Experiments include all aspects of future mobility
Carmakers faced reality. Consumers preferred SUVs. The new US administration considered rolling back emission standards. In this context, car brands continued to plan for a vaguely defined future of mobility, but they also invested in sustaining their current combustion engine businesses.
Ford best illustrated this tension. In New York, the automotive pioneer opened Ford Hub, a World’s Fair-like exhibition of the future of mobility, while in Detroit, the company announced that it would resume producing its popular off-road Bronco. Electric carmaker Tesla, founded a century after Ford, surpassed Ford and GM in market value.
Tesla led the BrandZ™ Car Top 10 in value increase, rising 32 percent, followed by Land Rover, the iconic standard of off-road vehicles, with an increase of 17 percent. Only two other brands rose in value, Porsche by 16 percent, and Mercedes-Benz by 4 percent, having outsold BMW for the first time in a decade after BMW’s US sales slowed. Toyota remained No. 1.
The value of the BrandZ™ Car Top 10 stayed flat overall, compared with a 3 percent decline a year ago, as sales increased globally while margins remained thin. China experienced another record year, with 22 million cars sold. The US also reached a record, selling 17.6 million light vehicles. Sales rose for the third consecutive year in Continental Europe, and UK sales hit a record of 2.7 million cars.
Financing arrangements improved affordability and drove the UK sales. Discounts squeezed margins in the US and in China, where buyers rushed to purchase energy-efficient cars before the end of the year, anticipating the expiration of a government incentive program.
Meanwhile, carmakers invested in the development of electric and autonomous cars, and in connectivity to integrate cars into the Internet of Things. Technology brands entered the category both as competitors and collaborators. Alphabet renamed its autonomous car enterprise Waymo, and defined its mission as making it safe and easy for people and things to move around. Apple received a permit enabling it to test autonomous cars in California.
Technology changes mobility
Technology challenged the very conception of mobility as a system of vehicles and infrastructure designed to move people from place to place. With the rise of e-commerce, people increasingly stay in place and receive the delivery of goods, from clothing to ready-made meals. When people need to move, rising global urbanization suggests that they will be more likely to use public transportation or a ride-sharing option.
Today, however, most consumers in the developed parts of the world reside in less dense areas, and are still dependent on networks of roads and highways. For them, the fastest way to get from place to place—with family, friends, shopping bundles, or vacation luggage—is to climb behind the wheel of a car, and probably one with some cargo space, like an SUV.
Brands in the capital-intensive car business face this difficult challenge of meeting the needs of today’s consumers, while placing big bets on an uncertain future. The potential return on investment is long-term and based on fluid assumptions around rapidly-changing customer needs and societal trends.
Competition and collaboration
Many car brands already have made substantial investment in autonomous cars and have significant capability, especially at the levels of “hands-off” or “feet-off” driving, with related features already available, including lane-keeping technology. The “brain-off” driving level is more challenging.
In theory, the automatic pilot function could put the driver in the passenger seat reading a magazine or otherwise engaged, but ready to respond instantly if necessary. The first applications may happen with commercial vehicles. And legislation, rather than technological capability, may determine when full autonomy enters the market.
In the meantime, car brands are making strides in connectivity, with systems to communicate smartphone data and personalize cars with adjustments to seats, steering wheel, and the entertainment system. And brands are forming partnerships to combine industrial manufacturing expertise and capacity with technological wizardry.
Both BMW and Nissan have arrangements to integrate digital assistant technology from Microsoft’s Connected Vehicle Platform. Toyota licensed patents from Microsoft for its Azure cloud computing.
BMW and Ford are working with Amazon. Using Amazon’s Alexa, drivers of some BMW models can conduct certain engine checks using voice controls, even from home. Ford plans to enable its Sync system to respond to voice commands from Amazon’s Echo on its Sync hands-free system, developed with Microsoft over 10 years ago.
The major car brands are also experimenting new mobility solutions for when consumers desire access rather than ownership, or a vehicle matched to an occasion. Mercedes-Benz launched an Airbnb-type network that enables members to rent their Mercedes-Benz. Audi is testing a rental program called “Audi on Demand.” Members choose the Audi model that matches the occasion—shopping, schlepping, or going to dinner—and a concierge delivers and picks up the vehicle.
Ford purchased a rideshare shuttle service called Chariot. In Amsterdam, car-share service companies are picking up people in Tesla cars. Dubai has agreed to purchase Tesla cars to use as taxis. BYD, China’s electric car brand, is exporting electric buses worldwide. The Chinese internet company Baidu plans to open source its self-driving software.
Tesla’s sharp increase in brand value in part reflects the success of the car’s positioning as a stylish luxury brand offering the performance of a high-octane, carbon-burning engine without the guilt. Although Tesla introduced a car without a dealer network, placing its cars in high-end malls and other high-traffic locations, most brands still rely on dealerships.
Meanwhile, Amazon has talked about selling cars. And cars are available on Alibaba, usually in flash sales. The Ford Hub retail outlet purposely does not sell cars but rather attempts to reframe the Ford brand as different from the expected experience, and puts the manufacturer, rather than the dealer, in direct contact with the consumer.
Brand-Building Action Points
1. Balance priorities
Balance the investment of time and attention between the immediate requirements of succeeding in today’s market and the visionary possibilities of business in the future.
2. Express a point of view
Most brands say they are in mobility, connectivity, and autonomy. But me-too does not work, even if it is futuristic. A brand needs to have a point of view, meaning it not only will be present in the future, it will also help shape it.
3. Be more agile
As technology companies enter the car business, partnering can be awkward. Tech brands dance fast, while car brands typically foxtrot. Carmakers need to work on their moves and become more agile in the way they are structured, think, and behave.
4. Reimagine the dealer role
The need to know the customer, and the role of physical locations, will change with the evolution of mobility, including car sharing. Reimagined dealer networks could become important assets.