Navigant Research Blog

GM Wants to Be a Carsharing Maven

— January 26, 2016

male hand using navigation system on car dashboardOver the past several decades, Detroit-based automakers have rightly been accused of regularly burying their heads in the sand and ignoring changes in the marketplace that would upend their business. The latest announcement from General Motors (GM) shows that is no longer the case, as the biggest American automaker has launched a carsharing service in Ann Arbor, Michigan that also leverages its established OnStar telematics service.

Navigant Research’s Carsharing Programs report projects that such services will have 23.4 million members globally by 2024, potentially eating into individual vehicle sales. Ford has had a longstanding relationship with ZipCar, BMW is behind the DriveNow program, and Daimler provides vehicles to Car2Go.

Maven, the new service from GM is the latest in a string of moves by the automaker including a $500 million investment in Lyft and the purchase of assets, including intellectual property from the defunct SideCar ride-hailing service. While SideCar shuttered its service at the end of 2015 after failing to gain marketplace traction against larger rivals Uber and Lyft, many of its staff will join GM’s efforts, and the automaker will access to a 2002 patent on determining an efficient transportation route and requesting rides from a mobile device. SideCar founder Sunil Paul declined to use the patent against competitors, and it’s not clear if GM will be able to sue. More likely GM will use the patent defensively if Uber tries to corner the market.

Maven will have the advantage of GM’s longstanding OnStar system, which launched 20 years ago as the first commercial cellular-based telematics service. Many of the same features that OnStar subscribers get through the RemoteLink smartphone app will add to the convenience of using Maven. Using the Maven app, subscribers can reserve and locate available vehicles and remotely start them up to 8 minutes prior to a reservation.

The fleet consists of the four Chevrolet models including the Spark, Volt, Malibu, and Tahoe, allowing users to select the vehicle that best meets their needs on any given day. Rental rates start at $6 per hour for a Volt or Spark to $12 for the Tahoe.

Increasing Autonomy

For now, Maven users will have to go where the vehicles are parked, 11 locations around downtown Ann Arbor and the University of Michigan north campus. However, as GM continues to develop its autonomous vehicle technology and the autonomous hailing service it announced with Lyft at CES, Maven seems likely to morph into this type of service. It’s probably not a coincidence that GM chose to launch Maven at a location directly adjacent to the Mcity autonomous and connected vehicle test facility.

With GM and Ford both extensively dabbling in carsharing and ride-hailing services, Fiat Chrysler is the only Detroit automaker that hasn’t publicly announced any plans in this space, but it’s likely only a matter of time before they jump in as well. With a 30-mile electric driving range, the Chrysler Pacifica plug-in hybrid minivan that was revealed at the recent North American International Auto Show would make an excellent platform for mobility as a service.

 

Automakers Protect Their Turf by Cannibalizing Themselves

— January 6, 2016

Time may heal all wounds, but for the auto industry, not enough time has elapsed yet to forget the pain caused by the 2008 financial meltdown. With that sales collapse still visible in its rear-view mirror, the industry is wary of another potential collapse due to innovations from Silicon Valley as it takes to heart the warning from the late Steve Jobs: “If you don’t cannibalize yourself, someone else will.

Jobs was talking to his biographer Walter Isaacson about how the then-new iPad had the potential to steal sales from Apple’s own MacBook laptop computers. With the mobility ecosystem on the precipice of a transformation stemming from a combination of automation, connectivity, car/ride sharing, and electrification, incumbent automakers have recognized the potential for a massive drop in future sales and are positioning themselves to take advantage of the new normal, whatever that might be.

Navigant Research’s Autonomous Vehicles report projects global sales of more than 40 million autonomous light duty vehicles annually by 2030, while carsharing programs are projected to have 23.4 million members around the world by 2024. Along with increasing urbanization, automakers see the combination of these trends potentially decimating sales of personally owned vehicles in mature markets like Europe and North America in the second half of the 2020s and beyond.

Industry Takes Note

Based on recent announcements from several incumbent automakers, automakers hope to partner with the technology industry to transform how they make money from personal ownership to on-demand mobility-as-a-service. General Motors (GM) kicked off the 2016 International CES with an announcement that it would invest $500 million in fast-growing ridesharing company Lyft while Audi is leading a Series C investment round in Austin, Texas-based rental firm Silvercar.

The GM-Lyft deal includes plans to develop a network of autonomous vehicles that can be summoned on demand by Lyft customers. In September 2015, GM announced plans for a pilot program with a fleet of autonomous Chevrolet Volts to be used as on-demand shuttles by employees at its Warren, Michigan technical center.

Airport rental startup Silvercar now operates in 12 cities across the United States with a fleet of identical Audi sedans. Like Uber and Lyft, customers get service through a website or smartphone app. A reserved car can be unlocked with a phone and the all-inclusive flat daily rate is also paid automatically through the app.

Like GM, Ford has thousands of employees that move among the dozens of buildings in its product development center and global headquarters in Dearborn, Michigan. Ford recently launched a dynamic shuttle service with a fleet of Wi-Fi and power-equipped Transit vans so that employees can stay in contact or work on the move. Rides can be summoned and tracked from a smartphone app, just like Uber or Lyft. While retirees from nearby Ford factories currently drive the vans, Ken Washington, Ford’s vice-president of research and advanced engineering, has not ruled out using autonomous vehicles at some point when the technology is ready.

With increasingly congested cities looking for ways to help people move around while reducing accidents and improving air quality, urban centers may well ban human-driven vehicles at some future date. Each of these investments point to a time when fewer people need or want to own a vehicle but still need a convenient way to get around. With companies like Google, Uber, and potentially Apple hoping to step into the breach, automakers are smart to look at ways to cannibalize their existing business in favor of a whole new way of making money.

 

Automotive Mapping: A New Digital World

— September 15, 2015

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German automakers Audi, BMW, and Daimler have announced plans to acquire Nokia’s mapping service HERE in a move that seems part of the continued blending of the automotive and digital worlds. HERE is one of a handful of companies that supplies mapping data to a wide range of end users, competing with Google Maps and TomTom. HERE’s strengths lie in the automotive sector, as its service is the most often used in vehicle navigation systems.

It may be that the automakers simply want to secure the availability of this mapping service to ensure that Google Maps won’t be the only game in town. The same could be said for another interested party in the HERE sale: Uber, which has recently acquired mapping expertise and intellectual property from Microsoft. This was seen as partly a defensive move. It appears that Uber is trying to position itself away from Google, which has been signaling through its investment through Google Ventures a desire to launch its own ride hailing app that could compete with Uber. But Uber has also expressed an interest in autonomous vehicle technologies, declaring to Tesla that it would be prepared to buy a fleet of autonomous electric vehicles. As Navigant Research has discussed, high-quality mapping is critical to the autonomous vehicle sector.

Meanwhile, Apple has continued to make moves that suggest it may launch an electric vehicle of its own. After reports in early 2015 hinted that the company was building an electric van, speculation have only increased when the company moved to hire a former quality control executive from Fiat Chrysler Automobiles and to use BMW’s i3 electric vehicles in a trial project.

Blurred Lines

This brings us back to the story of Audi, BMW, and Daimler acquiring HERE. All of these activities demonstrate that the digital and physical worlds are now fully integrated within auto manufacturing, and that the lines between these industries will continue to blur. Auto companies are now well-established in Silicon Valley, and it is apparent to the OEMs that they will have to be more than just car manufacturers in the future, but also mobility providers. German automakers are especially far along in this realization. BMW, for example, has its own smart parking app and carsharing business. Indeed, most automakers are exploring some of these new mobility concepts. Ford’s 25 global mobility experiments include vehicle sharing, carsharing, and smart parking services, while Toyota has its electric vehicle carsharing trial programs. Other OEMs are also launching carsharing services, developments that will be discussed in Navigant Research’s upcoming Carsharing Programs report.

Acquiring mapping expertise plays into the shift from automakers to total mobility providers. What will be interesting to watch is how daring the auto companies are prepared to be in making this transition. So far, much of the OEM activity is labeled as a trial, indicating that some OEMs are still unsure about the real value of these new services. Indeed, some of the services may well be low revenue generators, but they can help automakers stake out their role in the new urban mobility landscape. This is especially the case in the mature and highly regulated car markets of North America and Western Europe, where private cars will be just one more mobility tool among many.

 

Are Automakers the Losers in the Vehicle-Sharing World?

— August 7, 2015

Vehicle sharing is a hot topic in the media. Reports of carsharing services as well as the always popular topic of ride-hailing company Uber and the other companies in that same market, such as Lyft, are on the rise. Vehicle sharing truly is a disruptive force, and it’s helping create a new model for transportation: on-demand mobility. There is an irresistible urge to ask who the winners or losers are in this new landscape, but some assumptions about who is going to be losing are not likely to be proven.

Winners and Losers

One of the most common questions is: Will automakers be the losers thanks to reduced demand for personal vehicles? Navigant Research has projected flattening growth of light duty vehicle (LDV) sales over the long term in certain markets, mainly North America and Europe. But carsharing is a relatively small contributor to this trend. The data on how many personal vehicles are replaced for each vehicle in a carsharing service vary, but estimates from University of California – Berkeley’s Transportation Sustainability Research Center are that each vehicle in a carsharing service replaces four to six new car purchases and postpones up to seven car purchases. Although carsharing memberships have been growing rapidly—Navigant Research estimates that global membership surpassed 3.5 million as of early 2015—the number of vehicles required to serve these members is likely to be well under 100,000. And the impact of these vehicles will be a small percentage of total LDV sales, which Navigant Research estimates will reach 88.8 million in 2015.

Staying in the Game

Automakers are still jumping on the carsharing trend, however.  BMW and Daimler have made the biggest commitments so far, with the DriveNow and car2go services, respectively. These two services alone represent over 1 million of the total global carsharing membership. But Ford, Audi, Toyota, and Renault have all been trialing limited carsharing or other vehicle-sharing services. Carsharing may not cut into their vehicles sales significantly, but the overall vehicle-sharing trend does represent a shift in how people in urban environments—a growing percentage of North Americans and Europeans—expect to get around. By offering vehicle-sharing services, automakers can identify their brand with the new world of on-demand mobility. They can also establish brand identity with the users of vehicle sharing, many of whom will become vehicle owners one day. And, they can secure new revenue streams. The vehicle-sharing market will more likely be something that automakers see as complementary to their existing business, not  a threat, and they may even be more likely to try to cooperate with the business than to resist it.

 

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