How to build fewer cars for more profit


As we march to­wards a bright fu­ture of au­tonomous ve­hi­cles, car shar­ing and, most likely, a mas­sive shift in our very con­cept of car own­er­ship, what’s the fu­ture for the global car in­dus­try?

Af­ter all, if cars can drive them­selves and can there­fore share them­selves be­tween a num­ber of us dur­ing the day, won’t this mean the in­dus­try will be mak­ing and sell­ing far fewer of them?

If there’s one thing that car com­pa­nies like, it’s profit. So the in­dus­try is way ahead of us on this one. Be­lieve it or not, some are see­ing a bright fu­ture – just not one that will see them churn­ing out mil­lions of cars per year.

How does one of the old­est and most tra­di­tional car man­u­fac­tur­ers bal­ance this sweep­ing fu­ture mo­bil­ity vi­sion with its cur­rent busi­ness model of mak­ing cars and, more im­por­tantly, its prof­itabil­ity?

We re­cently put that ques­tion to three of Ford’s big plan­ners of that fu­ture: man­ager of global con­sumer trends and fu­tur­ing, Sh­eryl Con­nelly, the CEO of Ford Smart Mo­bil­ity, Raj Rao, and ex­ec­u­tive direc­tor of strat­egy for Asia-Pa­cific, Jeff Jones.

‘‘We know that au­to­mo­tive man­u­fac­tur­ing is a multi-bil­lion dol­lar busi­ness – and we’ve done pretty well in that busi­ness,’’ says Con­nelly.

‘‘We have a nice share of the pie, but we al­ways want more.

‘‘The mo­bil­ity ser­vice in­dus­try has the po­ten­tial to be a tril­lion dol­lar in­dus­try and if we don’t change the way we do busi­ness, we aren’t go­ing to get any of that busi­ness.

The mas­sive shift in the con­cept of own­er­ship we have seen in the dig­i­tal age is some­thing that Con­nelly thinks will soon af­fect the way we look at cars too. The way mu­sic sub­scrip­tion ser­vices have over­taken the place of phys­i­cal me­dia is a good ex­am­ple.

‘‘Look at the young peo­ple of the world to­day; they don’t re­ally care if they own stuff as long as they have ac­cess to it. That is a seis­mic shift for a baby boomer who used to think of his car as the most ex­pen­sive suit he owned.

‘‘So how do we hold on to what the boomers want, but also make sure that the mil­len­nial gen­er­a­tion has what it needs?

‘‘We think that multi-modal trans­porta­tion is go­ing to be a re­ally com­pelling propo­si­tion in the fu­ture.

‘‘You will have many dif­fer­ent ways get­ting from A to B, and we hope to be the provider of some of those plat­forms.’’

While Con­nelly’s job is all about the fu­ture, Rao and Jones also have to con­sider the present and how it will blend into that fu­ture.

‘‘Our view is that we have built an or­gan­i­sa­tion that is ex­cel­lent at de­sign­ing, man­u­fac­tur­ing and de­ploy­ing ve­hi­cles, and that core com­pe­tence needs to be sus­tained and in­vested in go­ing for­ward,’’ says Rao.

‘‘What we are adding to that is the own­er­ship ex­pe­ri­ence and the rid­er­ship ex­pe­ri­ence. So when some­body gets ac­cess to a ve­hi­cle they can do more things with that ve­hi­cle, they will use the ve­hi­cle more flex­i­bly, achieve more out­comes and be able to share the ve­hi­cle.

‘‘These are all nat­u­ral ex­ten­sions of our busi­ness model, but it is an area where we haven’t re­ally built the or­gan­i­sa­tional scale yet.’’ Like the oth­ers, Jones doesn’t think the con­cept of mak­ing less cars is some­thing that should worry a com­pany like Ford, as it’s all a nat­u­ral evo­lu­tion.

‘‘You think about the city of to­mor­row and it in­cludes some type of trans­port. It in­cludes ve­hi­cles,’’ he says.

‘‘So when we think about what mo­ti­vates us, it is to have busi­ness mod­els that are prof­itable and sus­tain­able, but also make the world a bet­ter place.

‘‘When you think about the over­lap be­tween mo­bil­ity and the need for ve­hi­cles, whether they be au­tonomous ve­hi­cles or shared ve­hi­cles or a com­bi­na­tion – and we be­lieve it is likely to be a com­bi­na­tion – the two can sit to­gether.’’

Ford Fu­sion au­tonomous car.

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