We’re competing with whom?

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The future of the automobile industry seems pretty clear, and relevant to anyone involved in things Digital.

For those living in the suburbs, exurbs, and beyond, it will look a lot like it does right now: People will own or lease cars and use them to take themselves from place to place.

Having moved to a downtown condo a couple of years ago, I’m pretty confident a different model will become popular among us urbanites:

When I need a car, my NeedACar app will dispatch one. It will drive itself to wherever I am, take me wherever I want to go, and drive itself back to its home garage when I don’t need it anymore.

Imagine you (1) agree; and (2) are involved in strategic planning for a company in the industry. Plus, you’re digitally literate and consume science fiction at least occasionally — two essential qualifications.

And yes, while we’re exploring the automobile industry, the same thought processes apply to players in any other industry, too.

So … how do you size up your situation?

Start with the field of logical competitors, and how readily each of them can adapt to this new world of transportation.

Other automobile manufacturer/dealer consortia: These all have one certain and one potential advantage. The certain advantage is that no matter what the future looks like, someone will have to manufacture the cars. The potential one is brand loyalty: Even in an era of autonomous cars it seem likely that many drivers …well, in this scenario passengers … might have a preference for some makes and models over others.

But dealers will probably lack the scale needed to just house the fleets in question let alone manage them, and manufacturers by themselves have no ability to sell directly to consumers.

Uber: Using an app to get personal transportation to someone who needs it sounds a lot like Uber, except for the autonomous car part. Uber pretty much owns the mindshare of people who want on-demand transportation.

What Uber doesn’t have is a fleet of autonomous cars and the infrastructure that goes with one. Quite the opposite: Uber’s model works in large part because it’s made car ownership and maintenance Someone Else’s Problem.

Traditional taxi services do own and manage car fleets. But they haven’t even figured out how to compete with Uber. It’s unlikely they’ll figure out how to deal with on-demand autonomous self-service transportation.

Also, traditional taxis are pretty ugly.

Car rental companies would seem to be well-positioned for the scenario we’re exploring. They’re accustomed to managing large fleets and they’re in the business of providing vehicles on demand.

What they don’t have is the ability to cater to make-and-model preferences. Also, their fleets are concentrated in single large locations proximate to the local airport. In most cities the airport … and rental car centers … are located well away from the metro core, which means long delivery delays for the urbanites who are the core market for the service we’re talking about.

Turo and its brethren are Airbnb for car owners. If you won’t be using your car for a while you could make it available to people who need one.

With the addition of autonomous vehicles this model would seem to have a lot going for it — no need to own a fleet; a wide variety of makes and models on the street; and because the cars are self-driving the major inconvenience barrier — having to arrange meeting places to deliver and return the vehicle — goes away. It would, however, depend on car owners leaving their garage doors open.

Amazon: I have no idea what Amazon would bring to this party, beyond its obvious broad reach among consumers. Except for this: It didn’t occur to Best Buy that Amazon was even a competitor until far too late in the game, just as it didn’t occur to mainstream publishers that Amazon was a competitor until far too late in that game, and didn’t occur to traditional data-center outsourcers that Amazon might become a competitor until the game was nearly over.

Which gets us to the point of this little exercise: As companies dip their toes in the Digital waters, they’re (and by “they’re” I mean “you’re”) going to have to do far more than use Digital capabilities to gain an edge over the competitors they have right now.

They’re going to have to anticipate who their competitors will be once the innovation gears have gone through a few rotations.

Or, even better, they’ll choose some better competitors to beat than the ones they’re competing with right now.

Comments (10)

  • I’m not sure I agree with your assessment that urban driving is the future of autonomous vehicles. Last I was aware, self-driving cars couldn’t make a left turn at an intersection with oncoming traffic and no light. Perhaps worse, I don’t think anyone has developed an automated system that will obey a police officer’s signals, and traffic cones may be problematic as well. On the other hand, “Super Cruise” is available today as a partial automated solution for driving on limited-access highways.

    Of course, whatever is the future of autonomous vehicles, your point is on the money that identifying the competition will be vitally important in that and all industries.

    • Well, it is the future and I figure the technology will do nothing but improve.

      But my point wasn’t that urban driving is the future of autonomous vehicles. It’s that autonomous vehicles will reduce the need for automobile ownership, as opposed to renting them when they’re needed.

  • Excellent column!
    The analogy is insightful and very adaptable. Often we focus on our own skills at the expense of looking up at our surroundings, or looking down the road at the landscape. I’m sure I missed a cliche or two there, but it’s been a long day. Thank you for sharing your wisdom.

  • “It would, however, depend on car owners leaving their garage doors open.” Could this be solved with standardized, secured, garage-door opener? Need extra security where the garage is attached to home.

  • What about ZipCar? They pretty much do what you’re looking for — except you have to walk a block or three to get to the car, and then drive it yourself. Both “problems” which will be “solved” by better autonomous vehicle technology.

    For me, these aren’t problems because: 1. I don’t live in a city; 2. Being gravitationally challenged, I could use the exercise; and 3. I love to drive.

    As far as autonomous vehicles being a solution to anything: For me and many people like me, they’re an answer to a question we’re not asking.

  • What I like about this column is the observation that we need to be looking all around to see what is happening. Our next competitor may not be who we think, and in fact, may already be nibbling at our lunch. The problem is, it’s hard to take eyes off today’s get-it-fixed-now issue to spend time pondering the world around us. I think time travel is part of the answer.

  • The future is already here. I also live in an urban area and have already ditched the car and the garage. The combination of bike, rail, bus, streetcar, Lyft, and car sharing supplies me with all the transportation I need at 1/4 the cost of owning a car. I built a granny flat were my garage used to be and now have a $1500/month income. The biggest change I see with self driving is that it will drive the cost way down and change the form factor of a ‘car’. Based on my experience people don’t care what their uber looks like so I see a lot of shared rides with a 4-8 seat form factor further slashing the cost.

    • Building on Aaron’s comment: Brand loyalty will matter only for those who choose to own. So if your market is selling cars to purveyors of autonomous rides, beyond a minimum standard of comfort and style the big factors are going to be price, cost to operate, and reliability.

      Most of us (not all, most) don’t think too much about the brand of airliner, brand of washer in the laundromat, or brand of oven in the restaurant kitchen.

      Implications for car brands? There are a few decades left to milk brand loyalty. By then they’d better figure out the marketing magic for shared vehicles.

      • Oh, I don’t know. There are plenty of business travelers who rent cars and prefer some makes and models to others. The factors involved are likely to change, as drivability won’t mean much in an era of autonomous vehicles, but the design and comfort of the passenger space, and external styling, might still matter.

        I suspect this will be one of the big wildcards as companies vie for position.

  • Option 2. Bus replacement.

    I wonder if self-driving minivans 2 minutes apart might be able to replace busses. Seems like a large cost is the driver and another cost is the large size of the bus which means they only come by every 15 minutes.

    I see two issues with city living and cars. One is that people who don’t already drive probably don’t want to waste time 1) learning to drive and 2) actually driving when they could just be on their phone, so Uber or autonomous is the only viable alternative.

    The other issue came when our city installed a new bus line system and a “journalist” set up a contest timing a car driver, bicyclist and bus rider moving from one end to the another. If you think about it, the result is kind of irrelevant. A real test of a city human delivery system would time 10,000 cars against 10,000 bikers against 10,000 bus passengers.

    Trucks bring food from farms into the city and taking junque to the landfill are already mandatory for city living. Making them autonomous might save some money and lives.

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