Servicing the Next Generation of Cars and Customers
A couple of years ago, one of the consumer magazines compared the cars of 1991 to the cars of 2016 and listed the top 15 automotive milestones over that 25-year period. Hybrid technology, stability control and GPS satellite navigation were the top three in order and amazingly enough, tire pressure monitoring systems (TPMS) was number nine. The list was a mix of mechanical and driver-related innovations that made cars better, safer, efficient and more convenient.
Looking ahead to 25 years from now is impossible given the rate of technological changes and what that will look like in 2033. I will be 76 years old, so I hope I will still be driving, that is, if I need to. The automotive landscape seems to be changing at lightning speed so predicting what will shape the industry when I am an old man is pointless.
Besides the technology and the physical machine, there are also the changes that are taking place with consumers. When I was 16 years old, I couldn’t wait to get my license and my own car so I would have more mobility. Today’s 16-year-old may not look at it the same way I did decades earlier.
The future of the automotive aftermarket is definitely unpredictable, but there are ways that independent tire dealers can start preparing today for the evolution that is coming tomorrow. Statistics published by Modern Tire Dealer earlier this year showed that the mix of tire sales to automotive service hasn’t changed much over the last decade, but the types of automotive services provided have expanded. Tires, brakes and alignments were the staple of tire dealerships like the one I grew up in, but the new generation of retailers must provide more advanced services involving diagnostics, coding and TPMS in order to compete.
Then there’s the total disruption of the retail market known as the Amazon effect, where more and more consumers are switching from the traditional model of shopping at brick-and-mortar stores to online orders and door-to-door delivery. It hasn’t reached the automotive industry at the same level it has with others, but it will have an impact one way or another.
There is an evolution underway and to deny it is a sure sign of surrender. Resisting change at this point is admitting that you are barely competing in this economy and any hope of competing in the future is lost. Some owners just keep looking for a buyer and hope that some big chain will come in and buy them out before they squeeze them out. The good news is that there’s still time to embrace what lies ahead and start taking steps to avoid what happened to Blockbuster, Toys “R” Us and the countless other retailers that have secured their spots in the retail dustbin of history.
The best place to start is the vehicle and the timely subject of autonomous driving. Self-driving cars are eventually going to be the subject of every conversation related to the future of the industry. A host of experts are making their predictions on how drivers will be replaced in a short period of time. The well-publicized recent accident involving a self-driving ride-sharing service that resulted in a fatality may have calmed the waters to some degree, but the autonomous driving proponents have merely quieted down until it’s looked at as another byproduct of evolving technology.
It’s hard to believe, but some people actually think that a few lives must be lost in the pursuit of a vehicle that will save thousands more. In their eyes, any sacrifice can be justified for the greater good. Tell that to the family of the woman who was killed earlier this year.
Before we start making plans for what the engineers can accomplish with technology, I think it’s more important to consider what consumers want. A recent survey by the World Economic Forum revealed that a little over half of American consumers would be willing to try a self-driving car, while that number drops to just 44% of German drivers and 36% of drivers in Japan. Another study by the Massachusetts Institute of Technology (MIT) AGELAB measured the maximum level of automation that drivers would be comfortable with (see table).In 2016, the 16-44 age group was more comfortable with full automation while the 45-75+ age group was more interested in systems that provided active assistance without giving up control. The same study a year later showed the 16-44 group was less comfortable with full automation but significantly more comfortable with active driver assist. Likewise, the 45-75+ demographic was even less comfortable with full automation the following year and more comfortable with systems that actively help the driver. In the end, MIT determined that drivers are less interested in full automation when 2017 opinions were compared to those in 2016.
The lack of physical control over a fully autonomous vehicle is definitely a generational issue. Most middle-aged Gen X’ers like me are never going to accept a vehicle without a steering wheel and floor pedals. Younger generations, on the other hand, are probably more comfortable with technology doing the driving so they can focus on their handheld devices. The common thread for every generation should be cybersecurity. Autonomous vehicles must be connected in order for all of the safety benefits to be realized.
At a recent trucking event, cybersecurity experts were expressing their concerns on the potential effect of a “Trojan horse” virus. If one truck is infected, it spreads the virus to other trucks when they connect. Weeks or months down the road, the virus could impact thousands of trucks and instantly shut them off. In an age where foreign and domestic terrorists are constantly looking for ways to cripple our economy, all it takes is 72 hours without trucks to bring North America to a standstill. Translate that into large metropolitan areas where all the cars on the road just stop. It brings a whole new meaning to the word gridlock.
According to the Society of Automotive Engineers (SAE), there are five different levels of autonomous driving.
- Level 1 is known as Driver Assistance, which is what we have today with the vehicle controlled by the driver with features like lane control and automatic stopping.
- Level 2 is called Partial Automation and it requires the driver to remain engaged with the task of driving and monitor the environment while certain functions like acceleration and steering are automated. The self-park feature on some vehicles could be considered Level 2 automation.
- Level 3 is called Conditional Automation. This would be the well-publicized recent accident where the tasks of driving are automated but the driver must be ready to take control of the vehicle when notified.
- Level 4 is High Automation where the vehicle can perform all driving functions under certain conditions and the driver has the option of controlling the vehicle.
- Level 5 is Full Automation with the only difference that the vehicle performs all driving functions in all conditions.
By no means am I an expert on autonomous driving. There are so many layers to what can be done, what will be done, and what consumers actually want, it’s impossible to predict what cars will look like in five to 10 years. However, I think it’s safe to say that the amount of Level 1 Automation is only going to increase, so retailers must be prepared to repair, adjust and align those systems as well as the vehicle components that are affected. If the lane control system is inoperable, I’m guessing that most drivers would want it repaired. Same with the automatic stopping, which means the alignment, brakes and suspension may be impacted if they haven’t been already. As the level of automation increases, the demands on maintenance and service will multiply.
The Zipcar alternative
Another shift in vehicle ownership is slowly taking place with companies like Zipcar. Car sharing has spread across the U.S., Canada and Europe as another alternative. Unlike traditional car rentals, services like Zipcar are membership-based and allow people to rent by the hour, day or week. There’s no paperwork and all of the billing is handled through the app, which makes it perfect for the urban millennial in need of a short-term vehicle solution when ride-sharing is not an option. Consider a scenario where someone takes Uber to a Zipcar, drives out of town for whatever, drives back to the Zipcar spot and then takes Lyft home without ever talking to someone or signing anything.
Again, the ownership model has changed, but the need for regular maintenance and service remains. Progressive retailers will find ways to connect with car sharing services as a maintenance provider in order to capitalize on that market as well.
The Uber factor
The other factor to consider when looking into the future is who the customers will be in five to 10 years. I’ve been involved with the Boy Scouts as a leader and merit badge counselor for years. During a recent encounter with one of my Scouts, we were reviewing his expenses for the month as part of his Personal Management merit badge. The goal is to teach the boys about budgets. I’ve known this particular young man since he started in Cub Scouts because he is the same age as my son. I was shocked to see that he spends more than $150 month on Uber. As we looked at the reasons, some of them were just related to his unwillingness to get up early and catch the bus, but most of them were trips to the movies, restaurants, concerts and sporting events. He’s old enough to drive yet has no interest in getting a license or a car.
He reasoned that owning, insuring, maintaining and fueling his own car would be more than $150 a month, so why take on the added expense if his way was working? I couldn’t argue with that but did advise him that getting out of bed would save him a lot of money. Ride-sharing services are changing consumer attitudes toward vehicles in general, so failing to capitalize on this movement will prove to be costly.
It’s not just the teenagers who are changing their views. Business travelers are foregoing taxi companies for ride sharing at a growing rate. While most airport taxis still have a monopoly on the outgoing rides, I’ve noticed a lot more Uber and Lyft vehicles in the departure area. It’s not just the taxi’s feeling the heat — car rental companies are experiencing the pain for the same reason. Hailing a ride on your phone with the address and payment already handled is so much easier than finding a taxi or dealing with a rental.
I’m probably showing my age, but the millennial I just hired introduced me to Uber Eats a few months ago. Countless restaurants that didn’t deliver are instantly at your fingertips and once again, all of the details are handled without actually talking to anyone. It is amazing how traditional vehicle transportation is being transformed by smartphones and ride-sharing services.
I know a few Uber and Lyft drivers. Some of them do it on the side for extra cash while others have determined it’s the best they can do right now. Regardless, they all have one thing in common. They need a reliable vehicle because it is their livelihood. The ones who are more or less doing it full time put a lot of miles on their cars with most of it in the city. Tires and brakes are being serviced more often as a result, so they are looking for a maintenance partner. How many tire retailers are marketing to these drivers? Some of the larger chains are already on the approved list for inspections and are even willing to do it at no charge in order to build the relationship. These aren’t customers who drive back and forth to work. They are professional drivers who must have fully operational vehicles in order to survive.
Air conditioning services are about to become very important to the Uber or Lyft driver. Who is going to get that business? Reaching the ride-sharing drivers is going to be critical moving forward because they will become major purchasers of vehicle maintenance and service.
From Gen X to Gen Z
The final piece of the puzzle is the consumer of the future. By 2019, millennials are projected to outnumber the baby boomers and they already outnumber Generation X. It’s fairly well-documented that people born between 1981 and 1996 are changing the way that goods and services are bought and sold, so it shouldn’t be a surprise that the automotive service and maintenance industries are already feeling the impact.
Besides the effect of ride-sharing services and the fact that the majority of millennials would not own a car unless they had to, the growth of online sales is expected to continue. Even the Gen X’ers like me are jumping on the bandwagon and using mobile devices to make life a little easier. For those millennials who do own a vehicle, having an online presence is imperative for a retailer. If they cannot find your business online, you have little to no chance of making a sale. If they find your business online, those chances will not improve if they cannot make the purchase and/or schedule the appointment.
Even more concerning is the fact that the generation after the millennials, often referred to as Generation Z, projects to be even bigger! In fact, as it stands today, the two generations who are totally influenced and guided by their mobile devices make up half of America’s population. From the online perspective, having a total presence is necessary but having an effective mobile platform that is easy to navigate will become even more important when Gen Z enters the marketplace. They are so accustomed to instant gratification that waiting for even a couple of seconds is enough for them to move on. If retailers want to reach half of the future consumers for automotive maintenance and service, they must be dialed in at all levels online, especially on mobile platforms.
Having a social media presence is probably overstated and understated, depending on who you ask. It seems like every conference and trade show that I attend has workshops and seminars on how to maximize a company’s social media to attract new customers. Interestingly enough, most of them are led by older people who may or may not understand what resonates with millennials and Gen Z. As one of those older people who does not totally understand these generations, I’ve started asking questions to learn what is important to them when it comes to social media. Perhaps one of the more interesting things that I have learned is that most of them have strong beliefs in social causes and environmental sustainability. Plastering social media pages with sales and coupons may not be the best way to reach these buyers. Finding a cause, promoting it, and “walking the walk” might yield better results in attracting customers than giveaways and discounts.
The same with the green movement. Retailers who actively take steps to reduce their environmental footprint and communicate that via social media are speaking the language of generations that are trying to make a difference.
Say ‘no’ to status quo
Everything is changing at a pace that appears to be accelerating with each new model year. Vehicles are becoming more complex with levels of automation that require a higher level of technology and training. New car manufacturers are not making it any easier (or less expensive), so retailers must decide to go “all in” or stay in their lane where they are most comfortable. Given all the changes that are on the horizon, I have to believe that status quo is not the way to go.
As if the shift in vehicle technology isn’t enough, consumer needs are also going to change as the model of vehicle ownership and operation evolves. Teenagers are not clamoring for a car because many of them don’t need one. As they get older, the main reason for owning one will be when they no longer have a choice. If enough of them stay in the city, unlike the generations before them who retreated to the suburbs after they started families, then that model shifts even more as ride-sharing and car-sharing services become more dominant and necessary.
Tapping into those markets is vital, especially in the urban environments where the convenience of managing pick-up and drop-off with a smartphone cannot be understated.
Finally, tire retailers must consider the needs of what will soon become half of the automotive service and maintenance market. They don’t think like baby boomers or Generation X nor do they purchase goods and services like their parents and grandparents. Understanding how they act as consumers will determine the level of success simply because the “old school” approach does not resonate.
Jack Welch, the famed business executive, is credited with the quote, “Change before you have to.” If tire retailers haven’t started to change already, it may be too late. ■
Kevin Rohlwing is the Tire Industry Association’s senior vice president of training.