I have been thinking about this for quite some time.
Then via Twitter I came across this Adage article about how the internet or let’s say digital media in general is having a desasterous effect on the auto industry.
Sounds far-fetched? Maybe, but there is truth to it as I will prove.
THE RISE OF CARS
Beginning in the early 19th century cars began to replace horse and carriage. Slowly but steadily, and as productivity improved and cars became more affordable (think of the Ford Model T), the success of automobiles could not be stopped anymore. Until now. Sure, cars have not yet been replaced by small convenient electric aircraft or such, but they are under pressure. From a medium no one could have imagined it would be a threat..
HOW THE CAR EMPOWERED US
Some 10, 20 or even 40 years ago, a car was the dream of any young man or woman. Why? It is a symbol of freedom, it allows you to move where you want when you want, and thus enables you to communicate in person with people living too far away to walk. It enables you to haul home goods that you bought elsewhere, it takes you to your job interview and it may be the romantic setting on a first date. You had to have a car or you where nobody.
Still the case today, you might say. Well yes, but only to some extent.
WHERE DID ALL THE DRIVERS GO?
The number of young adults who have no driver’s license is decreasing. Just as the article on adage.com nicely illustrates, this is no coincidence but rather a strong tendency away from the car. This does also apply to my personal network. People don’t get their driver’s license because they are unable to drive properly. No, they simply do not need it and save the money for other things. Coming back to the graphic in the adage.com article you should be aware, that in the U.S a driver’s license is very easy to obtain (financially and concerning the test – if this is good like that? Well the auto lobby surely would not want it any other way). To compare: in Germany an auto driver’s license can easily amount to EUR 1000. This would at least partly explain why less and less people get the license. However, for the US and that is the country the adage.com graphic refers to, it is no explanation at all.
Now why would young adults shy away from all the wonderful possibilities a car offers you? Do they no longer have the needs? They do. But they found an easier, more convenient, yet digital way to cover all the things mentione before:
-symbol of freedom
-go where you want when you want
-communicate in person with people living too far away to walk
-haul home goods that you bought elsewhere
-setting on a first date
HOW THE (MOBILE) INTERNET TOOK OVER
Internet and mobile internet via your cell phone allows you to be free. You can do anything at any time. From shopping for exotic products to watching a UStream livestream of a highschool basketball final.
You can virtually access any point on this planet via Google Maps and billions of photos and videos at your disposal. You want to see how huge the waves in Hawaii are – surely someone has been there and shares his photos, videos and impressions with you. The internet allows you to communicate with anyone in the world – whether you are somewhere in the Bavarian Alps or downtown Manhattan. Skype and other applications allow to even see each other live. You can literally purchase everything online. From a new car to groceries to a new movie – many goods even come with free shipping right to your apartment door. Job interviews or at least first level interviews can easily be undertaken via video conference. No need to drive60 miles just to find out the position is absolutely not your piece of cake. Dating today does no longer take a car to take the girl to the movies or the diner as we know it from the 50s and 60s movies. Instead online dating platforms have become highly successful and even come with a money-back guarantee (now how weird is that?).
And to some it up. While before identification happened via clothes, your car, your peers, this has considerably moved online. Today, teenagers as well as young adult identify themselves by their myspace or facebook profile, the type of cell phone they have and which b(r)ands they favor. As a recent Southpark episode nicely illustrated: if you have no profile and or no friends you barely exist.
Sure, you can also show off your car. But think of young people and how they are searching for their own identity via brands etc. An iPhone is much cheaper than a car, and very often today, a car does not impress as much as an iPhone, the latest apps or how many friends you have on facebook. Another aspect is that we tend to move to highly populated cities. Who needs a car, when you have some 50 different subway lines, another 50 bus lines plus the train system? You often do not even have the possibility to demonstrate your car to your colleagues because many times you do not know where you will be parking the next day (if there is no company parking lot). And lastly: cars cost you money even when they are standing in the garage. In times of economic uncertainties you would rather not invest too much into a car.
You may have realized that I have spoken of different groups of people i.e. potential consumers. Teenagers who are allowed to drive a car much earlier in the US than in Europe and then young adults and adults in general. The latter may still be the more easy-to-handle target group with a fixed value set in their mind and often times strong loyalty to auto brands (and their heritage). But ask the younger generation! Cars have become much more similar in recent years. It is not longer the US brand vs. Japanese brand fight. The market is much more diverse, intertwined and thus confusing for the consumer. Is Subaru American? Jaguar still British or really Indian now? Does the Mini Cooper really have a Toyota engine? And is it true that Japanes cars are built in the U.S. by U.S. workers?
This industry is chaotic.
AND FINALLY: CARS ARE BAD
The car today has lost some of its power. And the world has changed leaving less space for our cars. What I have not yet mentioned is the entire environmental issue. Cars today are considered harmful. They endanger our future and that of our children. New technologies are being demanded by the public. As the world around us has changed so cars have to change to maintain their role in our lives.
THE CONSEQUENCES FOR CARS AND AUTOMAKERS
What does the changed environment mean for automobiles?
-cell phone-like apps for the car
-connecting the digital sphere with the car sphere (colleagues may not see your car on the road, but on social networks)
-hybrid, e-cell, fuel cell and other technologies to take away the negative touch
-alternatives to owning a car, such as car-sharing
-mobility on demand, e.g. via a rental car when you need one
-cars and auto brands have to go online and into Social Media (Don’t loose touch of future target groups!)
-cars have to identify new „reasons why“ to persuade consumer to purchase a car
-brand facets such as sustainability have to be pursued and must be cemented as core brand facets
-auto brands have to make sure their brand can be understood by consumers