Few crashes, big impact — on lawyers, car repairs and sales
Driverless cars have been in the doghouse recently, ever since one of Uber’s robot-driven Volvos killed a pedestrian in Arizona.
It’s a tragedy for the pedestrian and her family, and a setback for autonomous vehicles. We need improved technology and regulations to prevent similar tragedies.
That’s because robot cars aren’t going away. Despite the fatality last month, self-driving cars are expected to bring major improvements in road safety. But they also will cause major disruptions to the economy and society.
We know that cab drivers and truckers will be thrust out of work.
But what about the automobile sector? It will also take a hit. From car manufacturers to dealers to insurers, tow-truck operators and repair shops — particularly body shops — all of them stand to lose business. So do hospitals, ambulance companies and personal injury lawyers.
Why? Because sometime beyond 2025, human error in driving will start to fade and with it, the roadside wreckage and services that capitalize on our mistakes.
Human fallibility, the cause of 94 percent of accidents, is a cash cow. Every time someone wrecks a car — every 16 minutes in the United States — an entire industry swings into action.
A wrecker hauls smashed vehicles to an impound lot. Insurance agents photograph the damage and pay claims. Nurses and doctors patch up the victims or, about 90 times a day, send their corpses to the morgue. Rental agents provide temporary transportation. Mechanics fix the damaged vehicles. If the crash is bad enough, a dealer gets an opportunity to sell a new or used car. Sometimes a lawyer gets involved.
Autonomous vehicles, with their vehicle-to-vehicle communication, sensors and artificial intelligence, render most of these business opportunities obsolete. Simply put, machines can operate themselves a lot more sensibly than we operate them. Self-driving cars can text and drive without crashing. We’ll be safer.
Mostly this is fabulous news. Crashes kill almost 40,000 people per year in the United States, at a yearly cost in lives and productivity of more than $1 trillion, according to the NHTSA.
Existing measures like automatic braking, better road design, and lower speed limits would be a quicker way to enhance safety. But political hostility to regulation makes common-sense fixes difficult.
So we wait for robots to save us. When AVs dominate,
KPMG estimates accident frequency could drop by 80percent, from more than 0.04 wrecks per vehicle in 2013 to 0.01 by 2040. (Fig. 1) And these improvements will come despite a big increase in the frequency of vehicle use.
Those on the receiving end of this spending will suffer. If we’re not crashing our cars, General Motors, Toyota and Tesla aren’t going to sell as many replacements.
Most forecasts I’ve seen predict that AVs will increase usage of vehicles – which makes sense – as well as sales of vehicles, which may not.
I haven’t found a study that details the percentage of car sales that arise from vehicle accidents, but the number is not trivial. Police reported 7.3 million crashes in the United States in 2016, according to the NHTSA.
If they all involved just one damaged vehicle, the number would equate to 41 percent of the 17.6 million vehicles sold that year. Take away road accidents, and many of those 17.6 million vehicles would not have left the dealer’s lot.
When I lived in Dubai, where driving is more reckless than in the United States, the head of a major US auto manufacturer’s Middle East operations told me that prevailing driving habits were good for business.
Testing the theory, I called a Ford dealer in Dubai a few weeks after an incredible 250car pileup one foggy morning. Had the dealer noticed an uptick in sales? He had. “A lot of people who got out of Fords in that crash, they came to us again and bought another Ford, because they weren’t injured,” the dealer told me. “A lot of people who crashed their Japanese cars also bought Fords. They opted for something safer.”
In the United States, popularity of sport utility vehicles and pickups is based partly on personal safety concerns. But the rise in vehicle size has made overall driving more dangerous.
One study found that each light truck sold in the United States imposes an extra $2,444 in accident and health costs on the public.
When autonomous vehicles come around, the paradigm could shift. Safety rationales behind vehicle purchases will wither. Many people won’t even bother to own a car, or buy insurance. They’ll share cars or borrow them from a driverless “on-demand” service like Zipcar.
Crash repair, a $30 billion-ayear business replete with small firms like Joe’s Body Shop and Frank’s Towing, could go the way of the Blockbuster video shop.
Parts manufacturers will suffer. Hospital emergency rooms won’t need to treat two million crash victims a year. The personal auto insurance business could shrink to less than 40 percent of its current size, KPMG estimates.
A University of Texas study estimated the medical and repairs savings at $180 billion a year.
The 76,000 US lawyers who specialize in personal injury claims — about 6 percent of all US lawyers — may also have to look elsewhere for business.
Once electric vehicles, with their simple motors, start to take market share from internal combustion engines, maintenance requirements will plummet.
Of course, automobile parts will still wear out. And individual drivers may no longer need much insurance, but coverage needs could shift to manufacturers and their executives.
And there will be other unexpected business opportunities.
Saving lives on the roads will injure many businesses. Will those industries fight back, even when their loss is for the greater good? Probably.
As we saw with the pedestrian killed last month, AVs are not infallible.
Robot cars may be able to drive in dry conditions, but what happens when they start sliding on an icy overpass?
Or when an elk gallops in front of the car?
Or when some overconfident road warrior decides to turn off autopilot and drive manually?
Frank’s Towing and Joe’s Body Shop, we may still need you.