Browsed by
Tag: BMW

Beyond Uberization – auto industry turning into services business?

Beyond Uberization – auto industry turning into services business?

carI step out of my house to find my driver-less car from the ride-sharing service waiting for me, with my ride-sharing partners already seated and working. The indicator on my coffee mug tells me I have enough for the drive to the office – I fire up the console in front of me and log into my Office 365 account to finish up a sales proposal during the drive.

On the way back from the office, this cycle is repeated, except now the car has transmitted my arrival information to my home – to have it at the right temperature when I arrive with the lights on – and I have enough time to order groceries and shop for a gift on the car’s “marketplace”.

Too futuristic for you? If you have been following the developments in the auto industry, you would know that almost all of this is available today…

It was only about four months ago that I wrote about Uberization in auto sales – idea being that Tesla is leading the charge into changing the paradigm around auto sales to improve customer loyalty and satisfaction.

A couple of weeks ago at the CES trade show, the auto industry was again at the forefront of change – with announcements ranging from enabling people to access their Microsoft Office suite in the car from Microsoft and Harman, to “mobility services” from Ford.

“Ford’s rollout of mobility services, mostly under the “FordPass” brand name, resulted from 18 months of evaluation into building an end-to-end customer experience around the new offerings. FordPass, which launches in April, will be free, whether or not users own a Ford vehicle. FordHubs, the name for its storefront centers—which bear resemblance to Tesla’s retail locations—will open later this year in New York, San Francisco, London, and Shanghai. In February, Ford plans to launch a shared-lease program in Austin, Texas, that will allow up to six friends or neighbors to share a single vehicle. And soon FordPass members can speak directly to a human being, from a team dubbed FordGuides, to book a space at a local parking garage or receive other services”.

Add to that GM’s recent $500 million investment in ride-sharing company Lyft and purchase of SideCar‘s assets (SideCar was a ride sharing service which shut down last December) – the auto industry is truly thinking ahead, maybe because of necessity.

There are many factors leading to that thinking, but primarily, it is the increasing global realization that owning a car for everyday use may not be the most attractive option (of course, the purchase of a car for ego purposes cannot be discounted just yet). Even in the U.S., the number of households without a car grew from 8.7% in 2007 to 9.2% in 2012.

Consider this prediction from 2014:

The world will reach “Peak Car” — a point at which annual global sales growth will top out — in the next decade, several auto-industry analysts predict.

Researcher IHS Automotive, for one, sees annual sales cresting at 100 million within that time. Peak Car is at odds with the ambitious expansion plans of global automakers, which IHS says are gearing up to produce more than 120 million vehicles by 2016 — almost 50 percent more than last year’s worldwide sales mark of 82 million

So what is a major auto manufacturer (and its ecosystem of parts suppliers) to do?

An interesting article in MIT Technology Review talks about how auto manufacturers are taking tentative steps to become services businesses. In this age of “Everything as a Service”, a new term comes to mind for this – Mobility as a Service”.

Indeed, the article offers a prescient quote: “Uber showed the world that it can help people get where they want to go.”…(On another note, people following this thread maybe interested in a recent article in The New Yorker around how Uber and it’s Dubai-based competitor, Careem, have changed the lives of women in Saudi Arabia – which restricts driving by women)

The tune of the analysts has also changed in less than two years:

In November, Gartner, a technology market research firm, predicted that by 2020, 10 percent of today’s vehicle owners in urban markets will replace vehicle ownership with on-demand vehicle access. Thilo Koslowski, vice president and automotive practice leader at Gartner, believes companies like Uber and Lyft have an early-mover advantage in the short-term—but in the long run car companies could become legitimate players in mobility services made possible through car connectivity. He says their success won’t strictly be a matter of investment, but developing a culture and mind-set that extends beyond products.

So to answer the question above, in the short-term, companies like BMW are hoping to gain competitive advantage by impressing the ride-sharing users with the benefits of owning a BMW, but in the longer run, the Mobility as a Service and related offerings may become the primary way to financial success.

For more thoughts, follow me @RajBhandariDFW

Marty McFly was right – Flying Cars are here…

Marty McFly was right – Flying Cars are here…

back-future-part-ii_3Well, sort of…

Thirty years after “Back to the Future Part II”, it is amazing to see that some of the predictions the movie made in the 80s are real today – including 3D, abundance of flat screen TVs and drones…but no flying cars yet…

However, the transportation industry is undergoing paradigm shifts in every facet – from supply chain to marketing to to sales to predicting driver behavior and using technology to improve it.

Much has been written about using IoT, big data and analytics throughout the supply chain to improve the productivity, logistics, forecasting and predict machine failure. Not surprisingly, it is the emerging area of Connected Vehicles – from Connected Cars to Connected Trucks to Connected Rail – which is igniting possibilities from an end-user, commerce and fleet management viewpoints.

Think about what GPS data, real-time road conditions, weather data, driver behavior history, combined with data from the sensors in the vehicle can do…plus newer technologies like vehicle connected infotainment and dynamic route mapping… Add to that the projection that half the new vehicles shipping by 2032will have robotic autonomous (driver less) capabilities – we are painting a future which obsoletes all the current norms around transportation and commerce.

connected carA lot of this technology is available today – and some of it is under testing. An interesting report talks about “multi-modal mobility” as the future – “With mounting traffic congestion increasingly resulting in lost time and economic value as well as environmental issues, especially in mega cities in developing regions, the focus of both public and private companies in the automotive and transportation industries is shifting to multimodal / intermodal transportation solutions. Traveler information systems providing real-time public transport timetable information, multimodal journey planners, and smartphone-based pedestrian guidance applications are geared at facilitating knowledge of and seamless access to a wide range of mobility solutions. This is prompting even car OEMs such as BMW and Ford to offer solutions beyond the narrow context of the vehicle itself, realizing their products will become part of an integrated intermodal system, offering a balanced range of mobility modes…”

The basic technologies remain the same, but are being continuously improved – automated data collection (via IoT or other data streams), storing the immense volume and variety of data in efficient stores (big data), advanced predictive modeling on this data, and presenting it in the right context and format back to the user.

And just in time for the October 21, 2015 date famously referenced in the movie, learn how a couple of companies – HortonwWorks and Harman (disclosure: I work for Harman) are taking connected cars to the next level at this webinar on Oct 22nd.