Two Related Industries
I found a good example of the concept of business disruption. When someone comes along with a new way of doing something that really takes off – goes viral – it can disrupt the way the whole industry does things. Two related industries have been experiencing a good deal of disruption lately. Transportation with the move toward self-driving autos, and automotive with the move toward re-examining how a car is sold and serviced.
Selling cars has been so stressful that consumers welcomed new ways of presenting and certifying the vehicle to be sold, especially when it is pre-owned. Is this the best deal? Are they disclosing to me the car’s true history. There are now services that help the consumer answer questions the car dealership was slow to answer. Car-Max comes to mind.
But what about servicing the car? Any growth in that area? Some. Maybe the trend will increase. I had my car serviced just last Saturday. I waited in a line of cars for 45 minutes before my “appointment” could be honored. The standard wait time is 2-4 hours. I was fortunate to be at the lower end of that scale. There is a shuttle to take me home and pick me up. Mostly convenient, I admit. But could it be better?
Pick-up and Delivery
Well, for starters, what if I was able to make an appointment online to have someone come to my location, pick my car up, service it and bring it back when completed?
“The whole notion of having to come to a dealership for service is outdated,” says Brian Benstock, general manager and VP at Paragon Honda, the largest certified pre-owned Honda dealership in the world. “If a customer doesn’t want to set foot in the dealership, they shouldn’t have to.” If this is a new disruptive trend coming along, may it grow and increase!
This kind of customer-centered service must be costly. Think of the logistics of pick-up and drop-off. On both sides that’s a two-car project. Or does the driver Uber forth and back? In any case, it all sounds very expensive. Then again, Paragon Honda claims to have found ways to reduce the advertising cost of getting buyers to come to their dealership to purchase. The 80% reduction has come about by going digital with their marketing. So it may be that the cost of servicing the customer’s needs insures return business, further reducing customer cost.
Disruption to Transportation
Revolutions used to be quite an event. The shot-heard-round-the-world type of thing. But with so much information, with so many things happening, it is possible for a revolution to be underway without the public having noticed. Take as an example the transportation industry. We have to wonder if that 18-wheeler next to us is on auto-pilot or not. Self-driving vehicles are racing ahead of us, and most of us, don’t really want to keep up.
Four out of Five
Here’s the latest aggressive fact in the transport revolution. In four out of the five largest US cities a study has demonstrated that it is more expensive to own a car than it is to take UberX or UberPOOL. The analysis accounts for maintenance, insurance, parking and gas. Not to mention initial purchase – which might be a wash against the Uber vehicle.
But the point isn’t so much the result of the analysis that says in Los Angeles (NYC, Chicago, DC) it is more expensive to own your own car than rent a ride. Rather, the point is the support that such an analysis provides to those who have already been predicting that private car ownership is on the decline. Or “dead” if you will.
Lyft co-founder John Zimmer predicts that by 2025 private car ownership will be gone. Right around the corner! Elon Musk sees the future as being populated by self-driving Tesla cars that generate ride-sharing revenue for their owners. The few who can privately own, but more as a business venture.
What do you think of such predictions and developments?