The future of car selling

The future of car-selling is turning out to be very different
to what we thought it would be in 1958.

BEHIND the rows of new cars and trucks at Key Pietermaritzburg, two small offices rent out vehicles sold by Key for a few hours, or a few months.

This is where I send anyone who asks me what is the best 4x4.

For unless you drive dirt roads daily, your best 4x4 is the Isuzu you can rent for those few hours that you engage a crawl gear.

For the other 364 days of the year, expensive fuel dictates that you drive in city traffic with the smallest petrol burner that meets your needs, which may even be one of the quirky bicycles with tiny petrol engines and electric hub motors already used by a few pioneering people in KZN.

But they are few and far between, as South Africans don’t rent cars, preferring to own them.

This is mainly because we South Africans travel much further between stops, and because a car in South Africa is not viewed as a depreciating drain on the pocket, but an escape from the tyranny of the taxis.

In developed economies with their congested cities, however, teenagers increasingly say they prefer not to buy cars. and tuned-in car builders are therefore now trying not to sell them a vehicle, but to sell the ride instead.

What the future wants

A 2015 study by Penn Schoen Berland, a research company, showed why Millennial and Generation Z consumers don’t want cars.

They found:

• 50% say they will save money by sharing goods and services.

• 40% like the idea of being free to try the latest model instead of being locked into a rapidly ageing contract for seven years.

• A third just like being able to choose and use what they want when they want.

As the director of sustainability of General Motors, David Tulauskas,told the Detroit News last year: “We’ve come to the conclusion that our industry within the context of today’s traditional vehicles and today’s traditional business model is not sustainable in its current form.”

Which is why General Motors and Lyft have announced a strategic alliance to create a network of on-demand autonomous vehicles in the U.S.

GM will invest $500 million in Lyft to help the company continue the rapid growth of its successful ride-sharing service.

In addition, GM will hold a seat on the company’s board of directors.

Three ways to Lyft with GM

• Rental Hub: Beginning immediately, GM will become a preferred provider of short-term use vehicles to Lyft drivers through rental hubs in various cities in the U.S.

• Connectivity: Lyft drivers and customers will have access to GM’s wide portfolio of cars and OnStar services, leveraging two decades of experience in connectivity.

This will create a richer ride-sharing experience for both driver and passenger.

• Joint Mobility Offerings: GM and Lyft will also provide each other’s customers with personalised mobility services and experiences through their respective channels.

BMW scoops car-share app

GM is of course not alone in its realisation that its cars face a classic Shaka horn attack, with cities on one side heavily taxing cars and future buyers on the other side more into sharing than owning.

BMW iVentures last year announced a strategic investment in the Scoop car-pooling app that connects co-workers and neighbours who live in the same neighbourhood and travel to the same work area.

Commuters select each trip one way at a time and choose whether to ride or drive. Scoop’s algorithm matches them to a carpool with neighbours and co-workers for the most efficient commute.

CEO of Scoop Rob Sadow said the driving to and from work is the most frustrating time of the day — it’s expensive, unproductive, and stressful.

“We’ve built an app that allows commuters to enjoy all the benefits of car-pooling without the hassle.

“This financing will enable our team to bring Scoop to more commuters in our area and beyond.”

Head of BMW i Ventures, Ulrich Quay, said BMW Mobility Services and Scoop will together offer a practical car-pooling solution to a problem facing cities, starting in the U.S.

Ford has bicycles, Audi has boards and now Peugeot has scooters. 

Ford gets Smart

From Dearborn, Ford said it is now implementing the Ford Smart Mobility plan, which is based on two platforms: flexible ownership and multi-modal urban travel solutions, which includes the electric Ford bicycle.

To ensure flexible ownership, Ford Motor Credit Company teamed up with Getaround in the U.S. and easyCar Club in London to test a peer-to-peer car-sharing plan which sees approved customers renting Ford credit-financed vehicles.

In London, Ford drivers can use GoDrive, a pay-as-you-go car-sharing scheme.

Local realities

The big question all car dealerships should be asking is whether SA’s long roads and developing middle class will help to keep that L sign in a new car as a status symbol on our roads for another decade.

Or will young South Africans follow Apple co-founder Steve Jobs, who argued a car is not a milestone, but a millstone?

Jobs famously rented an unlicensed new Mercedes SL55 AMG every six months to avoid all the expenses of car ownership.

At Wheels, we are banking on more people buying into the status symbol for the next decade.