Electric Currents

Who Do You Sell Cars To When Nobody's Buying?

Oct 23, 2017

40% of young adults 18-24 don't have driver's licenses today. Even fewer will need them in the future with the advent of on-demand autonomous vehicle fleets. What's that mean not only to the automotive industry, from OEMs, suppliers and car dealers, but also to the advertising industry?

interior of Toyota Concept Fine minivan

I came across this Car and Driver article highlighting Toyota's new hydrogen fuel cell Fine Concept minivan with its autonomous capabilities, its lounge chair seating where front seat passengers - driver included - can swivel around to chat with passengers in the back seats (see above photo). 

Neat idea, huh? Some clever designer envisions taking your family on a cross-country vacation - the fuel cell gives it a range of 620 miles, double that of Toyota's Mirai FCEV sedan - setting the car on autopilot and playing Yahtzee all the way to Grandma's house. Or everyone can watch the latest Disney movie or NFL game digitally displayed on the side windows. 

Wouldn't that be wonderful, it's imagined? 

Then the thought occurred to me, who's Toyota going to sell this wondrous piece of machinery to? 

Affluent, young, suburban 'soccer' families? 

It's estimated that the automotive industry is going to spend $14+ billion on advertising by 2020, up from the $8.71 billion in 2016

To get a sense of scale, it's estimated that in 2017, some $207 billion will be spent on advertising in the US. Globally for 2016, the number was $493 billion

That means, about 4 percent of advertising in USA might have been spent trying to sell people cars. Globally, it would be closer to 1.7 percent.

For comparison, the drug and pharmaceutical industry spend $5.2 billion annually, but whether that's on a global or national scale, it's not entirely clear. Only the US and New Zealand allow pharmaceutical companies to market directly to consumers; and, not all that coincidentally, those two countries have the highest rate of prescription drug users. 

That's a lot of money being funneled through the economy to national television, digital media, print media, local radio, advertising agencies, etc., etc.; all of it in a carefully crafted and calculated effort to woo buyers to a particular brand, model, and/or dealership. 

All projections point to those numbers going higher, though in 2017 ad revenue growthhas slowed. 

So, back to my original question: To whom is Toyota going sell that futuristic, hydrogen-powered, self-driving family room on wheels? 

Think about the following comment by Jamais Cascio, a futurist and senior fellow at the Institute for Ethics and Emerging Technologies to Business Insider

"People will not own cars because it makes more sense for them to use a network of self-driving cars that will show up on demand when needed." 

Cascio points out that, "In just 15 years, by 2030, the self-driving car market is expected to reach a whopping $87 billion…" 

He's not alone in that assessment. Tony Ceba holds similar views. The individual car ownership model will eventually fade into history like horse & buggy ownership did at the end of the 19th century. Yes, there will be people who still own cars - as collectors, hobbyists, or out of nostalgia, but the economics of private car ownership simple won't make sense for most people after 2035, it's thought. Ceba even thinks that fleets of self driving cars and shuttles will pay you to hail them so you can view sponsor messages on those wrap around windows as you ride to work or to catch the local public transit into the city. 

If increasing numbers of people won't be in the market for private cars, then who does GM (the world's 3rd largest advertiser), Ford, Toyota, Nissan, VW sell them to? The logical assumption would be (1) themselves (GM's Maven, BMW ReachNow ) as they switch to operating their own mobility services, to (2) the Hertz, Enterprise and Avis of the world, (3) independent public transit system operators like Keolis, (4) Uber and Lyft operators, (5) corporate fleets, or (6) someday, I hope, our own goQUIK multi-modal shared mobility (m2sm) service. All of these are strictly B2B sales, business-to-business, and here operational capabilities and costs, not styling and upgraded bells-n-whistles, are the decision drivers. That's the stuff of trade shows and trade magazines, not multi-million dollar ad buys during the Super Bowl or even the erection of fancy dealer showrooms. 

Of course, this won't happen over night, just as ICE-age automobiles and trucks won't suddenly vanish - though cities like Paris and London and countries like Norway and China are increasingly moving in that direction. But the proverbial handwriting is on the wall. 

Says Cascio… 

"While it may be hard to think of parting with your car right now, the truth is, trading ownership for a service model may actually make more sense in the long-term." 

Times Article Viewed: 256

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