MOBILITY TRANSFORMATION

Your business is probably worth the most it will ever be in the next 12-18 months.

As of the end of 2016, there were 23 ridesharing companies in the US. Over 19,000 vehicles have been rented by 1.3mm people, growing at rate of 35% per year. Some companies like “Zip Car” own their own fleets and rent hourly; others will allow owners to rent their own cars peer-to-peer. Uber, Lyft, & Side Car connect car owners with people who are willing to pay for a ride. In addition to BMW’s “Reach Now” and Audi’s “Ride Share”; Mini will soon introduce shared cars, which will be accessible by mobile apps.

The future of the car business is in operating fleets for rideshare vehicles, and perhaps the retailing of a handful of luxury vehicles for private ownership. The culture and the sales approach will look completely different. No longer focused on the urgency of moving metal or measuring performance by scale, success will depend on a connected, experiential relationship between your staff and the consumer. This will require deeper, more sincere skill sets, and cannot be achieved unless you first build a leadership team that is connected with your employees at every level, developing the organizational  culture required to accommodate your growing client and employee base: Millenials.

<h3>The Future Of Auto Dealers In The US</h3>
What will happen to the vehicle distribution system that exists today? Our industry has enjoyed year-over-year growth in retail sales for the last seven years – the longest steady increase ever. Starting in 2017, experts predict a cyclical downturn will cause new vehicle sales to drop by about 500,000 units; with the upcoming industry transformation, don’t expect another upturn.

Based on consumer trends – increased popularity of ride hail and rideshare, manufacturer participation in developing apps for human-driven shared car fleets, and autonomous driving developments – in five years 5-7 million people are expected to give up their private vehicles.

Let’s take a look:

2017-2020

• Ride hailing and ride sharing companies will continue to grow, and more businesses will emerge to provide mobility services;

• Manufacturers will build special rideshare fleet vehicles with technology to make them more accessible, affordable and convenient; Some companies will expand their autonomous ride-hail experiments to additional markets;

• Hyundai’s “Vehicle Subscription” concept will spread to other manufacturers and eliminate the legal obstacle of conventional price fixing laws; Consumers will subscribe at fixed prices at automakers’ websites and pick up their vehicle at their local dealer; Dealers will receive a fixed margin for their subscribers, based on price range;

• Finance department revenue will sharply decline;

2021 – 2024

• Rideshare and ride-hail services will become increasingly autonomous; private vehicle sales will decline further as rideshare becomes more affordable and convenient;

• Anticipated number of dealers in 2025 will be below 10,000 in the U.S.; Total new vehicle sales will drop below 9 million units;

• Autonomous vehicles for private ownership will become luxury items, available at outrageous prices; Human-driven vehicular insurance will become increasingly unaffordable;

2025 – 2028

• The auto dealer concept as we know it today will cease to exist; Retailing of privately-owned fully autonomous vehicles will be centered around design, feature and benefit consciousness, offering ultra comfort and luxury;

• Fully autonomous fleets and rideshare companies will move 90% of traffic;

In the next ten years, the Mobility concept is going to usher in new ideas and opportunities that will replace auto retailing. Some will be able to adjust and make the transition to a new world of moving people; others will have to exit the arena. Most important of all is the shift in focus from “product” to “mobility experience”. You must ask yourself: What capabilities must I develop to make this transition?

The answer: people skills and organizational culture. You must be prepared to move from today’s scale based, product and efficiency driven sales environment to a “customer centric” philosophy.

Recent surveys still show that less than 1% of consumers were satisfied with their vehicle purchase experience. Generation “Y” values this experience three times more than the design of the product itself.

While it will take several stages of evolution for all of this to become reality, the first stage is already here. So if you want to be a player, start immediately taking steps to improve the environmental self-image of your organization, and take personal interest in your employees and their personal development. Convergent Alliance is completely focused and ready to hold hands with those who welcome the change.