Auto Makers Threatened By Both Tech Company Autos And Ridesharing (caranddriver.com)

An anonymous reader quotes Car and Driver: For automakers, the first bit of bad news is that people seem quite receptive to buying a vehicle from a tech brand such as Apple or Google, according to Capgemini's 17th Cars Online report, which surveyed some 8000 consumers in eight countries... Consumer interest in buying cars from tech brands has grown from 49 percent in its 2015 study to 57 percent in the latest report... There is also the growing popularity of ride-sharing services offered by the likes of Uber and Lyft. Fewer people will feel the need to have their own car if it's easy and inexpensive to order up a cab on their smartphones. Capgemini's survey found that 34 percent of car buyers see ride sharing and related services as a genuine alternative to owning a vehicle.

Comments

So join them

[ranton]

The car companies already realize all of this, which is why they are also getting into the autonomous car and ride sharing business. They are late though, and they will probably move too slowly because of fear of cannibalizing existing sales. But they at least see the writing on the wall so time will tell if they can get their act together in time.

Re:So join them

[ShanghaiBill]

they are also getting into the autonomous car and ride sharing business.

The problem is that that is a much smaller market. A normal car is idle 95% of the time, so a ride-share car that is idle on 50% of the time, can replace 10 normal cars.

I used to rent cars when I arrived at an airport. Now, I just take Lyft. It is cheaper, more convenient, and saves me half an hour at the airport both coming and going.

But that means fewer cars need to be manufactured.

Re:So join them

[knightghost]

I usually rent because Uber isn't there when I need it.

Re: So join them

[ShanghaiBill]

And you couldn't do that before ride sharing existed by taking a cab?

Cabs cost more and are less convenient.

fantasy that everyone is just going to up and drop car ownership. Not going to happen.

It is not going to be "everyone", but it will be a lot of people. My household has 3 cars: mine, my wife's and my daughter's. We very rarely use all three at the same time. We could easily get by with two, and just use Lyft or Uber on the rare occasions when that is not enough.

If even 10% of households buy one less car, that will have a huge impact on manufacturers that are already struggling with overcapacity.

Re: So join them

[Anonymous Coward]

Cabs cost more because VC is heavily subsidizing ride sharing. Once that ends, prices will skyrocket.

Re:So join them

[Bender0x7D1]

A normal car is idle 95% of the time, so a ride-share car that is idle on 50% of the time, can replace 10 normal cars.

You assume an even distribution of use. However, 99% of cars are idle at 3:30am; but only a small percentage are idle during rush hour.

The only way that will change is if we have a massive shift in how people live, work, and socialize. However, even then, most people will be active during the day - and at home at night. Which will still skew the demand curves.

Re:So join them

[johanw]

Even if that were so, the car would also be used up much faster than before. My car is 15 years old and I don't plan on replacing it unless I get some serious maintenance costs. Their bubble are the people who buy a brand new car every few years and they forget about all others who use second hand cars.

Re:So join them

[CaptainDork]

I agree with you and I'm betting we have a plot spoiler:

This sounds a lot like Microsoft trying to get into the smart phone business.

Late to the party and didn't bring the ice.

Re:So join them

[ranton]

Late to the party and didn't bring the ice

Facebook was very late the party as well, so first to the gate doesn't always mean failure.

Re:So join them

[CaptainDork]

Excellent point.

In fact, I'll see your Facebook vs MySpace and raise you Google vs Yahoo!.

Re:So join them

[AHuxley]

The production lines are set up to make a set number of cars per worker per hour.
The numbers of cars got based on the size of US families. Mother, father needs a work car.
Son, daughter have a style of car they want and they will need for work or study.
Thats a few new sales and a lot of car parts over the average family and average use of a few cars.
Add in some SUV or RV or car related hobby.
The production lines are not easy to just slow, get turned off or be altered.
Cities and states offered a lot of support to attract decades of car related work for their voters.
Less car sales are less happy voters with jobs.

Re:So join them

[ranton]

but only a small percentage are idle during rush hour

Rush hour tends to start at around 4pm and last until 6pm, and with an average of 30-45 minute commute time one car could service 2-5 people during rush hour depending on how many people are going each way. And likely less than half of cars are even on the road during rush hour, as not everyone works 9-5 and some don't work outside of the house at all. Even during rush hour I would guess each car is at least 75% idle on average.

Re:So join them

[dave420]

Well, if the car really is engaged in ride sharing, it is only transporting other people when the driver wanted to go somewhere specific, so its utilisation time is not increased, just the number of passengers it is carrying on these journeys. Hint: Uber isn't ride sharing :)

Re:So join them

[houghi]

A car sharing company in Belgium claims that 1 car replaces 14 cars: http://www.cambio.be/cms/carsh...
Take that as you like. Many people will use car sharing instead of a second car. As a car sharer myself I can tell you that you will drive less, because you need to plan it upfront (a reason why many people do not want it)

So where are your numbers?

Re:So join them

[TheCastro1689]

That market along with car sales will always exist, it'll just shrink. I think this will also shrink the suburb market for a while. More and more people seem to want to live in cities and try to raise families there.

Re: So join them

[TheCastro1689]

A 10% decline in car ownership would be a lot. Car co. are already seeing declining sales as many millennials can't afford them and since live in cities have no need.

Re:So join them

[TheCastro1689]

They have apps that let people rent out their cars as they sit at work, there was one that let you rent your car out while you left it at the airport for some extra money.

Re:So join them

[TheCastro1689]

But they are, and if you're a person that is willing to rent your car out or use rental/zip car services or lyft/uber services then you probably aren't going to leave climbing gear, cds, whatever in the car. You'd probably keep your stuff in a backpack or satchel and take it with you.

Re: So join them

[ranton]

Even with such tracking how does that help the next customer if their ride shows up to fetch them from work or such and it's in such appalling shape?

Because then they get moved to the top of the queue and get a new car quickly. It isn't like it would be a common occurrence for a car with puke or piss to show up. Repeat offenders would be black balled so a few bad apples don't ruin the experience for everyone else.

People are really stretching with this complaint. Human cab drivers are not the only way to ensure the cars are clean.

Re:So join them

[SnarkSide]

I hold an alternate view auto makers are threatened by their belief that they are threatened by tech company autos and ride-sharing. This belief will lead them to lose focus or their core products and waste R&D dollars without ROI. Autos can partner with tech and both do what they are good at doing. Google and Apple can't out produce auto companies and Ford and GM can't go it alone without great technical partners. Everyone is betting on Autonomous vehicles and ride-sharing side effects 15 years early. While I acknowledge you can't catch up once you get 15 years behind on R&D you can let someone else do the work, partner with the winners and spend the R&D only on integration. The problem is there will only be a handful of winners and some auto makers will not have a place at the table in the end.

Everybody wants a car

[rsilvergun]

Period. There's just too many advantages. Plus when you're a teenager cars get you laid.

That said, it's never been possible for everyone on earth to have a car. There just isn't enough metal to go around. Add to that burgeoning wealth inequality making cars unaffordable (just bought a 1 year old entry level sedan and by the time I'm done with insurance & warranties it'll run me $380/mo. And before you ask the warranty's only $40 and I have a spotless driving record in my 40s. Full coverage's a bitch) people just can't have cars anymore.

It's gonna be fun, because building cars was something high profit enough that the scraps companies leave their workers let them live a middle class life. Meanwhile I'm still seeing people blame rising minimum wage on the death of the American class. Oh well, now I'm just rambling.

Re:Everybody wants a car

[Sique]

Everybody wants a car.

I don't have one, and I don't plan to buy one. And I know many people who don't own a car though they had the money to buy one. So this is not a given.

People don't necessarily want a car. They want to get from A to B. A car is a means to an end, not a value per se.

Re:Everybody wants a car

[ShanghaiBill]

There just isn't enough metal to go around.

The earth's crust contains about 2.5e18 tons of aluminum and 1.25e18 tons of iron.

There are roughly 7 billion humans, so there is enough for each person to have 2.8 billion tons of aluminum and 1.8 billion tons of iron.

Re:Everybody wants a car

[k6mfw]

I see your score is a "0" which I figured you don't get it, but then reading rest of your post is insightful (cmon you guys, give rsilvergun some points). i.e. "I'm still seeing people blame rising minimum wage on the death of the American class." as reminds me your 2016 comment of "There is no left" (Austerity are practically gospel in American media.)

Cars and culture are not like as in 20th century, "American Graffiti" is as distant as the Roaring 20s. Back then a teenager can get a junker for $100. Maybe not good enough for 3 to 4 hour commutes (nobody did that back then) but great for dating at the Drive-In (ask an old-timer what those are).

I'm old enough to remember when as a teenager "I gotta get a car" and driving endless miles was action and adventure. These days I just want something reliable to get me from point A to B. I hate ***all*** car commercials because they all portray driving their latest model is as much excitement as flying a F16.

I think all young people want a car but for many it is too expensive an option so they do something else. For me I'd love to have an airplane but it is too expensive so I will do something else.

Re:Everybody wants a car

[viperidaenz]

Perhaps they meant there isn't enough metal that is economically viable to extract from the earth's crust to go around.

Re:Everybody wants a car

[drinkypoo]

So drive an older car. My A8 is under $600/year with full coverage and a $100 deductible. As much as everyone around here grumbles about internet connectivity, the lack of it should be considered a feature :)

Re:Everybody wants a car

[ShanghaiBill]

Perhaps they meant there isn't enough metal that is economically viable to extract from the earth's crust to go around.

That is not even close to true. There are billions of times more that we need, and far more than a billionth of it is economically extractable. The price of both steel and aluminum is going down, and the world is awash with excess steel capacity, while at the same time cars are using less, replacing metal with carbon composites and plastic.

Perhaps you also think we are going to run out of carbon? After all, it is hundreds of times rarer than either aluminum or iron. There is only enough for each person to have a few million tons.

Abundance of elements in the Earth's crust

Re:Everybody wants a car

[AHuxley]

Look at what Fiat and Lada did with their https://en.wikipedia.org/wiki/... work over the decades.
People got cars and when they get freedom they dream of US cars.

Re:Everybody wants a car

[viperidaenz]

Steel and aluminium have been bouncing back steadily in the last year
Copper is still expensive and is going back up in price, which electric and hybrid cars need quite a bit of.
On the subject of electric cars, neodymium is surging in price as well. gone up 100% in the last 6 months. All rare earth metals are going up.

In fact, pretty much every metal is getting more expensive over the last year, except nickel

The real big advantage of tech companies.

[140Mandak262Jamuna]

There are many advantages of tech companies. They are used to stiff competition, fast life cycle of products, etc etc. But the biggest advantage they have is, they would not be running the race with 25 lb dead weights strapped to their ankles, so to speak. The past agreements the automakers have made with the National Association of Automobile Dealerships are extremely one sided and very onerous. NADA has the monopoly of all the autos made/imported into the USA. They have extraordinary political clout, some are exempt from the monopoly and restrictive trade practices act, and they are a strangle hold on the manufacturers.

Their clout is so high, it is not being talked about as much as the pension obligations of the big three, or the clout of labor unions over the manufacturers. If the cars made by tech alliance by passes the NADA, it would be a boon to the consumers.

Re:The real big advantage of tech companies.

[johanw]

One of their PROBLEMS is that they expect fast life cycles. If you buy a brand new car and it has $0 value left after 4 years because it gets no software updates and does not keep driving using the old software, customers are NOT going to accept that.

Re:The real big advantage of tech companies.

[houghi]

Well, car-sharing is not a US thing. It also exists in Europe. I do think that the danger for them is bigger in Europe.
I am a car-sharer in Belgium and the reason is that I seldom need a car, because I already get public transport paid by the company I work for. This is nothing exceptional.
So many people will dump the second car in the family and start using car-sharing as a second car for those moments it is really needed,

So the NADA is not the only issue and the US market is not the only market they should worry about. Car companies are global companies that need to look everywhere. If sales drop in the EU, their income will drop.

When haven't car companies felt threatened?

[mykepredko]

In my life, I have read about how the North American car companies have been threatened by:
- Japanese Imports
- The Gas Crisis
- Better Japanese Imports
- Korean (and other low-cost geography) Imports
- Technology
- German Imports
- Electric and Hybrid Vehicles
And have stayed in business. If anything, the greatest risk to their businesses is their own complacency and unwillingness to recognize deficiencies in time to allow external threats to establish themselves as niche (and larger) players.

And now Google Apple, Uber and Lyft's are a threat? Maybe and I would expect that GM & Ford (along with Fiat Chrysler) will miss the initial wave, but will offer competing solutions that will maintain their positions in the automotive food chains.

Re:When haven't car companies felt threatened?

[Anonymous Coward]

It's pretty hard to fail when the government decides you're never allowed to fail and will bail you out.

Re:When haven't car companies felt threatened?

[ShanghaiBill]

And have stayed in business.

... except for the occasional bailout.

Re:When haven't car companies felt threatened?

[vtcodger]

And don't forget that two of the big three US car companies have been through bankruptcy in the past decade.

Re:When haven't car companies felt threatened?

[houstonbofh]

But when was the last time the price of car went up 30% (Over about the last 10 years) while incomes remained stagnant? The big problem with cars is that they have become way to expensive!

Re: When haven't car companies felt threatened?

[KGIII]

And those of us who are familiar with automobile history know that there are many, many car companies who did not survive.

Car Companies Don't Build Cars.

[Templer421]

The Government does.

There are so MANY government mandates that REALLY the NTSB designs the cars.

Re:Automakers forget they make hardware

[ShanghaiBill]

I think key problem is that automakers forgot that they are in the hardware business.

GM is a hardware company. Tesla is a software company. Tesla is worth 100 times as much per unit of revenue.

Automakers know they are in the hardware business. They also know they need to get into the software business in a really big way.

Autonomous, on-demand rides

[dcavanaugh]

Owning a car means wasting a lot of money on insurance, depreciation, property tax, etc. When you can summon a robo-car with your phone, the incentive to own a car goes away. The auto makers will still sell cars, but the customers will be quantity buyers, and sales volume will be a lot less.

Re:Autonomous, on-demand rides

[houstonbofh]

If it makes sense. Compare $800 to Uber (20$ each way 5 days a week) to $600 car payment, $200 insurance, and gas and maintenance... It's just math.

Re:Autonomous, on-demand rides

[houstonbofh]

And when it dies, will you buy a new on or ride share? That is the overarching question here.

Re:Autonomous, on-demand rides

[houstonbofh]

Though I suppose you should probably be leaving the driving to someone else if you're paying $2,400/year for insurance.

I can tell you do not live in one of the big 5 cities. That is not too unusual for full coverage there.

And this is why software engineers are idiots.

[Brannon]

Tesla spends billions of dollars on R&D in mechanical, electrical, industrial, and chemical engineering. They have a huge manufacturing infrastructure, and large sales & support network.

But they also employ some software engineers for self-driving software and the on-board infotainment system--and their headquarters is in SV. Therefore they are a *software* company.

Re:And this is why software engineers are idiots.

[ShanghaiBill]

They have a huge manufacturing infrastructure

They have a tiny manufacturing infrastructure by auto industry standards, about 1% of what GM has.

But they also employ some software engineers

Their manufacturing infrastructure gives them 1% of their value, so where is the other 99%? Software and other intellectual property.

Therefore they are a *software* company.

In terms of value and future potential, yes.

Re:And this is why software engineers are idiots.

[sinij]

The other 99% is market hype and bubbles.

When I am buying a dishwasher, a pair of shoes, or a car I want hardware. It is CRAZY to force me into SaaS or Cloud or even just apps in these cases. This is pets.com all over again.

Re:And this is why software engineers are idiots.

[painandgreed]

The other 99% is market hype and bubbles. When I am buying a dishwasher, a pair of shoes, or a car I want hardware. It is CRAZY to force me into SaaS or Cloud or even just apps in these cases. This is pets.com all over again.

This is more like wireless on printers and desktop computers. You think you're getting just what you want because that's the way it has always been, but eventually, the demand will be high enough and the cost low enough, that such features will come automatically with such devices. They might even be active by default and unadvertised unless you search the user manual for such because they have simply become a default service due to demand or industry implimentation. It's already to the point where a new car will most likely come with some sort of cloud service that will be near impossible to turn off the free trial period. Dishwashers are probably next. Eventually, I won't be surprised when your shoes communicate with fitness apps on your watch or phone.

Distopia

[fluffernutter]

I think people have a very lofty view of the condition that a shared car with no driver will be in. I think they also are dreaming if they think the response time for these cars will be any better than a taxi. Apps will give these companies all the flexibility in the world to multiply your charge if you are slightly out of the norm, and people will have to pay it because everyone else will be out of business. Right now with a vehicle in my driveway if i am stuck for a lunch to feed my kids in the morning it takes me 15 minutes to go to the grocery store and back. If personal ownership becomes unaffordable then that freedom is gone. I do not believe we are headed for a good place.

Re:Distopia

[jeremyp]

This.

People say that autonomous cars will save Uber but They will have to buy their own fleet, if that's the case because nobody will let Uber use their autonomous car after the first time it comes back with vomit all over the seats.

Re:Distopia

[wvmarle]

If you're so close to the grocery shop, you can also use your bicycle. Healthier, cheaper, and possibly more flexible than a car (at least you won't get stuck in traffic).

Re: Distopia

[fluffernutter]

It would take close to an hour on a bike, not practical.

Re: Distopia

[wvmarle]

15 mins there and back by car would mean a 2-3 minute car ride. That's normally about 10 mins cycling.

Re: Distopia

[fluffernutter]

Right, so I have around 25 minutes to get there and back.. By the time I top up my bike tires, find a bike helmet, and find my bike lock there is 10 minutes gone. Find a backpack so I can carry the groceries, another 5 minutes at least. Listen, I am not the most organized person, that's why my kids didn't have lunch in the first place. Furthermore, a section of that 15 min ride is a 50MPH speed limit so it's a longer ride than you think.

At one time in my life I used my bike all the time and used it to get to work every day, at that point in the shape I was in I may have been able to manage it in 25 mins but not today.

So you think "high P/S ratio" means "SW company"?

[Brannon]

They have a high P/S ratio because they are a fast-growing company and the market is betting they are going to have much larger revenue eventually. Any company that went through a rapid growth phase will have a high P/S ratio.

Tesla has a high valuation because they are a first mover & technology leader in the EV market. They have good engineering, a solid battery supply chain, a global fast-charging network, and have already sold >$20B worth of EVs. They're also a leader in self-driving and it is clear the world is heading that way; and certainly self-driving has a significant software dimension--but you are hopelessly clueless if you think 99% of Tesla's value comes from software.

Calling Tesla a software company is about as accurate as calling them a "leather seat" company.

Lots of speculation there

[93 Escort Wagon]

So far, though, the only real problem for the traditional American automakers has been the traditional Japanese automakers and the traditional European automakers.

Car ownership has been seen as optional by city dwellers for-freaking-ever. Lyft is more of a competitor to taxi companies than to auto manufacturers.

Sure, the Big Three are researching self-driving cars. Just like they research electric cars. And alternative fuels. And alternative materials. They spend lots of money on research, all of which may or may not pan out... and they've been doing that for decades.

Re:Lots of speculation there

[AHuxley]

City and state governments can also shape car use.
European tax rates on traditional cars, older cars, not allowing cars in a city centre.
Forcing a generation to churn to fewer cars and new cleaner, safe cars.
Tax to drive into a city. Adding more funding and support for bicycle, taxi, rail, streetcar, light rail.

Price Drop ??

[WindowsStar]

Maybe they will finally drop the price of cars. They have become outrageous over the years.1970 average income $22,000 a year, average car price $3800, 2017 average income $65,000 a year average car price $45,000. See the problem car prices have exploded over the years nearly 10 times more expensive. Auto makers need to severely drop the price. Also we don't need dealerships anymore, I am beyond tired of spending 4 to 6 hours buying a car because you have to haggle over the price, the contract, and the pressure to buy this extra that extra the extra extra warranty, the maintenance plan, the plus plus plus maintenance plan. Now they take your keys away even if you are not trading something in as a way to trick you into buying a car. While you are thinking about the new car let us wash yours, then they never give you the keys back as they wear you down to buy a car. I finally had to call the police and they gave me the keys back. No wonder no one wants to buy a car. Come on Auto makers, let us by a car on line direct from the factory for 60% to 70% less, skipping all the overhead, and direct ship it. We are an online world now-a-days.

Re:Price Drop ??

[speedlaw]

Car prices are dictated by marketing and "the monthly payment". The cost to make and deliver the car is a state secret that hasn't been WikiLeaked.....A base Jetta, for example, is 17k. The same car loaded is 35k. The difference in production costs is probably less than $2000.

Need to get rid of dealers and pimpmobiles

[knorthern knight]

Yes, we need repair shops/garages and service/tune-up centres. We don't need blood-sucking-leeches middlemen raking a percentage off the top of every sale. A salesman gets a Y-U-U-U-G-E commision for selling a new car. That's why the car's price drops drastically the momemt you drive it off the lot.

The dealerships also stock up on pimpmobiles. Safety features are one thing. But try to find a new car on the lot without a sun-roof, satellite radio, infotainment system, privacy-invading-constant-tracking (OnStar/etc), etc/etc. With a desktop PC or laptop, I have a choice between...

1) Ordering online from Dell and specifying the options/hardware I want/need.

2) Going in to Best Buy, picking from a limited selection the model that sort of comes close to my needs, and putting up with 20 minutes of nagging to buy extended warranty, etc.

I, and a lot of other people, prefer option 1) for computers. It would also be nice for cars. Right now car-buying is like buying a PC from Best Buy.

Auto Makers Already Responding Aggressively

[Koreantoast]

Traditional auto makers have already recognized they can't fill the gap organically and have made big inorganic bets to position themselves. GM is a great example with investments in Lyft and Cruise Automation just to name a few. Most of the other major automakers are also placing similar bets at at an accelerating pace.

Tesla ?

[speedlaw]

Really ? Tesla. Puts car out there. Loses money on every sale. Company does not make money. Pushes technology in a way the big 3 never would, knowing how stupid some buyers are. Locks down car if you try to hack your own property. Stock swap to bail out companion company. I also haven't had huge issues purchasing a variety of cars at different price points from traditional dealers. I'm not jumping for the BS that tech companies make us deal with for a car...my computer is maybe 1K...a car is at least 20k.

So we'll get semi locked down cars

[future assassin]

to cars from tech companies that can't be fixed by yourself or anyone else but them.

The thing with tech companies is...

[Ian-K]

...that they're ready to think out of the box.

Car companies think in market segments and how they'll preserve their trade.
Tech companies think from the perspective of what product they can release to make their customers' lives simpler / "better".

A car company will want to promote its A-segment or B-segment cars as best as it can. "we can improve it, but you're basically buying our X model"
A tech company will start from "does a city dweller really need a car, or another kind of vehicle? Does that vehicle have to be personal? What's the most economical / eco-friendly way to go about it?"

So, yes, from this perspective, go Google!, go Apple!

Re:The thing with tech companies is...

[alantus]

They both are interested in making a profit, the difference is how they will do it in different ways.

Car companies make their money selling cars, parts, machines to fix cars, etc. In the last few years they began with this ugly trend to lock down serviceability, similar to what Apple does with their products. You can't take your car to any random grease monkey, you have to take it to an approved mechanic, and of course the price will be 10 times more than it has to.

Tech companies are more inventive in how to squeeze money out of customers, and in fact, might make the buyer of their cars also a product.

It wouldn't surprise me if in the future a car made by Google would start suggesting "better" alternatives after you have put the address of a commercial place in the navigation system. Or if it started showing advertisements in the dashboard.

I saw Robocop & Back to the Beach

[rsilvergun]

at a Drive in, so yeah, I'm definitely old enough. I can tell you my kid wanted a car badly. So did her boyfriend. It took me till her second year in college to scrape together the money for one that wasn't just going to fall apart. The trouble is folks can't buy new cars, so they're not selling their old ones, and that means the cost of used has sky rocketed. I looked at stuff in the $10k range and found it all pushing 6 years and 60k+ miles. Yeah, those cars have life in 'em, but they're going to need a bunch of maintenance...