From Cars for DRIVERS to Cars for PASSENGERS: The Future of the Automotive Industry.

In 2000, the founder of Netflix proposed a partnership to Blockbuster. Wasn’t accepted; Blockbuster chiefs lacked the vision to see how the industry was shifting, from retail-rent as you go to online – unlimited streaming. From asset-intensive to technology driven.We all know what happened next. Blockbuster went bankrupt in 2010 and Netflix is now a company with a Market Cap of 124 billion, more than 40 times the value of Blockbuster at the time. Blockbuster made several moves to follow Netflix business model; was too late. The time to market was lost.

The automotive industry faces disruptive trends, similar than the ones Blockbuster faced at the time: connected vehicles on demand, autonomous vehicles, electric models are going to disrupt the industry in less than 10 years.

For most industries, digitalization requires radical change. Capabilities, infrastructure, supply chains, go to market strategies, product design and engineering. But a business model that granted success in the past, can become a barrier. Leaders, proud of what they built, can be reluctant to urgent change. Some companies can be re-invented, some will be disrupted. Companies able to identify the trends and create a sense of urgency to act, before it’s too late; will be the ones to a reimagine business models; design new processes and lead to new ways of collaboration and revenue streams.

The key is to Embrace Change and Embrace the Future before it even comes.

TREND 1: Shift from driving experience to passenger experience

Driver experience: Feel the engine, intuititve controls, instruments connecting with the driver. Car as part of your identity. Focus on brand, image and performance

Passenger experience: Outside connectivity, sensors, screens, cameras, video. Changes in engineering and design. The segment to prevail over the brand (Luxury, SUV, Mini-Van, Economy Sedan) instead of (Lexus LS, VW Tiguan, Honda Odyssey, Nissan Sentra) opening the possibility to consolidate the vehicle offerings and OEMs.

TREND 2: From selling cars to OWNERS to selling cars for Shared Mobility Platforms.

Vehicles are shifting from spending 95% of the time parked to spending 95% of the time on the street; thanks to Autonomous Shared Vehicles.

As a vehicle owner, you pay for 100% of the time and only use it 5%, on top, you must pay for parking, insurance, and all related maintenance costs. You own an asset that’s is unproductive 95% of the time and is losing value every day.

Why not rethink the way we use a vehicle? Imagine fleets of driverless cars on demand, that shuttle people and deliver products efficiently through our city streets and highways. Optimizing traffic routes; saving time, parking space and increasing productivity. Less vehicles are going to be need it.

How to deal with concerns around autonomous vehicles safety? Top causes for car accidents are: speeding, drunk driving, distractions (talking on cell phones, texting, eating), ignoring traffic lights and signals. None of these are going to exist in the future because of autonomous vehicles.

As customers move from drivers-to-passengers and from owners-to-users; Who is going to own the vehicles? This represent an enormous opportunity to create a new business model. The opportunity is there for the OEMs (original equipment manufacturers) to embrace it and become service providers. A recent example of a similar shift is the entire IT sector, already moving from On Premise to the Cloud

What are the car leasing companies thinking about this trend? They already manage the vehicles. Are they a business partner for the OEMs? Are they willing to transform or the entire car leasing industry is going to be disrupted?

Truck, bus, delivery and taxi drivers account for millions of jobs. Virtually all these jobs will be eliminated within 10-15 years. “Automotive Industry: Employment, Earning, and Hours,” Bureau of Labor Statistics

If there are less drivers (because of autonomous vehicles) what’s going to happen with Uber? A simplistic Uber business model is: connecting drivers to passengers with an App. My prediction is that there are not going to be many single vehicle owners to connect. In the future, the vehicles are owned by big- medium fleet operators, and they will have a negotiating power over Uber. The new network of vehicle owners-operators can generate a new platform and challenge to disintermediate Uber.

TREND 3: From manufacturing cars with +20,000 moving parts to manufacturing electrical cars with less than 100 moving parts.

Shifting the competitive advantage from Mechanical Engineering to Electronic Engineering, with more sensors and electronic devices serving as platforms to collect a BIG DATA with specific behaviors and insights to monetize. (privacy and data ownership are going to be an issue). The mechanical parts assembled trough complex supply chains are not going to continue to be differentiators; shifting focus from production efficiency to innovation. Traditional supply chain practices and collaboration models need to evolve. The entire automotive supply chain is going to be reinvented, disrupting entire business clusters and ecosystems.

TREND 4: Auto retail - reinvented

Changes in vehicles ownership will impact their delivery as well. With less single car owners, the existence of a brick and mortar dealer doesn’t make sense, if someone wants to acquire a single unit will be online with delivery to your door autonomously. If you acquire an entire fleet will be made to order and delivered at the site. Also, can be delivered autonomously at specific locations. The need to verify the unit for exact specifications will be trough IoT and Blockchain technologies, to automatically secure the acceptance of both parties.

As passengers and the usage of autonomous vehicles increase, the need to track record of every usage of the vehicle is going to be an imperative. Blockchain and IoT technologies can also be used to connect and track the exact conditions of the vehicle, before and after changing passengers. Service providers will use this data as a verifiable record of every passenger behavior and build a shared scorecard.

We are at the brink of a digital revolution that will fundamentally alter the way we live, work, and do business. This transformation will be unlike anything humankind has experienced before; and new and exciting times are coming. Are you in for the ride?