Will More Consumers Rent or Buy a Driverless Car?

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Few of my friends own a car in New York City. Parking is expensive and you're navigating streets clogged with pedestrians staring at their phones. Self-driving cars are a potential solution. However, I doubt many of my fellow New Yorkers would buy a driverless car--there simply isn't enough room. Other major cities face a similar situation when it comes to cars.

Few of my friends own a car in New York City. Parking is expensive and you're navigating streets clogged with pedestrians staring at their phones. Self-driving cars are a potential solution. However, I doubt many of my fellow New Yorkers would buy a driverless car--there simply isn't enough room. Other major cities face a similar situation when it comes to cars.This leads to the question of whether more people would buy their own self-driving car or be satisfied with an on-demand driverless car. The answer depends on a number of factors such as cost, safety, and convenience. Therefore, as automakers pour money and resources into self-driving cars, they would do well to heed customer needs and behavior.

Google declared its driverless car was fully functional in 2014, and Tesla recently unveiled plans to produce its own self-driving cars to compete with Google. Uber has also made it clear that it's investing in a driver-free world. Last year, the company launched the Uber Advanced Technologies Center in Pittsburgh to do research on autonomy technology and vehicle safety.

Removing drivers would lower the cost of Uber's car service, maintains CEO Travis Kalanick. "The magic of self-driving vehicles is that the reason Uber could be expensive is because you're not just paying for the car, you're paying for the other dude [the driver] in the car," Kalanick told Re/Code's Kara Swisher last year at the annual Code Conference.

Personal-vehicle ownership won't disappear entirely. Some people will continue to own and treasure their cars. But it's difficult not to imagine a decline in ownership rates if it's cheaper to summon a driverless car whenever you need one. If that's the case, automakers and dealerships will need to change their business models and find new ways to generate revenue. Perhaps instead of rolling out personal vehicles, automakers will be competing for the chance to send consumers vehicles for short periods of time from a few hours to a month.

However, much of this is still speculation since we are at least 20 years away from driverless cars becoming ubiquitous, according to a KPMG survey of 200 auto executives. Over half of the respondents think it is somewhat unlikely or not likely at all that a major disruption to existing business models will occur in the next five years, with just approximately one in 10 expecting a major change. And nearly three out of four respondents expect OEMs to continue owning the customer relationship until 2020.

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