Editor’s note: Andy Turton is SVP ENGINE Insights, Westlake Village, Calif. This is an edited version of a post that originally appeared under the title, “Adapt and thrive: the auto industry’s report card.”
With the auto industry reeling, this might seem like a perfect time for new mobility services (NMS) like rideshares to take advantage – the COVID-19 pandemic slammed the auto industry hard and while monthly sales have recovered somewhat from the initial dramatic drop in March and April, full-year forecasts are still 15% down on a year ago. Like a weakened heavyweight against the ropes, the auto industry looks like it might buckle with a few well-placed blows from a nimbler opponent.
NMS business models are fundamentally built for the digital age in which we live. All of them (car-sharing, ride-sharing, bike-sharing and numerous other mobility-as-a-service models) have been enabled by the consumer’s widespread adoption of digital technologies. Each one operates on a fundamentally consumer-centric business model by providing on-demand and shared services business models, based squarely in the belief that transportation products must be responsive to traveler wants, needs and preferences. In contrast, automakers still make most of their money through a supply model which is designed first and foremost with their own needs in mind, i.e., to cover high factory costs and to defer risk by operating dealer networks designed to hold and sell inventory, the root cause of the car sales behaviors that so many find off-putting.
And yet, despite the NMS challenge and the dent to sales and profit delivered by COVID-19, the traditional auto business model has proven to be remarkably resilient. To be clear, the industry has not stood idly by in the face of the onslaught of the NMS business challenge, indeed every OEM is developing or has launched its own versions of on-demand services. And the growth of EVs is p...