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Will we still want to buy cars in the future?

There are some startling predictions for the future of the car market, but which will come to pass?

Will we still want to buy cars in the future?: Volvo 360c Interior Office

Will we still want to buy cars in the future?: Volvo 360c Interior Office

 

“What can be more palpably absurd than the prospect held out of locomotives travelling twice as fast as stagecoaches?” – The Quarterly Review, March, 1825.

If the above quotation illustrates nothing else, it should be that “flying car” syndrome is nothing new. Flying car syndrome specifically refers to the 1981 Ridley Scott film, Blade Runner. A cult-sci-fi classic, Scott – who’d cut his directing teeth in the advertising industry, so knew how to sell a concept or two – drafted in “futurologist” and illustrator Syd Mead, to help design the look and feel the film. The idea was that Mead’s designs, based to an extent on science-fact, would add some verisimilitude to the ridiculous story of Harrison Ford hunting down humanoid robots gone rogue.

Mead, clever man that he was, overshot the mark somewhat, though, positing a future Earth that looked like “Hong Kong on a bad day” to quote the director. Off-world colonies had been created in far-off planets, yes companies such as Atari and Pan-Am still existed (no sign of Google nor Facebook). And there were flying cars. Referred to as “Spinners” in the film these cars could swoosh up and away from the grimy, ground-level streets and fly to the higher levels, where the rich folk lived. It’s worth pointing out at this stage that Blade Runner was set in 2019…

All of which brings us to a salient point – we don’t know what’s going to happen. No-one predicted, in the real (as opposed to Syd Mead) 2019 that the following year would be banjaxed for all by a rogue virus. No-one predicted that the world would be in thrall not to tinpot generals with nuclear arsenals, but to Silicon Valley billionaires, who usually have far more cash than sense. So in trying to predict what the market for new cars will look like in ten year’s time, we are very much in the zone of flying cars. Any predictions made hereunder may well turn out to be utterly, utterly wrong.

However, there are some people who know what they’re talking about (or at least have a very solid appearance of doing so) and one of them is Klaus Zellmer. Zellmer was, until recently, the head of Porsche’s North American operations, and very successful he was in that role. So successful that he has been recalled to Germany to become the global head of sales for Volkswagen itself. And he has some trenchant ideas about the direction car sales are going to take in the next few years…

A cataclysmically perfect storm is brewing on the car manufacturers’ horizon

“We have a new business model that we are discussing within the company which we call the Operational Business Model 2.0. By 2.0 basically we mean that we will operate fleets. So we own the cars, and we will, through intelligent smart IT apps, let people use those cars and pay per mile, or maybe pay per day, or pay per week, month or year” Zellmer told The Irish Times.

It’s a vision that has been discussed by many other car makers and sundry prognosticators before. A cataclysmically perfect storm is brewing on the car manufacturers’ horizon. One that combines increasing urban populations, tightening emissions standards, and a generally-assumed lack of interest from younger buyers in cars and driving. The idea that car makers hope will save them is turning car ownership into an on-demand service – you don’t bother buying a car, you just press a button on your phone to call one up when you need it. Driven by robots, it will whirr silently and with no emissions to your feet, and whisk you off to your destination.

Zellmer isn’t – quite – saying that this is the concept that’s going to take over the entire industry, at least not yet, but that it will be come a significant driver of revenue, and will sit alongside the conventional buy-it-own-it-lease-it-trade-it-in model. “When you are in autonomous driving mode, you probably drive yourself out of your garage, to downtown, or onto the highway or motorway. And then you hit that button and it drives itself, for six hours, or five hours or three hours. This is the new playing field for all the manufacturers, because what happens in the car now that you’re not driving? You could be with your family, you could play games, you could watch your video, you can work, you can sleep. And so we have to create this environment that differentiates our car in the future from other cars, and gives you the sense of something that you probably even call your mobile homes. And I think that’s where the new competitive environment will be really interesting to look at.”

In some ways, it’s quite an apocalyptic vision – no more ownership, just renting (or at most, leasing) – one in which car makers become more like transport curators. In some ways it’s already happening. Right now, BMW’s own satellite navigation system can tell you not to drive. It’s true – pop in a destination, and if the car is connected to the internet (and it is, now) then it will work out if your journey would be more easily and efficiently completed by public transport. While that may be a rare happenstance for most Irish customers (unless you happen to live next to a Luas stop, or in Limerick Junction train station) it is a dramatic move for a car maker which once described itself as “The Ultimate Driving Machine.”

Shopping from home for a car is now de rigeur
Shopping from home for a car is now de rigeur

Such vision is also sending shivers down the spines of dealers, who are of course independent franchisees of the car companies. Many, especially since the ending of the so-called ”Block Exemption” rules in the early 2000s, have had to invest seven-figure sums in their premises, the vast out-of-town plate-glass palaces. Will such investments be proven to be foolhardy by an en-masse move to on-demand driving?

Previously, and not that long ago, it was felt that dealerships would indeed survive, and would in fact still be a crucial link in the chain between car maker and car buyer. In the wake of Covid, though, that seems far less certain. Shopping from home for a car is now de rigeur, and the likes of Tesla have broken the old model of independent dealer buying wholesale from a car maker – Tesla owns its own dealerships too.

Volvo is one brand that has already started down the long road to online-only but David Thomas, managing director of Volvo Car Ireland told The Irish Times: “We recognise that this will bring some changes to the way they operate, but there will be plenty of opportunities for retailers. We will transform our business model together with our retail partners, who will play a critical role also in the future. We don’t foresee this impacting the size of our network. Cars are very physical products that need to be delivered, serviced, and maintained, and the retailers play a vital role in the relationship with the customer, offering test drives, the face-to-face interaction when wanted and when possible, and other type of support.”

Of course, all of this is predicated on the idea that fully-autonomous, robotic driving will become commonplace, and increasingly that is being looked at with more cynical eyes. While the technology has come on in leaps and bounds, equally there has been no massive breakthrough, and cars are nowhere near being capable, yet, of driving themselves without a human on board. It turns out that fallible, fleshy humans are actually – still – better (as long as they’re paying attention) at detecting and reacting to dangerous situations than a computer.

So, we’re back to flying cars again. A nice idea, and full of tech-y promise, but who knows what will really happen in the next ten years?