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Home > Accelerating the Auto Industry – and the Challenge of Change!

Accelerating the Auto Industry – and the Challenge of Change!

FutureCar

Popular Mechanix magazine envisioned the autonomous vehicle in the 1950’s. “Connected cars” and autonomous technology are expected to generate $131.9 billion by 2019 with a compound annual growth rate (CAGR) of 34.7% from 2013 to 2019

I’ve been doing a number of keynotes in the automotive, trucking and transportation sector. Groups such as Volvo/Mac Trucks dealer conference; the Colorado Transportation Summit, the National Association of Truck Stop Owners, Chrysler, and various motor vehicle dealer association conferences. I’ve also had some fairly widespread coverage in the media. There are a large number of blog posts about my observations in the Automotive & Transportation section of my blog.

This is a FAST moving industry, with SEISMIC changes underway.

Basically, vehicles have been built the same way for the last 100 years — they run on carbon, are driven by people, don’t connect with other vehicles, and operate independantly. The business model has involved “car dealerships” and “car salesmen” and consumers frustrated with what they’ve always perceived to be a one-sided relationship.

Now, for the first time in 100 years, massive change is underway — more vehicles will not be carbon based, but based on alternative energy sources. A growing number will drive themselves. And they will interconnect with other vehicles and intelligent highway infrastructure, with profound implications on efficiency, traffic, urban and highway design, not to mention safety. A future in which a large number of the next generation might not actually purchase a car — but simply use some type of vehicle sharing service. If they do purchase a car, they will likely do it online.

You couldn’t have a bigger change than that!

And it promises a massive shakeup as the speed of innovation is shifting from automotive/trucking companies to Silicon Valley. Consider one implication: one estimate suggests that “connected cars are expected to generate $131.9 billion by 2019 with a compound annual growth rate (CAGR) of 34.7% from 2013 to 2019.” (Connected Cars: Legal Hurdles and Issues Monitor Worldwide. Oct 2014)

The challenge is this: the auto industry is somewhat ill prepared to cope with the speed of change. They are still of a mindset that involves palatial automative dealerships, when an increasing number of consumers simply want to purchase a car that they’ve already researched online. Car dealers who cling to the same way of doing business that was in place in 1960 and 1970 — a very frustrating experience for most consumers.

At the same time, we see Tesla Motors selling cars online, and setting up ‘showrooms’ in shopping malls — and various state car dealer organizations fighting back in the courts. (The casket industry tried to fight a battle against people selling caskets online. It didn’t go well!) We see Uber indicating that its ultimate business model might involve being the car service for everyone, in a world in which few people actually buy cars!

That’s why senior auto executives, motor vehicle dealer associations and others in the industry need a good, frank discussion around the future of their industry, and what they need to do to turn these perceived threats into opportunity.

That’s what I’ve been doing a lot of lately — and so if you are reading this and are in the industry, give me a call!

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