The dis­rup­tion in car own­er­ship In­di­vid­ual mo­bil­ity op­tions like public trans­port, Uber and car-shar­ing are shap­ing change in the au­to­mo­tive in­dus­try.

Finweek English Edition - - OPINION - Editorial@fin­ is a long-time fin­week con­trib­u­tor, fo­cus­ing on prop­erty and motoring. She is pas­sion­ate about all things mo­tor and sports re­lated.

ten years ago if you didn’t own a car you were on the road to nowhere. Mo­bil­ity op­tions were lim­ited in ur­ban ar­eas, and non-ex­is­tent in sub­ur­ban ar­eas. To­day it’s a dif­fer­ent story. Ef­fec­tive public trans­port sys­tems like the Gau­train and MyCiti Bus now ex­ist. Then there’s Uber. And now car-shar­ing, like lo­cal start-up Lo­co­mute. Un­sur­pris­ingly, all these mo­bil­ity trends are dis­rupt­ing the need for car own­er­ship.

Lo­cally the new ve­hi­cle mar­ket faces stiff chal­lenges, not least of which is an ail­ing econ­omy that also con­trib­utes to in­flated ve­hi­cle prices and an in­crease in used-car pur­chases. New car sales are be­ing squeezed, with April fig­ures from the Na­tional As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers of SA (Naamsa) show­ing a yearon-year drop of 13.2%.

The core model for mo­tor man­u­fac­tur­ers has been the build­ing and sell­ing of cars. But fu­ture mo­bil­ity trends and their im­pact on car sales are likely to see car man­u­fac­tur­ers trans­form­ing their busi­ness mod­els to tap into mo­bil­ity mod­els as a rev­enue stream and, in so do­ing, shap­ing and trans­form­ing both in­di­vid­ual mo­bil­ity and the au­to­mo­tive in­dus­try.

Since 2013, mo­bil­ity dis­rupter ride-shar­ing ser­vice Uber has pro­vided rides for more than half a mil­lion lo­cals in five cities. But mo­bil­ity is not just about flex­i­bil­ity and con­ve­nience such as that which Uber and Lo­co­mute, SA’s first car-shar­ing net­work, pro­vide. It is also about af­ford­abil­ity.

Car own­er­ship is an ex­pen­sive busi­ness and while South Africa has a bur­geon­ing mid­dle class that aids own­er­ship, own­er­ship in Africa is only around 44/1 000 peo­ple. In some mar­kets like Ethiopia it is as low as 5 or 6/1 000. It means op­por­tu­ni­ties on the con­ti­nent for SA’s auto in­dus­try, in­clud­ing those that come from more af­ford­able mo­bil­ity so­lu­tions, can con­trib­ute to in­creased in­dus­try vol­umes, Mike Whit­field, pres­i­dent of Naamsa and man­ag­ing di­rec­tor of Nis­san SA, told me.

Tapping into in­di­vid­ual mo­bil­ity dis­rup­tors

The au­to­mo­tive in­dus­try has al­ways been in­no­va­tive when it comes to ad­just­ing to the chang­ing habits of con­sumers, Whit­field ex­plained, adding that man­u­fac­tur­ers are look­ing to ad­dress “the need for greater flex­i­ble mo­bil­ity so­lu­tions and the op­por­tu­ni­ties these present”.

This think­ing is ev­i­dent from the BMW Group, which says the de­vel­op­ment of cus­tomer-ori­ented mo­bil­ity ser­vices will be a cen­tral busi­ness field and it will con­tinue to po­si­tion it­self as a mo­bil­ity provider and not just as a car man­u­fac­turer.

Ac­cord­ing to Whit­field, of the in­creas­ing num­ber of so­lu­tions for mov­ing around, car­mak­ers view car-shar­ing as their big­gest op­por­tu­nity. Some have al­ready tapped into this mar­ket. Daim­ler AG sub­sidiary Car2Go, pro­vides car-shar­ing ser­vices in Europe and North Amer­ica while DriveNow, the joint car-shar­ing ven­ture be­tween the BMW Group and Sixt SE op­er­ates a fleet of more than 4 000 ve­hi­cles in five coun­tries in Europe and Scan­di­navia. BMW also re­cently launched ReachNow, a shar­ing ser­vice in Seat­tle, USA. BMW SA told me it will be able to adopt the DriveNow model once car-shar­ing, Uber and other re­li­able public trans­port mod­els be­come as ef­fec­tive lo­cally as they are in de­vel­oped coun­tries. Sci­en­tific stud­ies show that a DriveNow ve­hi­cle is sub­sti­tu­tion for at least three pri­vately owned cars. But rather than neg­a­tively im­pact­ing ve­hi­cle sales, BMW ex­pects the scheme to in­tro­duce new tar­get groups to its brands. The com­pany is con­fi­dent that part­ner­ships in the area of car-shar­ing and public trans­port sys­tems will en­able it to in­crease or bal­ance ve­hi­cle sales ap­pro­pri­ately. BMW an­nounced a pi­lot project with Uber and Nis­san, called UberGREEN, that will run in Jo­han­nes­burg un­til 3 June and will give Uber users the op­tion to be picked up by a Nis­san Leaf or BMW i3.

But South Africa, with its vast sub­ur­ban tracts, is not yet in the po­si­tion of de­vel­oped coun­tries where trans­port in­fra­struc­ture min­imises the need for a car.

Dis­rup­tion in SA

The vi­tal au­to­mo­tive in­dus­try con­trib­utes 7% to GDP and is one of the coun­try’s largest em­ploy­ers. De­spite pres­sure on the new car mar­ket, in­vest­ment by car­mak­ers and the re­lated in­dus­try con­tin­ues to ex­hibit con­fi­dence in the lo­cal econ­omy, with pro­jected in­vest­ment by the seven ma­jor mo­tor man­u­fac­tur­ers in 2016 cur­rently stand­ing at a record R7.63bn, ac­cord­ing to Whit­field.

Maybe it’s a case of the smart guys in­vest­ing in tough times, know­ing they will reap the ben­e­fits in an eco­nomic up­turn through ex­ports; an in­creased foot­print in car-shar­ing; as well as public trans­port part­ner­ships.

Mar­ket re­search com­pany Gart­ner fore­casts that 10% of cur­rent ur­ban ve­hi­cle own­ers will switch from own­er­ship to on-de­mand ve­hi­cle ser­vices by 2020. But SA, with its vast sub­ur­ban tracts, is not yet in the po­si­tion of de­vel­oped coun­tries where trans­port in­fra­struc­ture min­imises the need for a car.

And South Africans love their cars. Aside from a means of trans­porta­tion, car own­er­ship for lo­cals is im­por­tant as a sig­ni­fier of suc­cess and so­cial sta­tus. But even those that do forgo car own­er­ship are still likely to con­trib­ute to ve­hi­cle sales in the form of the ride-shar­ing or car-shar­ing so­lu­tions they use to keep them on the move.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.