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The times are a changing, analyst says

THE auto industry is in a state of flux with manufactuers focusing on technological advances that are arriving fast and furious as they explore alternatives to fossil fuels from electrical power to fuel cells and autonomous vehicles.

The Silicon Valley is ploughing new trails but auto manufactur such as Ford, General Motors, Toyota, Honda or Mercedes-Benz are also keeping pace in stertching the boundaries of possible future vehicles.

Craig Giffi, Deloitte’s US director of automotive industry studies told the Washington Post there are four basic changes taking place, which he calls “four future change states”.

In the first secenario, the auto industry operates much as it has for the past century. Dealers sell cars. People buy them and drive them themselves. This “state” assumes that mass autonomous operation of cars – driverless driving – “does not take hold anytime soon”.

Car sharing is the second. “This is an inconvenient truth confronting automobile dealers and manufacturers,” Giffi says.

New cars are becoming too expensive – the final transaction price now averages US$33,566 (RM150,000). “In this state, shared vehicle services become ubiquitous as greater scale of shared mobility and increased competition leads to a more expanded range of services and segmented customer experiences at lower costs.”

The driverless revolution is next. “Autonomous-drive technology becomes viable, safe, convenient and economical.”

But he said such progress in no way means an end to private vehicle ownership. Individuals will continue to own cars “for many of the same reasons they owned them before the advent of autonomous drive,” Giffi said. He said people will accept autonomous drive for its functionality -”safety and other potential benefits.”

The fourth is a convergence of autonomous drive and shared mobility. Example: You tap the screen of your smartphone to order an electric Tesla or Chevrolet Bolt.

The car, sans driver, arrives at your place to pick you up. You get in the Tesla or Bolt and continue preparing for your day’s meetings without worrying about the steering wheel or other traffic matters.

This will take time but if manufacturers and Silicon Valley are to be believed, 2020 is their target where this will come to pass.

Giffi predicted that it will happen much faster than doubters expect. There will be “tipping points” – the funding and creation of governmental infrastructures that can electronically communicate with cars and allow cars to “talk” to one another, the emergence of fleets of autonomous shared vehicles as a viable transportation option.

Giffi, echoing other future-transportation wonks here, said that car manufacturers need to get serious about considering “whether they need to evolve from a relatively fixed capital production, first-transaction, product-sale business into one centered on being an end-to-end mobility services provider.”

Car dealers, for example, will be challenged, probably within a decade. But smart, creative dealers will survive and thrive, Giffi said.

“For the moment, they continue to operate as they have for decades, selling and servicing driver-controlled, personally owned vehicles,” Giffi said. But all of that is changing with changes in automotive technology, he said.

“As autonomous-drive vehicles become more widely adopted, there are likely to be far fewer personally owned vehicles than the 250 million in operation in the US today,” Giffi said.

But the vehicles on the road will still need to be serviced except that, well, as already illustrated by Tesla, that servicing can be done remotely, without appointment and the need for vehicle storage, through software upgrades and electronic patches.

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