Driverless cars could have sig­nif­i­cant credit im­pact across range of sec­tors

Financial Mirror (Cyprus) - - FRONT PAGE -

Driverless cars could have sig­nif­i­cant credit im­pli­ca­tions across a wide range of com­pa­nies and sec­tors as the tech­nol­ogy be­comes more ad­vanced and wide­spread in the com­ing years, Moody’s In­vestors Ser­vice said in a re­port.

Al­though the ex­ten­sive use of self-driv­ing ve­hi­cles is still some way off, the tech­nol­ogy has the po­ten­tial to make road travel safer and cheaper, while hav­ing a big im­pact on ve­hi­cle pro­duc­tion, fi­nanc­ing and us­age. It is also likely to carry credit con­se­quences for in­sur­ers, car­mak­ers, banks and tech­nol­ogy firms.

“While there are still many un­cer­tain­ties around the fu­ture of driverless cars and trucks, the tech­nol­ogy is likely to have credit im­pli­ca­tions across a wide range of sec­tors,” said Colin El­lis, Moody’s Man­ag­ing Di­rec­tor, Chief Credit Of­fi­cer EMEA, and co-author of the re­port.

Driverless cars are likely to open up new forms of com­pe­ti­tion for tra­di­tional man­u­fac­tur­ers, with soft­ware and data firms such as Google en­ter­ing the mar­ket. The new tech­nol­ogy could also cre­ate new op­por­tu­ni­ties for man­u­fac­tur­ers. Th­ese ve­hi­cles could, in prin­ci­ple, cap­ture in­for­ma­tion about house­holds’ travel and other habits, par­tic­u­larly if the cars link with other house­hold sys­tems. This data would be valu­able for banks, in­sur­ers and other com­pa­nies and could also al­low man­u­fac­tur­ers to iden­tify new goods and ser­vices that house­holds may want to pur­chase, fur­ther di­ver­si­fy­ing rev­enue streams.

Ul­ti­mately, the car it­self may be­come more com­modi­tised, with buy­ers more fo­cused on the soft­ware that al­lows the ve­hi­cle to drive au­tonomously. In this sce­nario, soft­ware and semi­con­duc­tor firms may be best placed to reap the ben­e­fits of de­mand.

Se­cure IT hard­ware and soft­ware will also be crit­i­cal to pro­tect au­tonomous ve­hi­cles from both in­ad­ver­tent and ma­li­cious in­ter­fer­ence, which will ben­e­fit semi­con­duc­tor firms along­side soft­ware com­pa­nies.

Sim­i­larly, hard­ware pro­duc­ers who build the sen­sors and cam­eras ve­hi­cles should also ben­e­fit.

In the­ory, au­to­mated ve­hi­cles could free up space on the roads, re­duce the risk of ac­ci­dents and cut jour­ney times for in­di­vid­u­als and com­pa­nies. This could cut trans­port costs for freight haulage and in­crease em­ploy­ees’ pro­duc­tiv­ity.

For car­mak­ers, driverless ve­hi­cles are likely to have mixed con­se­quences. Com­pa­nies could ben­e­fit from de­mand­ing a price pre­mium for th­ese cars. How­ever, they could lose out if smoother com­puter-op­er­ated driv­ing styles were to re­duce wear and tear and, con­se­quently, give cars a longer life­span be­fore they need re­plac­ing.

The im­pact on in­sur­ance com­pa­nies could also be sig­nif­i­cant. Lower ac­ci­dent rates should re­sult in lower costs and pre­mi­ums. Set against that, au­tonomous ve­hi­cles may be more ex­pen­sive to re­place, which could push up pre­mi­ums.


for au­tonomous

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