Why car companies must learn lessons from the technology industry

As major cities look to improve air quality and aid in the fight against climate change, the technology of the future appears to focus on electric engines with fully autonomous driving.

In turn, this will lead to significant growth in leasing, with more and more entrants in the shared car business, especially in cities.

The new entrants will differentiate on cost, but also largely on the quality of the cars they provide access to and the extensiveness of their non-transport related services.

Technology must be carefully selected to facilitate these external service providers, rather than simply link to the manufacturer or the leasing company.

The relationship customers have with their cars will change from a framework of statutory ownership, towards shared use and pure transportation.

Already, the industry has started to see a change in the user mindset from a car that reflects an owner’s personality and requires a major personal investment, to a car being seen as simply a cost, with a need to manage repairs, which also requires a constant search for parking spaces.

Technology-focused companies such as Uber and GAFA (Google, Apple, Facebook, Amazon), which are not and do not intend to be manufacturers, are investing heavily in the automotive sector, but mainly around automatic driving.

These companies have adopted new added-value opportunities developed from the mining of big data – generated from following all transport by car users, the replacement of taxi fleets, and even private second cars.

Over time, there will be a major shift towards more shared fleets of ‘pay per use’ cars in cities and a shift in end-users’ attitudes.

Increasingly, end-users are expected to be able to perform similar tasks in their vehicles as they do at home, such as surfing the internet, while autonomous vehicles take over driving duties.

To enable this, some form of open blockchain interaction will have to be defined in order to provide a complex multi-company, new technology-enabled service.

This includes offering:

• Secure and instant payments from a car
• Real-time interaction with service, maintenance, and repair providers as soon as the car detects when action needs to be taken
• Extending GPS features to provide more reliable and responsive services
• Big data support to car manufacturers on the transportation usage of their customers
• Parking services
• On-demand servicing of the vehicles

In the digital age, it is easy for companies to lose their grip of the market if they do not learn to adapt to modern needs.

Just look at the rise of Netflix due to its digital streaming, and the fall of Kodak due to advances in digital cameras.

In the car manufacturing industry, with increasing pressure from local and national governments to help tackle pollution and users demanding additional services whilst getting from A to B, manufacturers have begun to focus on electric engines with fully autonomous driving.

Successfully introducing developments in this area will give manufacturers the best opportunities to respond to developing challenges from companies such as Uber and GAFA.

Nicolas Ullmo is product marketing director for lease and loan businesses at Sopra Banking Software.

He is responsible for assessing market trends and incorporating emerging requirements in the evolution of Cassiopae lease and loan software solutions.

Prior to his five years with Cassiopae, he spent 25 years as a management consulting partner in various well-known consulting companies, with a focus on the banking sector.