October 17, 2019
By Axel Schmidt, Senior Managing Director, Global Mobility Industry Lead, Accenture, and Brian Irwin, Managing Director at Accenture who Leads its Automotive and Mobility practice in North America and the Industry X.0 Consulting practice.
Fueled by constant improvements in autonomous vehicle technologies, the market for mobility services is set to grow exponentially, with revenues projected to soar to more than €1 trillion over the next decade. Clearly, the potential for auto manufacturers and related companies is exciting and unparalleled. The question is: Who will profit and who will be left behind?
In this rapidly evolving landscape of mobility services, there are many open questions about the best way to build business models around these new market opportunities and how to monetize new services. But one thing is certain: automakers must make smart choices about where and how to play.
Why? Because new research from Accenture uncovered some surprising findings regarding consumers and mobility services. In one of the first demand-led surveys, called Mobility Services: The Customer Perspective, Accenture queried more than 7,000 people in the U.S., China and Europe to find out what they really want in terms of automotive mobility services—and the findings should be a wake-up call to auto manufacturers, who will need to shift gears if they want to remain relevant and successful.
For instance, certain automakers have long been able to realize significantly higher price points than competitors due to the cachet of their brands. Yet our research found that while brand is an important factor for consumers when buying a car, it’s far less important when considering car sharing (including autonomous driving), especially among owners of non-premium brands. In other words, brand strength alone will not ensure future success in mobility. So, automakers that want to win in mobility services act now to use its sales-reach to reposition their brand.
Perhaps even more surprising than the declining importance of brand is the willingness to give up car ownership. In fact, nearly half (48%) of all respondents in our survey said they’d consider giving up car ownership in favor of car sharing or autonomous mobility solutions.
What does this mean for carmakers? For starters, they should begin thinking about positioning mobility services as a valid alternative to car ownership—particularly in the premium car brand category, as, somewhat surprisingly, owners of premier brands were more likely than owners of non-premium brands to consider giving up car ownership for car sharing or mobility services.
Further, this indicates that the transition from car ownership to mobility-as-a-service seems inevitable—and that the risk of losing customers to new mobility service providers with mature service offerings is high. The key is to identify future value pools and calculate the investments needed to tap into them.
For example, is it still worth trying to sell vehicles to customers who are ready to jump into services altogether while risking losing them to service providers? If they don’t want to lose the grasp on their customers, auto manufacturers must fully embrace alternatives to the ownership model instead of just experimenting with them. And since premium-brand car owners are more willing to reconsider owning a vehicle, there’s greater urgency to start positioning mobility services as a valid alternative to car ownership for this market of consumer.
Our research did, however, uncover some differences between respondents based on geography, which should make automakers cautious about taking a one-size-fits-all approach. For instance, respondents in China show the highest propensity to give up car ownership, whether they currently own premium or non-premium brands, so car makers in that market should act now and start pushing alternatives to ownership since most customers there are already willing to consider substituting ownership for service models.
Car owners in the U.S., on the other hand, remain the most ownership-committed—with only about a third (39%) there who own a premium-brand vehicle and one-fifth (21%) who own a non-premium-brand vehicle saying they’d consider giving up ownership for autonomous mobility solutions. So, carmakers might have more time with consumers in this market, continuing to cash in on sales and aftersales margins for a foreseeable time before pushing more aggressively into car-sharing and related mobility services.
Our research also debunks the myth that the time is not yet here to sell “in-vehicle,” as the vast majority of respondents, especially those under 40, showed interest in add-on services on autonomous mobility trips—such as hotel service, music/movie streaming, catering, wellness (massage seat), etc.
For instance, most car owners we surveyed, regardless of geography, said they’re interested in at least one add-on service category for an autonomous ride. Further, 84% of respondents in China and almost half (46%) in the U.S. and Europe said they’re willing to pay an upcharge for such services—indicating that in a future of autonomous mobility, add-on services will become a major source of revenue.
The question in the future will be: Will transportation itself become the add-on to service, or will automakers be able to sell services as add-on to rides? Although China is the only market where most riders are currently willing to pay extra for add-ons or upgrades, automakers everywhere should consider at least piloting and refining those service offers to be ready once autonomous vehicles hit the market.
Those who start positioning themselves now to meet customers’ needs could reap the tremendous benefits that the mobility services market promises.