“Millennial Effect” shaping auto industry’s future
Today’s “Millennial Effect” is influencing how people of all ages think about vehicle ownership. This generational phenomena is on course to alter the automotive and auto finance industry going forward. According to a study by LendEDU, this influence will manifest itself by 2020 when Millennials will make up 40 percent of the car market.
Other statistics in the study include:
+ Nearly 21% of car-owning Millennials do not believe cars will be needed in 20 years;
+ 11.6% of car-owning Millennials have driven for a ride-share program like Uber;
+ 33.5% of Millennials view their car as a status symbol;
+ 42.5% of Millennials would give up manually driving a car for a self-driving car;
+ 16.6% of Millennials said apps like Uber and Lyft had made them re-think ownership;
+ 50.1% of Millennials would prefer a green car over a traditional car.
Dennis Ephlin, Digital Strategist for IBM’s Global Automotive Center of Competence, outlined these trends and others while looking at the complexity that disruption will bring to the automotive and the auto finance industries in the very near future. He made his presentation last month at the first Automotive Intelligence Summit hosted by Cherokee Media Group. He said three primary “disruptors” are causing industry boundaries to blur and possibly disappear. “Those disruptors are consumers, mobility and ecosystems,” he said. “Digitally sophisticated consumers expect digital engagement and experiences.”
Mobility as a disruptor begins with intelligent, intuitive connected vehicles while ecosystems allow for new areas to collaborate outside of traditional industry borders. “In the on-demand economy, traditional business models are in flux due to the growth in the sharing economy and the delivery of mobility services rather than the sale of vehicles,” he said. Ephlin sees these disruptions taking shape in the auto industry and having impact on consumers, entire enterprises and certain ecosystems. He believes that new automotive retail experiences will evolve, while the in-vehicle digital experience will dominate.
He sees the power of data as pushing companies forward with the possibilities of new business models forming. The result, he said, will be winners partnering extensively to create the next generation of mobility platforms. “Consumers will prefer auto companies that offer alternative ownership options,” he said. “Non-traditional retail companies like Amazon will begin to have a significant role in new vehicle selling. Consumers will want a seamless digital experience inside and outside the vehicle, while auto companies will offer incentives and loyalty programs to entice consumers to opt-in to services and share data.”
He said there is intense competition among disruptor companies trying to influence the industry due to the massive amount of startups in the digital space. “Companies who excel at the ability to partner and collaborate with the disruptors will lead the auto and auto finance industries into the future,” he said.
August 10th, 2018 by Dan Bucherer