In 2016, the UK’s car industry posted its highest car production figures since 1999, demonstrating a resurgence in car sales. Indeed, a range of deals and investments seem to be boding well for the industry – but are challenging times on the horizon?
The rise of technology
Digital technologies are making unprecedented changes and the sharing economy, which has infiltrated everything from lending to transport and housing to travel, looks set to revolutionise the car industry too. Although car producers are fusing new technologies with traditional manufacturing, the industry may be developing at such speed that traditional models become redundant within the next decade.
Sharing our way into the future
Uber has already revolutionised car transport, making taxi services more dynamic, egalitarian and affordable. Another example of the sharing economy within transport is Zipcar – the car-sharing club that offers an alternative to car rental and car ownership. The company recently announced that its 1 million members have resulted in 413,514 fewer cars on the road, with 10 percent of its members saying they got rid of a car after joining the service. It also claims members report saving an average of $600 per month, compared to owning a car, suggesting a fundamental shift could occur when it comes to car ownership. With congestion, travel costs and pollution remaining issues in numerous cities around the world, transport alternatives are becoming increasingly popular, and car manufacturers are responding to a possible sea change.
Technology takes over
This shift is being seen in a radical development for car transport – the arrival of driverless cars. The car industry’s future is no longer solely the preserve of traditional car manufacturers. Indeed, technology firms like Google and Apple are utilising their expertise and vast access to capital to pioneer driverless cars. Despite questions around their safety, it seems likely that these vehicles will become the cars of the future.
The traditional car industry will need to adapt in order to survive over the long-term – and that may require them to join forces with tech giants. Martin Benecke, Frankfurt-based analyst at IHS Automotive, explains:
“[Car manufacturers] see the competitive threat from Google and Apple. They know they cannot respond by doing everything themselves, so have to form alliances and partnerships.”
A convenient marriage
The alliance between tech firms and car manufacturers is already beginning. Volvo has joined forces with Uber in a $300 million partnership to create driverless cars, with Uber already recruiting staff from Carnegie Mellon University’s robotic department.
Ford and Baidu, the Chinese web service company, recently invested $150 million in Velodyne, which manufactures a LiDAR system providing sensors for self-driving cars to map their environment. Similarly, in an acknowledgement of the car sharing economy’s popularity, Ford aims to launch its fleet of self-driving cars as part of a ride-sharing or hailing service by 2021 – retaining affordability as the mantra of its brand. Meanwhile, General Motors has invested $500 million in Lyft to build a network of self-driving on-demand cars offering a ride-sharing service.
Other car producers are also in the running to master driverless technology, with Nissan, Hyundai, Honda, Audi, BMW, Toyota and Daimler also working on autonomous vehicles. Some of these are scheduled for launch as early as 2020, providing they overcome regulatory hurdles and consumer hesitations. One thing looks certain though, traditional car manufacturers will have to change lanes and adopt highly progressive technology if they want to stay competitive.