October 25, 2016
How can car brands navigate the utility mobility model?
by Dylan Stuart
Car brands are facing the most disruptive period in their history.
Agile new competitors, rapidly advancing technologies, increasing disincentives to own cars in urban centres and the growth of mobility networks are converging to fundamentally change the relationship between the car and consumer. Out of all those disruptors, the most fundamental will be the rise of the ‘utility’ model of mobility. We are on the cusp of a world where ‘intelligent’ mobility platforms can scale to become so convenient and flexible that we simply won’t need to own a car. Instead, we will pay for as little or as much mobility as we need from a network.
So when the car is no longer the second biggest purchase we make, or about pride of ownership, perceived quality and resale value – how will car brands be built in the future?
In order to avoid intermediation by third parties, one answer may be for carmakers to create their own ‘branded’ networks. Instead of owning a car, consumers will have a relationship with a car brand through the service it provides. We’re seeing this already with carmakers launching their own car-sharing services, such as BMW DriveNow and Audi On Demand.
For the networks to achieve success they will need to deliver services that aren’t just generically good, but which allow them to express their brand through services and experiences. Car brands will need to move beyond engineering products people love to forging new and more emotional bonds with consumers beyond the car. This is not an easy route to take. To use our phones as an example, we typically have a deeper emotional bond with our phone maker than with our phone service provider.
The second solution could be where the platform brands, such as Uber, become the “provider” and the carmakers become the “content.” Think of the relationship between your cable TV company and the channels you watch. The relationship of note is with the channel, not the provider.
For carmakers, a setup like this would rely on consumers having a strong brand preference towards a specific car brand. Which may prove difficult given the degree of separation between the carmaker and the customer. In order to maintain a powerful relationship, brand pull and meaningful differentiation will be more important than ever. Otherwise, the risk is the carmakers will return to being essentially manufacturing companies, supplying the new mobility networks as a B2B rather than a B2C.
As recognition of this reality, Toyota has begun partnering with Uber and Volkswagen has invested $300m in Uber rival, Gett. Apple has also entered the market, investing $1 billion in the Chinese Uber equivalent, Didi Chuxing Technology.
It is clear that car brands need to consider how to deliver their brands through the experience beyond the car. Those that stand the best chance of survival will be the ones able to define how to sustain their emotional bonds with consumers when the product is no longer the only star.
Article originally published by Automotive World on July 26, 2016.