Half of today’s car owners will not want to own a vehicle and more and more will want self-driving and electric cars in future, a survey of car manufacturing bosses has found. As fewer people see the need to buy a car, a majority of automotive executives believe the industry will increasingly focus on making money from peripheral digital services to be used with their vehicles.
The results suggest that producing driverless, electric vehicles to sell to tech firms, such as Google or Apple, that consumers would then pay to use could be a growth area in the industry in the coming years, according to an analyst.
“I believe robot taxis will revolutionise UK urban transportation in the second half of the next decade,” said John Leech, UK Head of Automotive at KPMG, which produced the report.
“The UK is particularly suited to the early adoption of self-driving cars consumed as a service. Our greenbelt policy has created a relatively dense urban population which, when coupled with our high fuel prices, means that so-called robot taxis offer a greater cost saving to the UK public, compared to European or North American markets.”
However, manufacturers thought it was more likely that the prevailing business model in 2025 would be centred on producing a vehicle with technological add-ons.
They placed the more traditional production of cars and sale through dealerships second, while selling a connected car then maintaining a relationship with the driver using the vehicle’s connectivity was third.
About 20% of executives, among them many from India, China and south-east Asia, felt the industry would focus more on selling vehicles directly to tech firms – in particular, those whose brand image is not as strong with the public.
Moreover, the report said 74% of executives thought more than half of car owners today would not want to own a vehicle in the future. And 85% of the executives surveyed were convinced their company might make more money by providing the new digital services than by selling cars alone.
“Carmakers plan to sell a myriad of new digital services to vehicle users. Today, carmakers already make substantial profits from the sale of consumer finance and annual vehicle insurance but this will grow in the future as innovative services such as remote vehicle monitoring and the integration of the car as a focal point in people’s ever more connected lifestyles are demanded by consumers,” said Leech.
“For the auto industry this implies that pure product profitability is outdated. Carmakers’ success will not be evaluated solely on the quantity of vehicles sold, but on the customer value over the whole lifecycle – especially when the digital ecosystem will be ready for the market.”
The report also found that executives expect diesel technology to become a thing of the past. More than 90% of them plan to invest in the technology needed for battery electric vehicles over the next five years, while 62% felt that diesel was losing its importance for manufacturers.
Figures from the annual global automotive executive survey also showed that 90% of bosses expect battery electric vehicles to dominate the marketplace by 2025.
Leech said: “Improvements in the cost and range of battery technology, coupled with growing concern over the emission of both carbon dioxide and nitrogen oxides from diesel engines, means that almost the whole automotive industry believes that the mass adoption of electric cars will happen during the next decade.”
The survey was taken of 800 executives in 38 countries. People working for vehicle manufacturers, suppliers, dealers, financial and mobility service providers – as well as car users – took part in it.