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Tech Brands and Ride Sharing Could Worsen New-Car Sales Hangover

Salesman holding out car key in automobile showroom

Automakers saw boom times for new-car sales in 2015 and 2016, and the notion that what goes up must come down (or plateau, if you’re being generous), has appeared to take hold in 2017. Car buyers are, after all, a finite resource. People don’t need to buy new vehicles regularly, and data shows people are hanging on to their cars and trucks longer. Rising technology only compounds this increasingly harsh reality for automakers, as underscored in a new report by the consulting firm Capgemini.

For automakers, the first bit of bad news is that people seem quite receptive to buying a vehicle from a tech brand such as Apple or Google, according to Capgemini’s 17th Cars Online report, which surveyed some 8000 consumers in eight countries. This interest is despite a “lack of substance,” said Matthew Desmond, North American automotive market lead at Capgemini, meaning that tech brands do not yet have their own vehicles ready for sale. The firm’s survey nevertheless found that consumer interest in buying cars from tech brands has grown from 49 percent in its 2015 study to 57 percent in the latest report. Whether consumers actually would buy the tech companies’ vehicles is another matter, Desmond noted. But they’re increasingly open to it.

Brand loyalty is not the only thing for the established OEMs to worry about. There is also the growing popularity of ride-sharing services offered by the likes of Uber and Lyft. Fewer people will feel the need to have their own car if it’s easy and inexpensive to order up a cab on their smartphones. Capgemini’s survey found that 34 percent of car buyers see ride sharing and related services as a genuine alternative to owning a vehicle. However, more than half of the respondents said they see ride-hailing services as complementary to buying a new car.

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But of course, where there is change, opportunity also can be found. Capgemini’s survey found that two-thirds of consumers see car brands as an important factor in determining which ride-sharing service to use. That means that brand-centric programs could be an important factor in future new-car sales. Ventures such as General Motors’ Maven and Book by Cadillac are examples of ways automakers can use shared mobility as a way to get people to try out their products, Desmond said. Luxury automakers such as Mercedes-Benz and BMW offer similar services.

Regardless, the shift in shared mobility is only expected to continue, underscored somewhat by Ford elevating Jim Hackett, the head of its Ford Smart Mobility unit, to the CEO spot on May 22. “There are going to be [auto] companies experimenting in the marketplace, boldly going where they haven’t gone before,” Desmond said.

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The sales disruption has the potential to go beyond the OEMs and spread to their franchise-dealer networks as well. Capgemini’s survey showed that almost half of consumers would consider buying a car online. The key here, for automakers and their dealers, is to embrace and integrate some of the disruptive technologies into the marketplace, according to Capgemini’s report. Some automakers, such as Jaguar Land Rover, have already been toying with integrating virtual reality into showrooms. That’s good, because Capgemini’s survey showed 62 percent of consumers want virtual reality to be part of the car-buying experience.

However automakers choose to adapt to disruption, adapt they must, as the golden age of car sales cannot last forever. “Car brands are realizing they need to react to changing consumer habits to sustain growth,” Kai Grambow, global head of automotive at Capgemini, noted in the report. “Becoming leaders in car sharing and the broader mobility space will not just create new revenue streams for car manufacturers, but will also allow brands to raise awareness and establish a new kind of relationship with consumers as they decide on their next model to purchase.”

Article source: http://blog.caranddriver.com/tech-brands-and-ride-sharing-compounding-new-car-sales-hangover/

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