Car Companies Prepare for a Future without Car Owners

Customer Strategy
Customer Experience
Auto companies are at the beginning of a major transition as they peer into a future where people may not want or need to own vehicles.

Auto companies are at the beginning of a major transition as they peer into a future where people may not want or need to own vehicles. In an increasingly on-demand and subscription-based economy, manufacturers are exploring a wider range of ownership models and rides-as-a-service programs to keep pace with changing customer behaviors and expectations.A recent survey of 16,000 consumers conducted by IBM shows that values placed on private car ownership are beginning to change. Cars will continue to be a primary mode of transportation, however there is a shift underway in what it means to own a vehicle. Of those surveyed, 42 percent would consider alternative ownership modes such as subscription pricing, 39 percent would consider a car -sharing model and 36 percent would choose the on-demand ride sharing option, while 24 percent of respondents were interested in fractional ownership of vehicles.

As cities grow more crowded, alternative options for accessing a car without having to worry about parking could become more than a luxury--it could become a necessity. Additionally, car sharing, on-demand ride sharing, and peer-to-peer rental not only give consumers the convenience of using a car without owning it, but it gives car owners the opportunity to receive a return on investment on their underutilized property.

To provide these new ownership models, auto companies are looking to Silicon Valley for help. Instead of building from scratch, General Motors, Ford, and BMW are partnering with tech companies like Google, Microsoft, and Amazon. They're also investing in peer-to-peer car-sharing and ride-sharing companies. GM, for instance, is investing $500 million in a partnership with Lyft to build an on-demand network of self-driving cars.

Ford is launching a new pilot program that allows families, friends, and neighbors to lease a car together and reserve drive time. Ford also announced that it is working with IBM to launch a new data analysis platform for analyzing transportation data. The platform will use IBM's cloud computing platform to identify patterns and trends that could help drivers make better decisions about their driving or whether they should use another means of transportation based on traffic conditions.

Ford says it is already using this platform to power its "Dynamic Shuttle" pilot in its campus in Dearborn, Michigan. The Dynamic Shuttle allows people to summon rides on-demand on a mobile app. Once a ride request is made, the software - including an algorithm that drives the platform's technical capabilities -determines the shuttle best suited to address the request without extending the travel time of riders already aboard. It then sends the rider an offer detailing proposed pick-up time and maximum duration of the trip, which the requester can accept or decline.

While traditional car ownership won't disappear any time soon, it's unquestionable that auto manufacturers can no longer simply build new vehicles. Auto companies must keep up with customer demands or else they'll be watching Google, Apple, and other tech companies drive off with their customers.