: New Trends in Automotive

Categories:
Customer Experience

looking in the rear view mirror reflecting on trends in automotive customer experience

[Estimated read time: 5 minutes]

While the automotive industry has continually evolved, it hasn’t seen many major upheavals. But a combination of technology advances and shifting demographics is affecting just about every aspect of the customer experience.

Here are the three key trends disrupting today’s auto industry.

1. Consumers are demanding connected cars, but still have reservations

Originally, the focus of automotive technology was on the vehicle’s internal functions, such as increasing fuel efficiency or alerting drivers to specific malfunctions. Then it shifted toward the convenience and comfort of passengers (think automatic climate control, rear-view cameras, and Bluetooth). Now we have connected cars, which combine onboard sensors with internet connectivity to both optimize operations/maintenance and enhance the in-car experience.

From 2014 to 2015, the number of customers who said they would switch brands for better connectivity features almost doubled, to 37%. More than a quarter say connectivity is more important than features like engine power and fuel efficiency,Click to Tweet and 13% won’t even consider a new vehicle that doesn’t have internet access. Nearly a third of customers are willing to use a subscription-based model to pay for connected services, up from 21% in 2014.

“Today’s car has the computing power of 20 personal computers, features about 100 million lines of programming code, and processes up to 25 gigabytes of data an hour.” -McKinsey & Company

Yet despite that demand for connected cars, consumers aren’t entirely sure they want them. In a study of consumers in Germany, Brazil, China, and the U.S., McKinsey & Company found that an average of 37% are reluctant to use connected service because of privacy concerns. And an average of 54% are afraid that a connected car can be hacked and manipulated remotely (a concern that is hardly unfounded).

2. Intelligent cars are priming consumers for autonomous cars

McKinsey & Company predicts that because of technological and regulatory issues, fully autonomous vehicles are unlikely to be commercially available before 2020. But it’s not an all-or-nothing process: advanced driver assistance systems (ADAS) are already getting consumers, regulators, and automotive companies used to the experience—and the challenges—of letting an intelligent car take its own wheel.

One of the primary challenges is pricing. But as consumers utilize current ADAS features (self-braking, self-parking, automatic accident-avoidance, computer-operated power steering, automatic cruise control based on road conditions, and more), they will see the tremendous convenience and time-saving value a fully autonomous car could provide.

There are also very real security and safety concerns surrounding autonomous vehicles, which will take significant advances in technology to address—something that, as Strategy& puts it, is “not in the traditional wheelhouse for most automobile makers.” The consulting group explains that this shortcoming is an invitation for tech companies like Apple and Google to step in, and advises OEMs not to downplay the disruption their presence could have on the industry.

3. Younger consumers are buying mobility, not cars

More and more consumers, especially younger ones, don’t see cars as prized possessions or status symbols; they see them as a way to get from point A to point B.Click to Tweet And if the value of a car lies in its ability to get you where you need to go, it’s worthless when you aren’t actively using it (which is most of the time).

Enter “Transportation as a Service” (TaaS)a fancy way to talk about ride- and car-sharing. Instead of letting their cars sit idle, some consumers are now putting them to use, either by driving others around through services like Uber or renting out their cars through services like Getaround.

Even more consumers are forgoing purchasing a car at all and paying for mobility when they need it. This gives them flexibility to choose the appropriate transportation solution for each situation. A daily commute, an occasional trip to IKEA, and a 1,000-mile road trip with three kids all call for very different vehicles. It also lets them enjoy freedoms that drivers can’t—in particular, texting and drinking. Since the launch of UberX in California, drunk-driving crashes have decreased by 60 per month for drivers under the age of 30.  

“I think the biggest change that we’re seeing here is that people are choosing to buy mobility as opposed to just buying a car.” -Shelby Clark, CEO of Peers.org

Successful automotive brands can adapt to this new trend in two key ways:

Targeting the ride-sharing market

One out of 10 cars sold in 2030 will likely be a shared vehicle, and as soon as 2050 that number could grow to one out of three. OEMs need to start developing cars for this growing market, cars that are designed for intensive use, additional mileage, and passenger comfort.

In addition, drivers who are profiting from their vehicle can afford a price point that they otherwise wouldn’t consider. Premium vehicles are becoming accessible to more consumers, and brands must adjust their strategies accordingly.

Finally, automaker’s financial divisions could create new leasing and maintenance programs tailored for ride-sharing drivers. A hurdle for many potential drivers is the car itself. Mileage restrictions and increased maintenance can make the upfront costs of traditional leasing or purchasing deals unaffordable. Recently, both Uber and Lyft have stepped in with solutions that, while controversial, are often the only available option.   

Positioning themselves as mobility providers

Ford has taken great strides in this area. In 2015, Ford announced its Smart Mobility plan, with innovative experiments across the globe to improve access to transportation. One of the initiatives was launched earlier this year, the FordPass mobile app. Through the app, all consumers—not just Ford owners—can find and pay for ride sharing, car sharing, parking, and other mobility services.

Another Ford initiative is a partnership between Ford Motor Credit and car-sharing service Getaround to encourage Ford owners to earn extra money by leasing out their cars for a few hours each day.

How Astute Can Help

Astute can give you the strategies and tools you need to adapt to these new trends and stay ahead of your competitors. We’d love to hear from you to learn about your business and find out how we can help you succeed.

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