Automobile dealers, thanks to their knowledge of local market demand and their ability to offer a variety of on-the-spot services, could emerge as winners in the shifting mobility landscape, according to a Silicon Valley executive.
Mark Thomas, vice president of alliances and marketing for San Francisco-based Ridecell, which creates apps for companies looking to customize mobility services, says the combination of the pandemic and innovations in mobility are creating new opportunities for dealers.
“Car dealerships have a shared mobility opportunity,” but many of them appear reluctant to change business models, Thomas (below, left) says during a web conference on “Never Let a Crisis Go to Waste: How Will New Mobility Initiatives in the Auto Industry and in the Public Sphere Come Out of the Pandemic?” organized by the Automotive Futures initiative based in Ann Arbor, MI.
The pandemic has impacted the fledgling mobility-as-a-service (MaaS) sector, Thomas says.
“Ridesharing is down but it is not down universally,” he says, noting Chinese ride hailing giant Didi grew 10% in 2020. The appeal of mobility as a service is still strong, particularly among younger consumers, Thomas adds.
In addition, delivery services such DoorDash and Grubhub as well as package delivery have grown. “The business model switched from carrying people to carrying packages,” Thomas says. Nonetheless, estimates that one-third of all passenger miles traveled by 2030 will be completed in a shared vehicle of some kind remain in place, he says.
Thomas adds there has been a resurgence in car sharing, which once seemed dated with the rise of services such as Uber and Lyft. In addition, car-sharing services are evolving from short-term uses, such as a trip to the grocery store, to a week or even a month.
“People are keeping the cars for longer,” Thomas says, which also indicates consumers may not simply default back to the old model of owning or leasing a vehicle under the pressure created by the COVID-19 pandemic, which has undercut mass-transit ridership in many cities.
However, while use of traditional forms of mass transit has dropped more than 60% during the pandemic, prices of new and used cars also have gone up steadily as well, adding stress to individual or family budgets, he says.
“Car sharing could become the new ownership model” as new- and used-car prices grow and going to a dealer for a loaner could become more common, says Thomas, whose firm creates specialized platforms for ride hailing and ridesharing.
New business models built around shared mobility and no-contact services, and the relationship between utilization and profitability, tend to favor existing dealerships if they are willing to experiment and innovate, Thomas says.
Many dealers already loan vehicles to customers when they bring their vehicles in for extended service visits, and dealerships are in a good position to capitalize on the shift to shared ownership.
Shared vehicles of all kinds need to be serviced and cleaned every day, and dealers are well-suited to deliver contact-free service for both individual customers and small fleets. Even autonomous vehicles are not necessarily a threat to dealerships because they will need to be cleaned and serviced.
Thomas notes experiments with so-called subscription services, which offer users access to different vehicles, have faltered under manufacturers but could be utilized by local dealerships with access to a fleet of used vehicles.
In a world shaped by COVID-19, technology also could enable dealers to shape their sales effort by making vehicles available throughout specific areas or districts so potential customers could test-drive them at their convenience.