Auto Makers Mull Prospects of Fewer Cars in Future

PARIS – Like their customers, European auto makers are changing.

Prices and running costs are going up, congestion is growing and interest in cars is waning across the region.

“Economic slowdown has a significant impact on affordability,” Peter Fuss, Ernst & Young’s senior advisory partner in Germany and Switzerland, says at the Automotive News Europe Congress here.

“We need new concepts in the industry,” he says. “The younger generation is no longer looking for car ownership. They just want to use it.”

Urbanization is expected to reach 60%-70% globally over the next several decades, according to Ian Robertson, BMW’s executive in charge of sales and marketing. Urban living means congestion, which takes away much of the pleasure of driving, if not the necessity.

“Congestion is going to push people in a direction to find alternatives,” he says. In addition, society is concerned about the environment and the price of fuel is rising with the cost of extracting oil.

BMW is one of several European auto makers developing car-sharing services. Such services foreshadow a future in which manufacturing efficiently at high volume is not the core competence of an auto maker, but just a step in providing individual transportation.

“Customers expect BMW to be what we have been, and they expect us to do the right thing,” says Robertson, whose company since 2011 has operated a car-sharing joint venture with rental agency Sixt called Drive Now.

Daimler was the first OEM to go into car-sharing in a big way, with the 2008 launch of its Car2Go program in Ulm, Germany, and Austin, TX. Car2Go had grown to 18 cities and 270,000 customers by the end of 2012.

The auto maker says it has started a new experiment called Moovel, essentially an intermodal transportation system with an eventual single billing point.

“We will significantly expand the Car2Go business in the coming years,” Daimler says inits recently released annual report. “We have already gone live with Moovel in Stuttgart and Berlin.”

Mu by Peugeot is a service in which the French auto maker rents everything from its bicycles and scooters to its Ion electric vehicle and new Peugeot 2008 small cross/utility vehicle.

“You always have to start from customer expectations,” says Peugeot brand manager Maxime Picat. “We can’t force people to buy a car in the future.”

The auto maker sees Mu by Peugeot as something related to its traditional business of selling cars, Picat says, because 50% of rental customers say they plan to buy a car someday.

Gareth Foden, Peugeot’s head of leasing and rental, is quoted in Fleetworld magazine’s May issue as saying, “Over the next 12 months Peugeot will expand the Mu scheme to present a corporate solution for fleets in major cities in the U.K. to drive down their (carbon-dioxide) CO2 footprint and save costs.

“The traditional ownership model is under threat with fleets able to rent the right vehicle for the right journey.”

Car-sharing means a vehicle is used more often than a private car, which is usually parked and waiting for the owner to need to go somewhere.

Private investors such as Zipcar have expanded the concept, and Internet-based services in which owners rent out their private vehicles are sprouting up.

“There is a shift,” says Fuss, “from car ownership to transportation services, integrated mobility, car-sharing, car-pooling and car-Web integration.”

Fewer vehicles will be needed as they are shared by more than one family, a goal of Europe’s central cities.

London and other cities charge motorists who bring cars into the central area. Paris is closing streets and reserving parking spots for car- and bicycle-sharing programs, which means fewer spaces for owners of private cars. France, Denmark and Norway are among countries encouraging EV purchases by making the cost of ownership more competitive.

“In urban areas we need more clever concepts,” Fuss advises his auto maker clients. Car-sharing is a basic model, but other ideas include connected types of transportation – such as linking cars to buses to trains –and creating a single payment interface allowing a traveler to use the same smartphone to pay for every portion of their voyage.

“In European regions, spending on mobility is going down,” he says. “People are making car-sharing and car-pooling more attractive.”

Changing to a service orientation from a product-specific format may not be as profitable in the short term, Fuss says, but OEMs and other stakeholders already are committing to these concepts.

“If we are doing this right in Europe, this could be a major new blueprint for what we are selling across the world.”