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Shifting the Premise of Car Ownership

Shifting the Premise of Car Ownership

By chance as a young teenager I became the proud owner of three cars, which I salvaged from certain breakers-yard destiny, worked hard on them for several months and transformed into decent run-arounds. In consequence even before the legal driving age, I was already enjoying the premise of car ownership in London embodying not just freedom and adrenalin but also adulthood, status and sex. Cars have long been symbols of personal freedom. With the open road ahead you could go almost anywhere. Discover the unknown and take control of your destiny behind the steering wheel of your car. My passion for the automotive industry grew from this premise of car ownership, the culture surrounding it, and its many benefits. In this context, cars were, and still are, empowering.

Cars have long been symbols of personal freedom.

I grew up at time when owning wheels was still deeply desired and difficult to achieve as a teenager. I am only in my thirties, but since then car ownership in many cities has become a burden rather than a pleasure. Global car ownership has now surpassed the magical figure of 1 billion, and with sales constantly increasing in developing markets, that figure will probably double within the next 7 years. Cars are still integral to modern life, but rapidly declining in importance. They still dominate economies, aside from rent or mortgage payments, transport costs are the single biggest monthly outlay, and most of those costs normally come directly from cars. Younger generations like mine now move around more and settle down later. They prefer to have fewer responsibilities and trade-in security for freedom. Advertising still tries to capture the car magic with themes of choice, status, and freedom. But reality is far more negative, therefore, it is no surprise that the premise of car ownership is slowly fading away.

They prefer to have fewer responsibilities and trade-in security for freedom.

Geography matters too. In most established markets car use has been stable or increasing in rural areas, where driving still offers freedom and convenience. But it is in cities, especially their centres that car ownership and use is declining. Plus city living is massively on the rise globally. There are various reasons for this. Public transportation are, in the main, faster and more reliable than they used to be, with increased capacity in many cities. But are you even able to imagine a road trip with your group of friends without a car as we know it? Using only car sharing services, public transport, driverless cars, and transportation apps. A total nightmare without any sense of the unknown or sense of adventure. Driverless cars, or robot-guided vehicles – as in my opinion they are not worthy of the sacred car definition – could go on sale within the next decade. They will be safer and a lot less hassle. Flocking together like sheep through clever algorithms and cut congestion dramatically. But they will, without a certainty, further stretch the already weakening value of social identity.

Driverless cars, or robot-guided vehicles – as in my opinion they are not worthy of the sacred car definition

Traditional taxi drivers are furious, and understandably so. They must now compete with a startup that does not meet all licensing and regulatory requirements. As taxi drivers in various countries stage protests against Uber, it is a good opportunity to contemplate the impact that services like this will have on the very fabric that underpins all basis of consumer economy. They shift the premise of car ownership and the acquisition of social status. Online services that have as a business model a sharing economy, literally threaten to rewrite the social and ownership equation. Disrupting established industries also intimidates many of the values it tries to preserve. Values like infrastructure, community, and safety are many times diluted for the sake of senseless disruption. We might one day realise that outsourcing those values to the ‘Cloud’ will one day bite us back with a vengeance. Plus, it might just be a matter of time before these disruptive startups start looking and behaving like the businesses they once replaced, and the industries they muddled up become once again anonymous monopolies. Do not get me wrong I am all for improvement, startups, and entrepreneurship but sometimes industries are able to improve based on evolution, rather than revolution. In most cases, that is just what happens, and I fear disruptive services like Uber will just awake a sleeping giant into taking decisive action.

We might one day realise that outsourcing those values to the ‘Cloud’ will one day bite us back with a vengeance.

The impact of the economic recession arguably fell hardest on the established generations. The newer generations took full advantage of the recession and its many disruptions to standard expectations, which gave customers more flexibility and access to a wider range of goods and services. Now, the temporary access to goods and services for only a period of time, instead of outright ownership, that was just a side-effect. Without a doubt that this side-effect is now part of a permanent social shift away from the idea of ownership and towards a new sharing-based economy. Young people are not buying cars and houses because we are currently facing a terrible economy. This is the beginning of a more fundamental shift with far deeper consequences for businesses and industries. The idea of the rebirth of the automotive industry is a human story consumers can identify with. But sympathy alone does not pay the bills these days. The automotive industry has been trying to integrate the car as naturally as possible into the life story of the consumer. Unfortunately, the car in many cities, is becoming the rejected puppy everyone smiles at, but nobody takes home.

This is the beginning of a more fundamental shift with far deeper consequences for businesses and industries.

Many consumers are also opting for alternatives. Bike culture is flourishing, with bike-sharing networks popping up everywhere. These consumers are making an effort to drive less, partly because of concerns over the environment, their health, and cost of owning a car. In light of these recent paradigm shifts in car ownership and the challenging years ahead of the automotive industry. Everyone should have a fresh perspective on sector trends beyond just car sharing. With support from market research the industry has to identify new consumer behaviour patterns and highlight demands, which will be key in the next decades. By decomposing lifecycles, along different parts of the value chain, new solutions will be recognised and applied. Given current developments, the automotive industry has a unique opportunity to further accelerate growth. But this growth can only increase if they create new products and services outside classical business models. Claims of car ownership erosion and rumours about a decline of the car as status symbol are not just a myth anymore.

Everyone should have a fresh perspective on sector trends beyond just car sharing.

The next generation of consumers are car buyers with smartphones, which usually dismiss conventional wisdom. This new generation are disruptive mobile communicators, rather than friendly car lovers, fuelling two key trends: media integration and car sharing. Media integration in cars still presents itself as an untapped growth opportunity. Car sharing still has the potential to become a winning game for automotive OEMs, instead of the domain of tech-startups.

Media integration in cars still presents itself as an untapped growth opportunity.

© image modified from LeWeb.

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