2. What’s really happening to Cars?
“Throw your driver’s license out the window.
Better yet, don’t get one at all”.
"Throw your driver's license out the window. Better yet, don't get one at all".
For nearly a decade, that's been the message from buzzy transportation companies, the
message from Futurists, from government officials and executives from tech companies.
Although there's a transformation happening right now, and a race to become the leader in
the different opportunities of the CASE transformation (CASE as connected, autonomous,
shared, electric), just how much is happening?
October 2019, New York City banned cars from busy 14th Street, in favour of bus-only lanes.
San Francisco's Municipal Transportation Agency voted to transform Market Street, its main
downtown artery, into a place for bikes and scooters and buses—and not personal cars.
Some real estate developers tout apartments without parking spaces but with built-in Uber
pick-up spots and leases with monthly ride-hail credits. New buildings are coming now with
Cities and companies say such moves can help take emissions-spewing cars off the street,
make it easier to get around by foot or by bike, and unburden riders (if not the drivers) from
the drudgeries of car maintenance.
But here's the funny thing: Personal car ownership in the US has increased in the past ten
According to research from former New York City transportation official Bruce Schaller, the
number of vehicles has grown faster than the population in some of the cities where ride-hail
is most popular: Boston, Los Angeles, New York, Philadelphia, and Chicago.
And what is happening to the “sharing” phenomena?
Car2Go, the car-sharing company owned by Daimler and BMW, it's pulling out of half of the
North American cities where it operates. BMW-owned ReachNow, folded in the US this
summer. GM (Holden) put down its Maven car-sharing services in half of the North American
cities. Uber and Lyft continue to lose money.
And then there's the uprising of electric vehicles.
One of the UK's best-selling cars is the all-electric Tesla Model 3. But its success doesn't
change the fact that only about 1.1% of new cars sold in 2019 are electric, and that the
market for used electric vehicles hardly exists.
So, what's happening with the CASE revolution?
Researchers suggest many reasons for the gap between hype and reality.
1. recession recovery
2. gas prices have generally fallen
3. millennials are growing up, and we can't tell if millennials aren't owning cars until they
start having children, and especially until their second kids hit school age
4. car sharing is capital-intensive, making it hard to make money.
5. basic infrastructure for electric vehicles to scale.
After all, what is mobility transformation?
4. Auto in Australia (2)
The Australian automotive sector is a massive contributor to our economy, notwithstanding the
closure of manufacturing.
A 2017 report predicted that even after plant closures that year, the industry would contribute
$37.1 billion to the Australian economy, or 2.1% of GDP, and employ 360,000 people.
• There were 19.5 million registered motor vehicles as of 31 January 2019.
• The national fleet increased by 1.7 per cent from 2018 to 2019.
• Toyota topped the list of passenger vehicles for the 14th consecutive year.
• Diesel vehicles increased to 24.6 per cent of the national fleet, up from 18.5 per cent in 2014.
• The average age of vehicles across Australia is 10.2 years (IBS), but ownership is of 6 years.
• (2) Australians have one of the highest per-capita car ownership levels in the world.
• (2) Despite our relatively small population of 25 million, Australia is one of the world’s most
competitive auto markets with 58 car brands selling passenger cars, SUV’s and LCVs.
• Carsales estimate that approximately 3.35 million in vehicle sales in 2018. (1,111,6851
new cars sold, 2.24 million used vehicles)
• VFACTS is a term used to describe an industry report; it’s also a term used to describe a
vehicle’s category. There are four VFACTS categories: 1. Passenger, 2. SUV, 3. Light
Commercial, 4.Heavy Commercial. And within each of the four categories, there are
• There are over 4,000 car dealers in Australia. Of these, about 2,000 are new car dealers.
Toyota Mazda Hyndai Mitsubishi Ford Holden Kia Nissan Volkswagen Honda
6. Car Running Costs
in Australia 2019 (2)
• The average two car household ownership costs in NSW averages spend of $22,292 in 2017
per household (average of $428 per week).
• Melbourne was the second most expensive city for total transport costs, with an average
spend of $19,461 a year (average of $375 per week)
• The average weekly two-car household cost in major cities around Australia for car loan
repayments was $121.81
• Fuel costs are the biggest ongoing expense for Australians who own their cars outright,
with an average spend of $71.50 a week
7. "Nobody knows what the future of mobility
is going to be exactly, so people are
getting together to lower the risk,"
Prof Peter Wells, director of the Centre for Automotive
Industry Research at Cardiff Business School.
8. 1. Product
2. Macro Trends
3. Developing industry trends
4. Required changes to business model
Changes in the product have been evolving for several years, most notably the gradual shifts
toward digitally-connected, autonomous, shared, and electric (CASE)
Making them as connected as your phone, office and home, new technology that will soon
exist in all cars is creating huge opportunities for established tech players such as Google,
Samsung and Facebook. These companies are well-positioned to enable the transmission of
data between cars and manufacturers and between smart systems (car, home, office).
These changes will also affect the aftermarket industry. A host of geographical and
technological developments is expected to disrupt the automotive aftermarket over the next
5 to 10 years. For automotive suppliers, in particular, six top trends are expected to change
the way the aftermarket game is played:
1. Consolidation among parts distributors
2. Aggressive expansion of OEMs into aftermarket activities
3. Digitization of channels and interfaces
4. Access to car-generated data
5. Increasing influence of (digital) intermediaries
6. Higher price transparency and greater diversity of supply for customers
• Will electric vehicles take off as quickly as people – including Australian politicians – are
• How far off is mass adoption of autonomous vehicles?
• What connectivity aspects will customers value in their cars?
• Will a more integrated shared service outweigh the convenience or status of owning a
• How will brands position themselves for the longer term – especially those with significant
brand heritage and equity – for example in the case of connected and autonomous
• Are digitally-savvy and connected consumers likely to still want the personal touch of a
dealership? (Especially given the increased risk of the unknown associated with purchase
due to the major and ongoing innovations to the car, and because there may be the
opportunity to access a range of other mobility services through the dealership?)
• Which trends will impact the aftermarket and how might the resulting strategic moves of
• the players involved change the game?
• Will the dealer model be less car-centric and more service or lifestyle based? (see
In 2018, for the sixth straight year, Los Angeles earned the honor of being the most gridlocked
metropolis in the world, where the average driver spends 2.5 working weeks per year trapped
And countless cities are close behind. For the average driver, dreams of being elevated above
jammed freeways and flying—uninterrupted—to one’s destination seem well out of reach. Yet
these visions will soon become realities.
The era of the internal combustion engine (ICE) car is coming to a close. From here on out, it’s
about electric vehicles, autonomous ride-sharing, and flying fleets. The implications for society
and the automotive industry are HUGE.
Oil demand is predicted to peak as early as 2021, according to Bloomberg New Energy
Finance. Electric vehicles displace the need for 350,000 barrels of oil each day. And long term,
EVs are projected to disrupt demand of over 58,000,000 barrels of oil per day. In the future, it
might become un-economical and socially unacceptable for us to hold on an ICE car.
Next, we will see electric vehicles migrating to the skies? eVTOL (electric vertical take-off and
By mid-2018, over US$1 billion had been invested by startups, VCs and aerospace giants in at
least twenty-five different flying car companies. A dozen vehicles are being test-flown, while
another dozen are at stages ranging from PowerPoint to prototype. In 2019, Uber hosted an
annual flying car conference (its 3rd). Uber aims to solve urban mobility by offering “aerial
ridesharing” solutions. The theme of the Uber Elevate Summit isn’t actually about flying cars.
The cars are already here. Instead, the focus was path to scale. And the more critical point:
that path is a lot shorter than many suspect. for the first time in history, we’re past the point of
talking about the possibility of flying cars. The cars are here.
Uber’s goal in partnership with NASA, is to demonstrate flying car capability in 2020 and have
aerial ridesharing fully operational in Dallas and LA by 2023.
As of last year (2018), over twenty-five different flying car startups have secured upwards of $1
billion in aggregate funding, coming from Boeing, Airbus, and Google.
In 2011, in Peter Thiel’s now famous manifesto, “What Happened To The Future,” the prominent
investor echoed this concern, writing: “We wanted flying cars, instead we got 140 characters.”
What’s different now?
The cars are here. And the infrastructure is coming fast.
A full connected auto has the potential to change the proposition of the car.
In Australia, 80% of drivers use up to 20% of the technology available in their cars (3). The
introduction of high connectivity will shift prospects to acquire the product “A’ versus “B”
– will be familiarity, convenience or luxury that will do the job?
• The connected car involves the integration of technology that will see vehicles digitally
linked with the surrounding environment, just as we have already seen in our homes
and offices. It raises critical questions around what connected attributes and services
the customer will want.
• Differentiating based on driving performance (power, acceleration, efficiency,
reliability etc.) will remain important, the in-car passenger and driving experience
(entertainment, comfort and interactivity aspects) will become increasingly relevant.
Data – Who will own the data? Will the data be available to partnerships (carsales,
Is the data generation a revenue stream for OEM’s?
Or is it perhaps a liability?
Perhaps the biggest change for the car companies themselves will be their move beyond
the scope of mobility.
Car users will operate in a ‘digital cockpit’, meaning they will be able to access digital
services, payment mechanisms and smart systems in the same way as they already can
from their home or office. This means consumers will be trusting car manufacturers to
manage data that may previously have been managed by insurance agencies,
government, social media and shopping retailers.
• Connectivity will allow car companies to harvest significant customer data that will
help them build relationships with the customer and develop and shape future
products. Connectivity will also have implications for safety, vehicle maintenance, user
experience, outsourced and shared mobility and interactivity with other personal
There are currently (October 2019) 76 skills in the Australian version of Amazon Alexa.
Examples of potential user experience advantages include the ability to find and pay for
parking with ease, with Daimler and BMW estimating that around 30% of traffic on a city
street is currently driving around on the hunt for a parking spot.
Services like Parkmobile and ParkNow will support finding a spot while offering ticket and
Meanwhile, voice activation technology could be used for adjusting car
heating/cooling systems or operating lights and windscreen wipers.
The voice activation systems will require an education program as users start getting
themselves familiar with a voice system.
Currently, Mercedes me has a skill at Alexa store in
Australia with low review rates.
Although the technology is state-of-art and current, there is no available education and
induction for first-time users. The lack of education has generated a series of bad reviews
at Alexa store.
Development of a facial-recognition feature offers augmented reality experiences like
an e-mirror surround view and cloud-stored profiles. Spouses sharing a car would only
need to sit in the driver’s seat and the car, upon recognising the driver, would
automatically adjust the car’s settings as required.
Lexus Australia has announced a partnership with VicRoads and Telstra that will see a
pair of modified RX large SUVs trial several connected vehicle technologies on the road,
with the aim of improving traffic management and reducing road trauma. The two
RX450h hybrids are fitted with about $5000 of specialised equipment that helps them
communicate with each and other through cellular networks while testing five new
connected safety features over a two-year collaboration.
Tesla prototype of on-board Netflix
13. macro trends
Urbanisation, digitisation, increase debt and environmentalism.
These multiply the impact and affect the way Australian consumers view cars and car
Interest in car sharing is growing. Just as we have seen the sharing economy thrive in other
areas (Uber, Airbnb, WeWork), the days of most cars sitting idle for the bulk of the day
Already, an entrepreneurial company (Carhood) allows travellers departing from Melbourne
Airport to lease their cars out while they are away, avoiding parking fees while sharing a cut
of the lease payments.
Pay-per-use (or carsharing). Yet new in Australia, but already getting pace in the USA,
membership programs are also in play.
• Automotive as a status symbol?
• Will another capitalism “thing” replace car as a Social differentiator?
• Personalisation -> The increasing social trend of overpersonalisation, where does it fit?
• Macro Socio-Economic-Politic environment
14. industry trends
At the industry level, the established incumbent – major manufacturers like BMW, Mercedes-
Benz, Toyota and Ford are now being joined by new (and well-resourced) players like the
connectivity companies (like Facebook and Google) and technology groups (like Apple,
Samsung, Sony, LG, Panasonic). OEM’s are also teaming up among themselves; BMW and
Daimler announced a 1 billion Euro partnership in 2019 to develop a suite of mobility services.
Ford and Volkswagen agreed to "investigate" ways of working on electric and autonomous
vehicles together, while Honda invested $2.75bn (£2.1bn) in rival General Motors' driverless
unit with a view to launching a fleet of unmanned taxis. There have been similar tie-ups
between Tesla and Daimler, and Volvo and PSA
Partnerships are being struck to leverage the knowledge from both established and new
operators. Each of the new modes of car will generate its own ecosystem, and the major
automotive brands will position themselves to be central players in those ecosystems.
• Automotive as status symbol?
• Will another capitalism good replace car as a Social Differentiator?
• Personalisation -> The increasing social trend of overpersonalisation, where does it fit?
• When brands converge into collaborative product development, where will brands fit in?
16. business model
Businesses are now ‘mobility providers’ rather than sellers of cars.
For OEM’s, the change will play out in their product mix, marketing capabilities, product
knowledge, staff training and retention, leadership capability and client/partner
relationships. At the dealer level the coming disruption requires a response to key strategic
questions. The dealers will need to consider how they structure themselves as retailers of cars
in a digital world.
It is also important that Australian companies move now to ascertain how they can best
contribute in this new environment and cement their position before the industry reaches a
tipping point towards mass marketisation (there are various tipping-point-signals for each of
the CASE elements) when making big competitive inroads will be decidedly harder.
• What are the new talent that OEM’s and Dealerships will require?
• Aftersales for Dealers – what’s in place for monetization?
• What are the requirements to adapt to a more service-based business model
• Who will own “Attention” during driving? Is this an asset that OEM’s can monetise?
17. advertising trends
The automotive category is the highest spending marketing category, with an annual
media spend of $807.69m in 2018.
Add to this the $152.91m spent on Auto Dealers, Parts and Services, and you’re nudging
a combined total spend of $960.61m annually (Standard Media Index (SMI) 2018.)
Auto Category Spend
In 2018, digital attracted 30.01% of all auto brand spend, accounting for $244.21m of
the $813.87m spent11.
1. Rise of Facebook as Marketplace for autos (Pitch, play, plunge)
2. Rise of Google as Marketplace for autos (Micro-moments)
3. Kogan, Amazon, Catch, eBay as new aggregators
4. (Line 1) car as commodity – traded on convenience
5. (Line 2) brands are major differentiator (distinctiveness)
6. In-car advertising (studies forecast most users willing to see ads
18. Auto tech funding has climbed upwards over the
past few years.
Funding in the USA reached a new peak in 2018
with a record $7.9B in funding across 210 deals — a
75% uptick in funding year-over-year.
Investments include startups building mobility
ecosystem, connectivity, safety, convenience, and
efficiency in vehicles. This includes technologies
such as advanced driver-assistance systems
(ADAS) and autonomous driving, connected
vehicles, fleet telematics, V2V/V2X, and vehicle
follow the money
where the investment is going?
20. MOST WELL-FUNDED AUTO-TECH STARTS-UP’S IN THE WORLD
NURO https://nuro.ai/ Self-driving for local goods delivery and
licensing driving software
Zoox https://zoox.com/ Autonomous driving system, robotics and
Aurora https://aurora.tech/ Self-driving platform
Keeptruckin https://keeptruckin.com/ track fleet data
Fleet management and telematics is a
common focus for startups.
Connected car technology is another
popular focus for startups receiving
Autonomous is emerging as another
prominent category, with cashed up start
ups all focusing on developing driverless
A new upcoming category is “In-vehicle-
Experience”, however not start up’s have
reached the unicorn stage (just yet)
follow the money
where the investment is going?
The in-vehicle experience cover from vehicle entry and ignition to parking, while ensuring
passenger safety and vehicle security. While many disruptive forces are expected to
ultimately render the driver obsolete, most of the upcoming solutions can be adapted for a
shared, autonomous future. For example, the sensors and computer vision software used for
driver monitoring could eventually be used to monitor passengers in a shared robotaxi.
There are six emerging focus areas for OEM’s (5) as they prioritize safety, comfort, and
1. Biometric-based authentication
2. The in-car voice assistant
3. AR-enabled heads-up displays
4. Vision-based driver monitoring
5. Shoppable content and
6. AI-optimized parking
The government should be a more prominent player in facilitating growth in the automotive
industry. Strategically speaking, the state and the federal government will need to take a
clear position on critical issues and opportunities of implications of the CASE disruption.
In the case of the electric car, the government can act as a catalyst in multiple way -
primary managing targets and incentives. Targets will drive production numbers up, but
incentives will influence demand.
We can expect the automotive sector to lobby government hard, with a unified voice. A
thriving automotive industry (coupled with rapidly expanding ecosystems) means
opportunities and employment across so many diverse areas of business that connect to the
The industry might look to convince the government to:
• make investments in electric infrastructure and incentives
• review current regulation in the energy market
• review privacy principles that affect connected cars (and connectivity more
• work with major car companies to create mobility options to integrate with public
• help to determine where Australia companies can play a pivotal role in the
• facilitate private-public partnerships. Issues such as reducing congestion and harm
to the environment
• Overall infrastructure and legislation that considers integration across modes of
In August/19 government announced it was investing $15 million into a network of ultra-fast
charging stations on major highways
1. Existing model, showroom, many
cars on the lot. Consolidation may
mean this continues but is much less
likely to be the dominant approach.
2. Retail shop, two or three cars, digital
interface (ordering). In the shopping
mall, potential to position brand
according to nearby outlets. Tesla.
3. Lifestyle dealership precinct and
mobility hubs. Dealers are in lifestyle
centers offering a mix of mobility
products and services, and are
situated among complementary
brands, products and services such as
high-end fashion, homewares, fine
foods and health centers. Mercedes
4. Manufacturer direct. Some
manufacturers like Volvo have
entered the manufacturer direct sales
5. Hybrid. Fewer cars, digital,
customization, and with added
services like bundling of mobility
options (ownership and subscription
packages, for example), dealers may
become a focal point for different
mobility solutions. Hyundai /Carly in
The idea of this report is to give you, reader, an overall understanding of the Mobility
Major disruptive forces, such as connectivity, autonomy, electrical and shared mobility, are
requiring automakers to review business models, partnerships, investments, advertising and
To adapt, automakers are digitalising the mobility ecosystem so that the car can be
seamlessly integrated into the consumer’s entire suite of connected devices.
OEM’s are also partnering with competitors, with tech companies and content providers
(like Netflix) to cover all the areas of CASE (Connected, Autonomous, Share, Electric)
Ultimately, given that the future of the automotive space remains largely in flux, startups
looking to disrupt the in-vehicle experience, safety, data management, driverless systems
will need to master a difficult balancing act: remaining flexible and adaptable, while also
complying with the stringent safety regulations characteristic of the automotive industry.
When it comes to the automotive industry, there’s a lot going on under the hood. There’s a
lot of noise, opinions and assumptions. Facts many times are different from opinions and
articles published in large magazines and journals.
We can expect progressive changes, rather than radical implementations in the next decade,
considering the large need for investment, changes in infrastructure and roll-out effect.
1. The Death of Cars Was Greatly Exaggerated, wired, https://www.wired.com/story/death-cars-
2. Extreme disruption in auto: CASE, new partnerships and government. Francis Farrelly, RMIT
University. https://www.marketingmag.com.au/hubs-c/feature-farrelly-automotive-case/ and ABS
3. Carsales/Mediamotive - carsales Discovery, An Intro to Auto - Course 1
4. Budget Direct https://www.budgetdirect.com.au/car-insurance/research/car-owner-cost-
5. Why are more and more car companies teaming up? https://www.bbc.com/news/business-
6. BMW/MINI internal data
7. The Future Of The In-Vehicle Experience, CBInsights -
8. Future Business Model for OEMs in the Automotive Industry, Business Model Adaptation Based on
the Role an OEM Takes in a Future Business Network – PHD, Whitepaper by EMMA KOLAR and
LINNEA LINDSTRÖM https://pdfs.semanticscholar.org/bfb7/22bf9ede0e3eb68de29629a2b1e04132ca80.pdf
9. https://www.marketingmag.com.au/hubs-c/opinion-farrelly-automotive-1/ and