The future for this industry is bound up in the emergence of mega-cities, the continuing growth of vehicle demand in rapidly motorising emerging markets and the integration of personal mobility with smart connectivity. I was at a thought-stimulating event in London last week, organised by Frost & Sullivan, that addressed these developing themes. Technologies involving our use of vehicles are moving rapidly, challenging traditional models of vehicle ownership, retailing and even how we spend our time inside the vehicle. It’s compelling stuff and there’s a prevailing sense of the whole industry wanting to get a grip on how fast some of these changes are coming and which ones could be the most disruptive.
The omnipresence of the smart-phone is one thing that is having a big impact on our lifestyles and productivity, possibly akin to the revolutionary arrival of the personal computer in the 1980s. Apps that can help us with mobility are here now and there’s a big space that is starting to open up that will make the vehicle more productive (think about it: how much time is your vehicle simply parked up and doing nothing?).
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Just a note of caution though. The future is rarely quite as we imagine it. Unforeseen events or developments can – and do – throw forecasts out or even totally alter the planning landscape. Social changes are often the ones that are most unpredictable. Look at South Africa, Brazil, Turkey and Iran – all in the news lately for different reasons. The first two are seeing social tensions that could have far-reaching political/economic effects and consequences. As emerging market economies experience rapid growth, the spotlight can increasingly fall on the unequal distribution of income which may widen. That spotlight may be intensified by access to better information across the web, international information flows, and to new social networking platforms that protesters can use to their advantage. I must admit, I was particularly surprised to see young Brazilians protesting about hosting the football World Cup next year, but it’s something to put in context. Brazil is still a developing country with plenty of poverty.
The recent protests in Turkey signify a level of discord and polarisation there that will take some resolving and threaten its particular economic and political model, which had looked very successful. Iran, curiously, could be heading in the other direction after its recent presidential election. The triumph of a candidate seen as a ‘moderate’ could, just could, lead to some liberalisation and its economy being opened up – with opportunities for FDI in the automotive sector. We’ll see. The point is, change is constant and some elements in the mix are very unpredictable, whether its social change, geo-politics or technology breakthroughs (hard or soft/electronic technologies).
On hard technology breakthroughs, there’s the current example of shale oil/gas and fracking in North America. The global energy sector is being shaken up already. Astonishingly, the US is rapidly becoming energy self-sufficient. The coal that would have been burnt in US power stations – replaced by fracked gas – is now washing around on international markets and driving the price of coal down. Oil, you might think, could be next. Don’t rule that out, but the global supply and demand picture for ‘black gold’ remains somewhat tight and there are a whole load of gasoline-engined vehicles in use in China now that were not there five years ago. Adding twenty million vehicles a year to the parc has major energy-consuming consequences, as does an emerging middle-class hungry for goods and services. Per capita energy consumption in China will rise and they will need smart transportation solutions for cities in China, too, if they are to avoid total gridlock (which, besides the immediate grief, impairs economic growth – something the Chinese authorities are pretty sensitive about maintaining).
As the world’s population grows and the migration to cities continues, moving around the big mega-cities in a manner that minimises environmental harm, maximises economic growth and makes cities agreeably liveable spaces will become a rising challenge. The auto industry can manoeuvre to be part of the emerging solutions, rather than the problem. And that’s the way the smarter companies are already thinking.
