Registered users can unlock up to five pieces of premium content each month.
Direction of Automotive Market Defined by “CASE” |
NEWS |
Over the upcoming years, Original Equipment Manufacturers (OEMs) will be following nearly identical paths to help transform their businesses to accommodate the rise of the Mobility as a Service (MaaS) market. These new strategies were first popularized by Daimler when it officially announced a new corporate strategy for the future of its company—Connected, Autonomous, Shared & Service, and Electric (CASE)—at CES 2017. This acronym now forms the backbone of most OEMs’ corporate strategies for the future and neatly helps summarize the overall direction of the automotive industry.
Other OEMs such as Toyota and BMW have also outlined similar strategies, with Toyota detailing its long-term strategy of “Electrification, Information, and Intelligence Technologies” and BMW announcing “Autonomous, Connected, Electrified, and Shared” (ACES) in 2017. These are the biggest disruptors to the automotive market in over a century. But what does this mean for the future of OEMs, the wider automotive market, and more importantly, what are the market opportunities available?
OEMs have Begun Their Smart Mobility Transformation |
IMPACT |
The backbone of OEMs’ strategies for the last 100 years has focused on personal vehicle ownership, working toward reducing vehicle Average Selling Prices (ASPs) and enhancing the driving experience through hardware. Most OEMs, however, have now realized that due to the emergence of driverless operations combined with the electrification of the powertrain, new business models will be required to transform OEMs to be able to provide mobility services to consumers.
Daimler, for its part, made several interesting CASE-centered developments and announcements over the course of 2017:
The takeaway from this and similar announcements is that the automotive market, which for so long has been dominated by OEMs and the idea of vehicle ownership, is starting on a new course. After some 100 years of the status quo, OEMs are now having to enter new markets out of pure necessity, ones they are not familiar with and do not have much experience in. OEMs are not fleet management providers; their core business revolves around selling products, and they do not have any extensive experience in providing mobility services. This lack of experience and familiarity means that this market that for so long has had large market barriers to entry, the door is suddenly wide open for new companies to take advantage. Companies that are familiar with providing fleet management and maintenance services are clearly well-placed to leverage their existing knowledge and experience to gain a good piece of this new smart mobility market.
New Opportunities for Fleet Management and Vehicle Maintenance Providers |
RECOMMENDATIONS |
In the future automotive market, whereby mobility is a service and consumers no longer own vehicles, product sales will be irrelevant. Although OEMs may be selling vehicles to future mobility service providers, these vehicles will have longer lifespans and will be sold in much lower volumes. OEMs have therefore realized the need to develop their own mobility services. The success of future mobility services will, in turn, be dictated by the ability to manage their fleet of vehicles and maximize vehicle usage, minimizing the cost per mile of running such a service and thereby improving competitiveness and success of such an operation. This opens the door to new market entrants that may currently provide these services outside of the consumer vehicle market, such as commercial fleet management providers and companies that can provide remote diagnostics/prognostic services. OEMs neither have the same level of expertise nor the right personnel as these companies, and they do not seem to have any appreciable appetite to develop this competence in-house.
Meanwhile, the ridesharing service providers—Uber, Lyft, etc.—are deemed by many commentators to be the future kingpins of the future mobility market due to their current market presence and brand recognition in the area. However, with the shift toward driverless services, these companies will have to own their own vehicles. These companies neither have experience with vehicle ownership nor management of large fleets of vehicles. The core strength of these business has in fact been that they do not own any vehicles. It is these companies that will require the most assistance in maintaining their future vehicle fleets. Companies that currently operate in the commercial fleet management space could capitalize on this inexperience and form partnerships with some of these future ridesharing services to help provide these services. Many of their existing services such as remote diagnostics, management of fleets, and data analysis will certainly have important application in businesses that will operate in a similar manner in the future.
In the end, it seems that OEMs have begun to accept the future role of mobility services in the automotive market, but crucially they have seemed to have underestimated the importance of effective vehicle maintenance and fleet management to the profitability and success of these services. Meanwhile, ridesharing companies, although well placed in the current mobility market, have no experience in vehicle ownership and fleet management. If commercial fleet management providers can adapt their services to the consumer automotive market, or if current passenger vehicle maintenance providers can adapt their business models to shift away from the current reactive Business-to-Consumer (B2C) vehicle maintenance business models to more proactive Business-to-Business (B2B) vehicle maintenance business models, then they will find significant new opportunities in the smart mobility context.