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Ride sharing, autonomous vehicles - How future car ownership will change

2019-03-21 10:57

Image: AP / Eric Risberg

Car sharing is a widely expected phenomenon of the near future. But like much of Industry 4.0 (or the Fourth Industrial Revolution) it is, for the moment, more a buzzword than reality.

Most people who share cars through Uber or Taxify in reality only do so for temporary convenience – and still own a car.

The major instance where Uber is widely used – and replaces car ownership – is in dense urban areas, where car ownership has in any case always been rare, says Jakkie Olivier, CEO of the Retail Motor Industry Organisation (RMI).

Nonetheless, car sharing is an evolving trend that poses challenges for market players such as big dealers and automotive manufacturers - do they invent new products to address it, or allow start-up tech companies to disrupt to their traditional model?

Olivier said: "Shared mobility is an attractive notion as a solution to rapid urbanisation – and it has found its ideal not in shared cars but in mass public transportation systems. There are challenges with car sharing – such as financing it, insuring it and servicing it – the costs of which ensure that as soon as one gets to over 3220km travelled a year, it makes financial sense to own your own car." 

Ownership issues aside, we stand at the brink of the age of autonomous vehicles (AVs), and most attention has been riveted on the societal and behavioural changes they will bring about, rather than the more mundane aspects of who will own and care for the millions of AVs that will presumably be idling, awaiting summons via a smartphone app.

One of the big questions is whether the shared car ownership model will follow that of a mass transportation system in which you simply jump on and off like a bus or train – or the Facebook model in which the device ends up controlling you rather than the other way round. There is the question of whether people, many of whom don’t so much as like to drive automatic cars, will take to autonomous cars in which they are simply passengers.

"Whether this will be a glorious future remains to be seen. We are already seeing a backlash against monopolistic companies like Google and Facebook regarding privacy issues – how much more so will this be in the case of AVs. An AV will essentially be a large computer, a valuable asset that will be owned by somebody. Most likely, car ownership will lie with fleet operators rather than individuals. You’ll call for an AV via a smartphone app – it will arrive at your location, you’ll get in and enter your destination, and you’ll head for the freeway, and pay digitally via the same app. Riders never have to think about maintenance, never have to worry about refuelling, finding parking, cleaning, or buying car insurance or monthly car repayments," says Olivier.

However, some company somewhere will have the responsibility for all those bills – and vehicle ownership. Olivier reckons this may be an opportunity for dealerships and OEMs to fill that role, rather than technology start-ups. Some issues, such as regular servicing, are being built into the design of the computerised car, which may not only diagnose its own maintenance needs, but schedule its own appointment and then arrive by itself at the workshop.Issues of financing and insurance are also being looked at in the packaging and marketing of AVs. Tesla, one contender in the race to create fully self-driving cars, is considering bundling the cost of maintenance and insurance with its car sales.

One US company, Clutch, is looking to substitute owning or leasing a car with a monthly car-sharing subscription instead. The subscription includes insurance, maintenance, cleaning, taxes and unlimited car-changes, so customers can switch between whichever vehicle they require for a specific purpose. Clutch, of course, will own the vehicle. This subscription service is a business model that can be replicated by today’s big auto dealers and OEMs, which could move into owning and managing fleets of their own vehicles, which in turn would then be deployed by mobility service providers.  This could affect the business of banks, as in the recent illustration of a Chinese car-sharing company which listed on the stock exchange to raise capital for its fleet of cars.

Car sharing will undoubtedly affect vehicle sales in the medium to long term. Even if many people will continue to own a car while at the same time use Uber, on a family basis it may alter the decision of whether or not to own a second car, for example, or rather consider a shared car ownership model or even just ‘leasing’ a car as and when needed, as an option for the second vehicle.

“No matter who owns the vehicle it needs to be properly maintained as road safety has to be a priority. We continue to recommend that vehicle owners use RMI members for proper maintenance, service, and ultimately peace of mind,” concludes Olivier.

Gary McCraw, Director of National Automobile Dealers Association (NADA), a proud association of the RMI, last year attended the NADA USA Convention, and notes the previously strong feelings regarding digitalisation and the advent of virtual dealerships as a trend, has since been “tempered”.

This was based on research conducted by NADA USA which concluded that the average new motor vehicle franchised dealership would see many changes to how the dealership would be set up and run, but no significant disruption to the underlying business model.

"Although this was the overriding conclusion, it was made very clear that digitisation and virtual purchases should form part of the broader business strategy of a dealership. In essence, the motor vehicle business is still very much a people’s business." 

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