• Transform magazine
  • December 11, 2017

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Opinion: How can brands survive in the age of the driverless car?

Dylan-Stuart.jpg

With driverless cars now being trialled from Milton Keynes to California, the automotive industry is set to face its biggest revolution in the past 100 years.

At last month’s CES in Shanghai, Audi committed to making its forthcoming Q8 e-tron car a digital mobile device, further signifying how the automotive industry is adapting to the digital revolution.

From usability and design to driving dynamics, carmakers have nurtured their brands based on the assumption you will both own and drive the car – but what if this is no longer the case?

In the future, car brands that already know how to create desirability through seductive sheet metal and driving pleasure will now need to consider how to provide a different experience – from entertainment and communication right through to the mobility experience beyond the car. This will mean thinking much more broadly about where to create lasting emotional brand connections across an entirely different, and much more digitally enabled, experience.

On the one hand, many cars will become utility-driven products, based on providing a great mobility experience. Convenience, connectivity and comfort will likely trump emotion, performance and driving pleasure. On the other, cars will still be loved for the beauty of the object and the driving experience they provide, but this is likely to become a rather niche interest. Much like owning a horse or a fine mechanical Swiss watch.

Mercedes recently presented a product that pointed the way towards a ‘digital living space.’ Will we choose our cars based on the living and working environment they provide more than any other factors? Will we choose different types of vehicle for every journey – calling up exactly the vehicle we need when we need it? A future where the car is more of a personalised, mobile living space to rest, work or be entertained means car brands will need to fundamentally rethink how they communicate their personality and distinctiveness to customers.

Another challenge for car brands is the emergence of the ‘sharing culture,’ with US auto sales predicted to drop by 40% in the next 25 years because of shared driverless cars, according to senior Barclays plc analyst Brian Johnson.

Large-volume automakers “Would need to shrink dramatically to survive,” Johnson wrote. “GM and Ford would need to reduce North American production by up to 68% and 58%, respectively.”
As the traditional car market shrinks, the new breed should boom. Carmakers and technology developers building self-driving cars will create an £54bn opportunity in 2030, with software emerging as the biggest winner, according to Lux Research.

The research company predicts the software opportunity in autonomous cars will grow rapidly from, offering software powerhouses such as Google and IBM a lucrative opportunity. For automakers, varying software will be a key competitive differentiator as well as a crucial safety tool.

Driverless cars could deflate the physical market but they are set to offer huge opportunities elsewhere. Increasingly, the car is going to be an extension of the home meaning companies that provide entertainment, connectivity and communication will have an integral role to play. Whether a car contains iOS, Android, Sky, Nintendo etc. may end up playing a significant role in determining auto brand preference.

Overall, the car industry is on the verge of an incredibly exciting opportunity as brands move from creating desirability through leather interiors and exhaust notes to a deeper, wider-ranging relationship. The transition will, of course, take time. However the shift has begun and many brands need to consider how to move from selling cars to creating an outstanding mobility experience.

Dylan Stuart, is a partner for strategy at Lippincott

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