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The motor industry is set to undergo radical change, according to South African futurist Dr Graeme Codrington, who advises all players to embrace new guidelines to successfully negotiate the road ahead
The digital world was one that all players within the motor industry needed to embrace since, according to futurist Dr Graeme Codrington: “Disruptive forces are shaping all aspects of the world today; how should we respond?”
Speaking recently at the opening roadshow of the 2017 Business of the Year Awards under the auspices of NADA and Sewells-MSXI, he sketched future scenarios that ranged from autonomous cars to car-sharing and the need to “adapt or die” in an environment of radical change.
“Driverless cars are coming. They will be legal. They will be more efficient. And they will be safe. In the end, they will become compulsory. The change they will bring will be huge in all aspects of the motor industry,” he warned.
According to Codrington, the developments would affect anyone connected with the automotive world – from insurance companies which would derive lower incomes thanks to accident-free roads to local authorities which would lose revenue from traffic fines. Dealers in vehicles would also be significantly affected since ownership models were expected to change substantially.
He said it was vital for all businesses in the automotive sphere to be aware of latest developments on all fronts. Currently, some technological aspects that had had considerable impact included the advent of vehicle communication and connectivity to virtual reality and artificial intelligence, while changes in the finance world encompassed the arrival of new concepts such as Blockchain and Bitcoin. Even language was less of a barrier to doing business on a global scale since real-time translation was available through Skype.
Codrington also mentioned several other trends, one of which was longevity. For instance, he said nearly 20 000 people in South Africa were now more than 100 years old, which meant previous norms for people retiring and moving out of the buying cycle were no longer applicable.
The futurist was very strong on the availability of cheap, sustainable energy. He said already there were more than 70 wind and solar farms that generated power in South Africa, and these resources, together with other technologies, would contribute to low-cost energy production.
He cited the efforts of the Breakthrough Energy Coalition, which is a global group of 28 high-worth investors from 10 countries – headed by Bill Gates of Microsoft – which is committed to funding innovative, clean-energy companies. In his view, the availability of cheap energy would lead to the making of water through desalination and chemical processes.
“Cheap energy and the subsequent availability of adequate supplies of water will provide an enormous boost to the global economy, and accelerate change,” Codrington said.
The futurist stressed the importance of integration in the new order, spelling out guidelines for businesses in the changing world. He came up with five mindsets:
In his keynote address, Chris de Kock, CEO of WesBank, said the mindset of vehicle buyers had already shifted. “Personalised solutions are what car buyers are looking for in the purchasing process nowadays,” he said. “The future of buying cars is no longer the future. It is now!”
De Kock explained that the time-old linear process starting with search (for a new car), then sell (trade-in the old car), and lastly finance (the new car) was no longer relevant because it was inefficient, did not offer a personalised experience and was expensive.
“Only about 10% of the people who start this process actually end up buying a new car. Firstly, an average of about 30% are not in the positon to settle the outstanding balance on their present cars, while only about 40% get approved finance resulting in the only about 10% of the potential customers actually doing the deal,” he said.
In the UK, the trend was for consumers to look to use cars rather than buy them, and he expected a similar scenario to evolve in South Africa. “We generally tend to follow the UK in these matters. Over there, younger people are no longer car mad, with the number of under 25-year-olds buying new cars being 30% lower than it was 15 years ago, while 20% fewer 18-year-olds have a driver’s licence compared to the situation in the ’60s and ’70s.”
De Kock explained that potential car buyers were no longer researching only cars on the internet, but were also using the medium to look for financial and insurance packages. Often, they had worked out how much they could afford in repayments before they inspected the cars they were considering buying.
Social media, too, played a major role in the decision making process, with 87% of potential buyers saying that they had researched a potential purchase through Facebook and other channels before visiting a dealer.
“We need to catch up to stay relevant,” he said. “Dealers will still be important because most customers want to experience their new car before buying it. They also want expert advice on options for the car as well as answers concerning insurance and finance queries. They still yearn for the personal aspect in the buying process. What is interesting is that the number of motor dealers in the UK is growing, not declining, as the car-buying landscape changes.”