Analysis
8 Aug 18

Are you fit enough to survive the future of Mobility?

Mobility management is not the future: it’s already here. And it will only become bigger and spread even wider. Look to China, India and the rest of Asia for phenomenal uptake. As self-drive tech improves and data mining increases, mobility management will be increasingly electric, connected and shared.

In a nutshell, there you have the recent, 15th edition of Intelligent Mobility, Frost & Sullivan’s annual London conference on everything that moves and shakes in terms of new mobility trends. It was attended by a select 400 movers and shakers in the automotive, fleet and mobility industries from across 25 countries.

$3 trillion

Global consultants Frost & Sullivan have made mobility one of their key development pillars. They’re cranking out studies, surveys and benchmark reports aplenty, offering insight into the fast-growing mobility market. “The Global Automotive and Mobility Solutions (AMS) Market grew from $315 billion in 2016 to $440 billion in 2017”, said Sarwant Singh, Senior Partner and Board Member at Frost & Sullivan. “We expect it to grow further to $3 trillion by 2030”.

Downstream services are key to the AMS Market: new revenue streams from Financial, Driving, Vehicle and Mobility services is expected to grow to a $1-trillion market already by 2025.

Inspiring industry

But Frost & Sullivan want to do more than report and predict; they want to inspire industry leaders to adapt, adopt and change. The old business model, in which everyone stuck to just one activity – whether producing cars or funding them, organising public transport, offering parking solutions, etc. – is becoming obsolete. Partnerships between established players and start-ups, across various disciplines; that’s the new normal in the new mobility ecosystem.

That change is particularly urgent for ‘classic’ automotive players, who for much too long have clung to making, selling and maintaining cars. In a world in which individual consumers will be less and less inclined to buy and own cars, that’s an increasingly shaky foundation for success.

1.5 billion trips

Growth will be centred on shared services in high-density urban centres. Car-sharing will increase from 22 million users today to 45 million by 2025. Equally unstoppable: ride-sharing and ride-hailing.

Ride-hailing is going from a $10 billion business in 2017 to $17 billion in 2025 and from a fleet of 10 million to 15 million vehicles over the same period. Did you know that Uber alone managed more than 1.5 billion trips in 2017?

The ride-sharing market is becoming increasingly interesting for corporates especially. Last year, corporate car-pooling in Europe and North America represented about 6 million users. By 2025, that number will more than triple, to 20 million users.

Renewal cycles

And yes, these trends will greatly impact car sales. Don’t simply assume sales will go down, though. No: with both population and prosperity rising in places like China, Brazil, India and Africa, their growing middle classes will need more cars to drive around in. And with new mobility offers that include vehicles in shared programmes, vehicle renewal cycles will become shorter.

So it’s not all doom and gloom for car manufacturers. In fact, OEMs like BMW Group, Jaguar Land Rover, Volkswagen and Mercedes have already made the mental switch from ‘classic’ car manufacturers to providers of Cars-as-a-Service (CaaS) and Mobility-as-a-Service (MaaS).

All-inclusive ecosystem

This is indicative of a sector evolving from just manufacturing and selling cars to also providing related services and multimodal solutions, in order to attract new customers. BMW, for example, is developing its mobility services under the brand name ‘Now’. By 2025, the Bavarians want 100 million active mobility customers – and not just BMW ones.

“If you talk mobility, you can’t just focus on your own brand’s target group. It has to be much wider than that. You have to offer an all-inclusive ecosystem that’s accessible to all”, said Dr. Bernard Blättel, BMW Group Vice President. That explains why BMW’s mobility brand doesn’t mention those three letters in its products, but instead heavily feature the name ‘Now’, as in car-sharing programmes DriveNow and ReachNow, EV charging service ChargeNow and smart parking solution ParkNow.

Leasing companies

Also heavily investing in MaaS are finance players like the leasing companies. LeasePlan, ALD, Athlon, Europcar, Sixt and others have developed solutions well beyond the financing and servicing of the vehicle: they offer fuel cards, parking solutions, car-sharing and ride-hailing, telematics services and mobility cards.

As the market continues to grow, increased focus on B2B service offerings will be accompanied by new partnerships and acquisitions, which will redefine the market.

Pay-per-use

And as the market moves toward pay-per-use models, the finance method itself is changing. According to Frost & Sullivan, more than 50 vehicle subscription models will enter the market just in this year alone. These include models with variable durations – from minutes to months, even years – offered by a broad cross-section of the industry: from OEMs and lease companies over insurers, dealer organisations and shared-mobility specialists.

In these offerings, additional en-route mobility and after-sales services will be included, such as tolling, navigation, congestion, parking and refuelling.

Corporate space

In parallel with this transformation, there is the convergence of the B2B and B2C markets – not surprising, actually, as mobility is centred on the individual (who is both an employee and a consumer).

Nevertheless, access to mobility will in future also pre-eminently occur via the corporate environment. That’s why mobility players know they need to stay focused on developing innovative products that capitalise on the corporate mobility space, such as Mobility Budgets and Integrated Mobility.

Charles Darwin

It’s exciting, really: mobility is evolving to become more convenient, flexible, tailor-made, autonomous and urban-centred. This means corporate fleet managers have to adapt as well: they have to include new players into their mobility configuration, develop mobility offerings that take account of employee profiles rather than salary grades, and more frequently adapt their programmes to reflect employee expectations, business needs and supplier changes.

Charles Darwin never wrote about electric cars or ride-sharing, but the theme of his On the Origin of Species is equally relevant to the evolution of mobility: Only the smartest, the fittest, the most readily adaptable players will survive in the new ecosystem. And that goes for both mobility customers and mobility suppliers.

Copyright slides: Frost & Sullivan, 2018.

 

Authored by: Steven Schoefs