No one will own cars in the future — and that could be great news for automakers – Business Insider

Posted: Tuesday, December 13, 2016


BI Graphics_Self Driving Cars Timeline 2016 4x3Business Insider

Self-driving cars are coming, and
that could spell the end of car ownership.

Industry experts predict self-driving cars will dramatically
change consumers’ traveling habits, spurring them to trade car
ownership for on-demand robo-taxis.

In fact, vehicle ownership could decline as much as 43% in the US
once autonomous cars are adopted, according to a study by the
University of Michigan Transportation Research
Institute
.

But the death of car ownership doesn’t necessarily spell doom for
automakers. In fact, people giving up their own car in favor of
autonomous taxis could mean a boon for business.

“Personal miles is going to soar and therefore vehicle miles per
hour is going to soar,” Gary Silberg, KPMG auto analyst told
Business Insider. “And that creates a huge opportunity for
automakers.”

Silbert argues that autonomous cars will give more people access
to mobility. Specifically, self-driving cars could give those
above the age of 65 and younger than 15 the ability to travel a
lot more than they are currently able to.

In fact, this new demand could lead to more than a trillion new
vehicle miles traveled by 2050 in the US alone, according
to Silbert’s research. And while that may not
directly translate to more cars on the road, it could mean that
the turnover for vehicles will be higher because they are driven
more.

Currently, personally owned vehicles are parked about 95% percent
of the time, which means that their lifespan lasts 10 to 15
years. However, if people trade owning a car for traveling via an
autonomous car that’s shared, well, then all of a sudden that
car’s usage soars and it’s lifespan is dramatically shortened.


parking lot
On
average, personally owned cars are only utilized about 6% of the
time.


REUTERS/TIM
WIMBORNE



“If the industry can cater to the consumer changes around
mobility and cars having a higher utilization, then this could be
a massive new market for the auto industry that they have never
seen before,” Silberg said.

However, car companies must quickly evolve their business models
if they really want to cash in on this new opportunity, he said.

Historically, automakers haven’t thought about miles traveled as
a business model. They’ve simply made the vehicles and then sold
or leased them. But as consumers move towards ridesharing
services and self-driving cars become a reality, car companies
must quickly evolve.

“We think that is a fantastic opportunity, but the dilemma is how
do you change your organization to adapt and be able to adapt and
take advantage of it. That’s the question mark, can they solve
this? Can they figure out how to change their business model to
meet this?” Silberg said.

Many major car makers are certainly trying.

Ford, for example, plans to roll out a fleet of level four
autonomous cars in a ridesharing setting in 2021. While the
initial pilot program will launch in only one city, the company
plans to eventually expand the program with hope that it can push
into the mobility services space in a meaningful way.

General Motors also plans to launch its first self-driving car in
a shared setting on the Lyft network. The company has yet to
release a launch date, but CEO Mary Barra told Business Insider in a recent
interview that even if car companies end up producing less cars
because of consumers opt for self-driving taxis instead of
personal ownership, there’s still a lot of opportunity.

“I see a different model than today’s model, but one where, even
if there are fewer vehicles, their life cycle is less, or the way
they are serviced provides a different business,” she said.

“The nature may change, but I
think there’s still a very strong business fundamental,” Barra
said.

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