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5 June 2020
Georg Bauer, founder of used car subscription site Fair.com tells Christof Engelskirchen, Autovista Group’s chief economist, why – after a career as a ‘traditional auto guy’ – he felt it necessary to focus on improving the used-car buying experience. He tells us how and why Fair.com does just that and how the role of car dealers may change in the future.
4 June 2020
How to prepare for changing consumer preferences, especially around alternative powertrains and future trends, should be central to any remarketing strategy. Sebastian Fuchs, managing director Manheim and RMS Automotive Continental Europe, part of Cox Automotive, explains that this requires both considered industry monitoring and a leap of imagination.
When talking about alternative powertrains, many options come to mind, and it is important to prepare for changing consumer preferences, particularly regarding remarketing strategy.
The closest powertrain to the internal combustion engine (ICE) is the hybrid, which comes in two forms: the full hybrid with an electric range of several kilometres, and the plug-in hybrid (PHEV), which – depending on model and battery – can travel around 50km purely powered by electricity.
Further from today’s ICE, hydrogen is what many believe to be the long-term solution. Due to its sustainable method of production – as a by-product of many industrial processes – sources of hydrogen are plentiful. Ranges for hydrogen-powered vehicles are – depending on model – not far from that of traditional ICE vehicles.
Finally, there is the battery-electric vehicle (BEV), the powertrain that has a substantial chance of long-term success, given the leaps that are happening in battery technology and the investment going into it.
Turning to the megatrends that were front of mind, at least up until the coronavirus pandemic hit, and that we expect will be our focus once again in six to 12 months from now. There is a continued trend towards urbanisation, depending on which study you read, by 2040-50 around half the world’s population will live in an urban hot spot. Digitisation will see generations growing up with the possibility of ordering everything at their fingertips and will, in their own time, change consumer behaviour, explained Fuchs.
There is also an environmental consciousness, with CO2 reduction objectives driving development and consumption, while a sharing economy will change how products are owned and consumed. Finally, artificial intelligence will become mainstream and an accepted part of daily life.
With all these trends, electric cars will likely be the ultimate winner of this future. The variables of this powertrain are the ones we need to understand.
‘If we keep these megatrends in mind and turn to the current reality, we should explore whether inflection points in the growth of electric cars can already be seen. The RVs of electric cars are still way behind some those for traditional vehicles, although the picture is not the same for every country,’ Fuchs concludes.
This article uses extracts from the feature: Future-ready remarketing. In the full version, which you can find here, Sebastian Fuchs delves into the residual value data of key markets in Europe and highlights the key areas to pay attention to when formulating a remarketing strategy for EVs.
For more of the latest thinking, insight and data from our Auto Mobility LIVE speakers and TCO Awards judges, check out our Auto Mobility LIVE Insights page.
1 June 2020
Autovista Group’s chief economist Christof Engelskirchen speaks to John Saffrett, deputy CEO of ALD Automotive, about how a leasing company needs to ‚build muscle‘ to create a truly digital customer experience. They discuss the remarketing risks for the internal combustion engine and how used car markets need to be built to be able to absorb the increasing amount of electric vehicles. John predicts that companies will scrutinise costs associated with the mobility of their staff and will be looking for flexibility in contracts and potentially shorter commitments.
21 May 2020
Connected vehicles can offer consumers an enhanced driving experience, but even with numerous features and options available, there is still a sense that the car is not a seamless aspect of a consumer’s digital life. Stéphane Lagresle, senior marketing director, connected car and connected services, Harman International, in conversation with Autovista Group’s chief research officer, Sarah Walkley, explains how this will change.
Many cars in the market today already include all the technology a driver needs. They have a big screen on the dashboard and 4G connectivity. Yet, drivers cannot get into their car and access Spotify, WhatsApp or any of the other apps that they customarily use. Therefore, the challenge for carmakers is navigating how to enable today’s connected consumer, instead of just adding technology for technology’s sake.
To put the consumer at the heart of vehicle design requires a radical shift in industry mindset, says Lagresle. Manufacturers need to rethink how they are organised and how they operate in order to address this transition. As an automotive industry supplier, Harman regularly sees great opportunity for OEMs in becoming more collaborative across departments. He believes that collaboration is key, particularly as the in-cabin experience is what is important to consumers today. ‘Ubiquitous connectivity reshuffles the cards,’ explained Lagresle. Areas that typically had no need to collaborate now work together.
It is rarely efficient or effective for manufacturers to develop their own equivalent of Spotify or a restaurant review app, like The Fork. Moreover, consumers are not necessarily asking them to do so. However, they do expect their preferred restaurant app and the navigation system in their car to work in tandem to ensure they get to the restaurant in time for their booking. ‘Even further, perhaps their car can automatically WhatsApp, or mobile message, the other diners to inform them that their host will be five minutes late’ speculated Lagresle.
In this world, automakers must view cars as another digital device in order to enable seamless mobility and connectivity, not just something that moves us from point A to point B, and this inevitably requires partnering with the technology providers that consumers favour.
Furthermore, Lagresle observed that when you buy a new phone, the first thing you do is set the login details, download your favourite apps, change the backdrop, customise the menus etc., so it is no longer ‘just a phone’ but rather a highly personalised and distinctive device belonging to that particular individual.
‘In the future, automotive consumers may behave similarly, moving between car brands and models more fluidly, fully expecting a hyper-personalised infotainment experience with effortless access to all the apps and services they love’. At present, however, even months after you buy a new car, it is still a car; you have very few options to make changes and personalise it to how you want it.
Customisation and features on demand represent the next stage in this process of choice and personalisation. Lagresle acknowledged that this could have far-reaching consequences for used vehicles.
When asked about valuing a vehicle when what matters most is the experience rather than the car itself, Lagresle replied that establishing residual values needs to be thought through over the coming years and that partnering will be the key to meeting consumer needs and ultimately driving the highest value.
To read or download the full article ‘Putting a value on experience – Delivering the connected cars that consumers want’ click here.
For more of the latest thinking, insight and data from our Auto Mobility LIVE speakers and TCO Awards judges, check out our Auto Mobility LIVE Insights page.
18 May 2020
In this podcast, Christof Engelskirchen, chief economist of the Autovista Group, investigates whether people will want new cars in the mobility market of the future. He is joined by Wolfgang Reinhold, Managing Partner at WER-Consult and co-founder of CARA Europe, the European Car Remarketing Association. Wolfgang explains why he is optimistic about the post-pandemic prospects for the remarketing sector and explores how consumer behaviour may change immediately after COVID-19, and beyond.
For more of the latest thinking, insight and data from our Auto Mobility LIVE speakers and TCO Awards judges, check out our Auto Mobility LIVE Insights page.
6 May 2020
Sarah Walkley, chief research officer at Autovista Group, spoke to independent experts Alain Duez, international senior business advisor & partner of Fleetcompetence Group, and Jose Luis Criado-Pérez, founder of Jose Luis Criado, Mobility Consultants, to find out why disruption in the wake of the coronavirus (COVID-19) pandemic may not be a bad thing.
For companies with a fleet of vehicles, the costs involved often make up a large part of the overall cost base. They typically represent the third largest expenditure, after employment costs and real estate, accounting for anything up to one fifth of a company’s indirect costs.
Yet the coronavirus pandemic means that since the start of March, a large number of fleet cars have not been in use. Given the scale of fleet costs for the typical organisation, there has been pressure on those responsible for overseeing the company fleet to look for any form of cost savings.
But before acting, companies should take some of the time that they have been afforded by the unexpected interruption in business to review the current shape of their fleet and their fleet policy and determine whether it still fits their operations – both now and for the next five years.
Think ahead
While it is tempting to consider returning vehicles to the leasing company, it may prove expensive, and rather short-sighted. While manufacturers are confident they can get production back up to speed as restrictions put in place to stem the COVID-19 outbreak start to lift, supply-chain issues and staggered shift patterns will likely lead to delays in vehicle deliveries. This will leave anyone wanting to lease new vehicles later in the year with lengthy waits – a challenge if they have previously returned a large part of their fleet.
Extending leasing contracts or recalculating the contract mileage to allow for the fact that vehicles will be used far less than expected over the coming months are also options available to fleet managers. These will both help to control fleet costs but, according to fleet experts Jose Luis Criado-Pérez and Alain Duez, there are other, more creative options available.
Distance travelled
Now is the ideal time for businesses to take a step back and review whether the policies they have put in place are still relevant Duez comments. Fleet managers tend to adopt standard age and mileage scenarios, such as three years and 60,000km, but do these reflect actual usage? Annual distances of 80,000km are not unusual for many salespeople.
The additional cost of the extra 20,000km payable at the end of the year might be far greater than the uplift in contract value if the correct age-mileage scenario were selected in advance. This is intelligence that you can use when negotiating future contracts.
Mobility future
How different does the future look for leasing firms in a post-coronavirus world? Both Duez and Criado-Pérez agree the move towards shared mobility and electrification of their fleets will continue despite the current crisis. How that change plays out will not be as we had previously expected, but that could bring new opportunities. However, it is advisable for leasing firms not to launch any new plans until the right time.
The concept of shared mobility is not currently as appealing as it has been, and it is likely to stay that way until an effective COVID-19 vaccine is developed. However, the past few weeks have taught businesses how to manage remote and flexible working, with many perhaps looking at making it standard practice in the future.
Such a move will give a shot in the arm to shared mobility, as providing employees who often work from home with their own vehicle feels like an unnecessary expense. Indeed, Duez quoted recent research that revealed that one quarter of fleet managers were already looking more seriously at shared mobility and providing mobility budgets for their staff.
You can read or download the full thought-leadership insight piece here. In it, Duez and Criado-Pérez explore further ways that fleet managers can look to make their business more effective in a post-coronavirus world.
1 May 2020
Although both Auto Mobility LIVE (AML) and the TCO Awards have been cancelled for this year, Autovista Group and the events’ speakers and judges remain committed to bringing you informative and relevant insights.
In this article, Rui Ferreira, vice president Electric Vehicle Fleet at electric vehicle (EV) subscription startup Evezy, discusses the company’s unique business model, the impact the coronavirus crisis might have on car subscriptions and the challenges of working in an untypical startup. Christof Engelskirchen, chief economist at Autovista Group leads the conversation.
You can read the full interview here
Q: Evezy offers nearly new electric vehicles via a subscription model. How does it work?
A: Evezy is an all-inclusive electric vehicle subscription solution, with no deposit and no long-term commitment. Included in the subscription is the car, a network-charging card (free electricity at 7,000 charge locations in the UK) insurance, maintenance (including tyres, servicing and applicable taxes. In essence, everything that you need to drive the vehicle.
For most consumers to convert to an EV, there are still too many unknowns. Not the technical concerns but how you live with and experience an electric vehicle. Range anxiety. Can I charge my car at home? Is it hard to plug the car in at a public charger? Are there enough public charging points out there? Evezy gives customers the opportunity to experience an electric vehicle, without the significant upfront cost nor the long-term financial commitment, so they can overcome any of these apprehensions.
Q: The car industry seems to be amongst the hardest hit industries during and potentially after the coronavirus crisis. What do you think the impact will be during Q2 and Q3 2020?
A: When you compare this crisis to the one in 2008/2009, there is one aspect that is fundamentally different. It has been the general stopping of all economic activity and for the first time ever, the closing of automotive factories. That is going to make a significant difference. In the previous crises, automotive production continued, creating a surplus of new cars for which there was limited demand. This is not the case now, so I hope and believe there will be a quicker recovery, but the question is, to what level?
Whether it is going to be 95% or 90%, I am not sure. Obviously, there are going to be sectors of the economy that are going to struggle more than others, such as entertainment and travel. This, in itself, will have an impact on the economy and overall automotive demand.
Q: What are the trends you see emerging out of this crisis?
A: When you look at March [2020] new car registration data across Europe, it is clear that electric vehicles continue to grow exponentially. A record 4.6% of the total market registrations in the UK were electric vehicles and that shift to electrification continues in all major European markets. I believe this trend will accelerate.
People will come away from this coronavirus experience with a greater consciousness of climate change, our environment, what is really going on in the world, what is important. We will be more conscious of what we need to do as individuals to protect our environment. That will generate even more focus on electric vehicles. Other mobility solutions may find greater challenges. For car sharing, it was already difficult to make the business casework across Europe.
There are reports coming from South Korea that people are shying away from public transportation, increasing demand for cars. The rental industry will suffer from a significant impact as leisure travel will inevitably decrease this summer season and business travel will take a while to recover.
A full digital experience [is now desirable] for people looking to satisfying their mobility needs. [This] is another trend that our business model will likely benefit from.
Q: Non-ownership business models may benefit from the crisis, as people will not have to make long-term commitments but will still be able to try all the options that there are for vehicle access. But what about the trend towards electrification. Is there a risk that it will stall?
A: No, I do not think so. I think it will be accelerated. For the reasons we mentioned before, plus the amount of investment that automakers have put behind electrification is just so large. It is beyond the point of no return. The charging infrastructure is also growing quickly across Europe and financial commitments have been made to build it up. The train has left the station.
Q: Would you say that a subscription model makes more sense for the electric vehicle than for the internal combustion engine vehicle?
A: Absolutely. Subscription models for electric vehicles eliminate the fear associated with electrification from the consumer’s eyes.
You can download and read the full interview with Rui Ferreira of Evezy here. In it, he talks more of Evezy’s business model and how European incentives following the coronavirus pandemic may benefit the EV market.
28 April 2020
Although both Auto Mobility LIVE (AML) and the TCO Awards have been cancelled for this year, Autovista Group and the events’ speakers and judges remain committed to bringing you informative and relevant insights. AML speaker Franck Louis-Victor, who is new media and innovation services director at Renault, discusses the future of car design, and how to create brands that live up to their iconic predecessors.
Technology has always been the driving force behind evolution in car design. Used effectively, it has the potential to be a game-changer. However, used unquestioningly, there is the danger that cars of the future will be stripped of their personality and consumers will lose the personal connection they have always had with their car.
Over recent decades, cars have undergone a series of incremental evolutions. Each new version is bigger, heavier, taller, more sophisticated, more comfortable and more environmentally friendly. Modern cars have become safer, efficient and reliable as manufacturers take advantage of continuous technological improvements, and they have fewer elements in common with their predecessors as a result.
Rare emotion
However, making better vehicles using the same name as an iconic original model does not guarantee the car keeps its soul – that unique recipe that made the original a success. The emotion that surrounds a product is rarely just a question of technology. It results from a perfect combination of a relevant value proposition, meeting a precise societal need and a brand associated with strong values.
Ongoing developments within the industry, such as electrification, connected technologies, shared mobility and autonomy are also impacting car design. Battery-electric vehicles, for example, represent a major step towards dramatically reducing pollution. These cars are attractive enough to compete with traditional combustion engines; they offer the right level of comfort and autonomy. Yet, all these incentives are doing is artificially sustaining the market, while CO2 regulations are forcing carmakers to shape their product ranges around zero-emission offerings to avoid heavy taxes.
Unique recipe
The pace of automotive research and development has probably never been more intense, and yet to realise the combined potential of the technologies available, OEMs need to rely on their suppliers to provide top-notch solutions and components, cautions Louis- Victor. Still, the job of design, upstream specification and integration rests firmly with manufacturers. They need to combine the ingredients to deliver their unique recipe to the market.
How will the current coronavirus pandemic affect design? Big crises have the virtue of bringing us back to basics, sweeping away the superfluous, unnecessary things, reducing the choices that we have to make and bringing what is most important to the fore. This may lead carmakers to focus on areas away from technology to win customers, bringing design back to the front of their thoughts.
You can read or download the full thought-leadership insight by Renault’s Franck Louis-Victor here. In it, he explores the different technologies on offer to carmakers today, and how coronavirus will impact decisions on car design and development.
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