The Death and Rebirth of the Car Company

The car company is dead, long live the car company!

No, I’m not trying to pour cold water on the notion of the “rebirth” of Detroit, as effectively marketed by Chrysler and Clint Eastwood in the recent Super Bowl ad. Chrysler, Ford and GM have all done impressive phoenix impersonations, arising from the ashes of the SUV-dependent era to soar again with the winds of financial health and strong sales at their backs.

However, these companies as well as their competitors in Germany, Japan and Korea, will soon no longer be car companies. Or even automotive companies. Slowly, methodically, and purposefully, they are transforming into “mobility” companies as their inevitable incarnation for the future.

In mature automotive markets that may have already hit peak car sales, the companies formerly known as automakers have expanded their focus beyond pushing metal to becoming more sustainable (in all senses of the word) transportation solutions providers. Mobility is the linchpin for their growth, and it encompasses optimizing getting folks from here to there through “multi-modal” transportation, including public transit, personally owned vehicles, walking, bikes and car sharing.

A few years ago conversations with automakers about alternative revenue streams and mobility were scarce, as they had few staff dedicated to exploring new growth paths as the car was still king. However, as evidenced by recent marketing efforts and conversations with auto industry insiders, mobility has become an integral part of the future for Detroit’s big three as well as Audi, Toyota, Hyundai and most others. This shift in business philosophy is as much of a 180 degree turn as Domino’s shift to making pizza that tastes like, well, pizza.

For example, Audi recently announced a pilot program to study the role of electric vehicles in future mobility in order to “spark a progressive dialogue about the role transportation will play in the global megacities of the future.” These are not words you would have expected to hear from any car company a decade ago.

These mobility companies see strong opportunities for growth in telematics and in smart transportation technologies that seek to create a new role for vehicles that reflects growing urban density. These include services based on understanding traffic patterns, “smart” routing that reduces the carbon footprint of transit, and vehicle-to-vehicle communications that speed traffic flow and enhance safety.

Mobility companies are also starting to leverage their natural access to dashboard infotainment screens for the retail sales of applications, music, video, and information services. A few years ago, car companies were lukewarm to the idea of participating in these markets, but now they see them as a natural extension. They also see promise in mining data from connected cars’ driving patterns (appropriately anonymous and protective of consumer privacy, naturally) and using it to develop new services or selling it to third parties.

Eventually, some of these companies may stop selling cars altogether and become logistics or data experts. Skeptical? Just remember, IBM no longer sells PCs.

Article by John Gartner, appearing courtesy the Matter Network.

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