Taking it to The Next Level
A blog post from Sebastian Fuchs, Managing Director Manheim and RMS Automotive Continental Europe, a dynamic and open minded global corporate person with an entrepreneurial approach to corporate business.
It’s been a far too long since I last sat down and put my considered thoughts into words for you all. In the interim, the industry has moved on quite a bit. Tesla finds itself no longer the sole pioneer in the premium electric car market above 400km range. Established brands such as Jaguar, Audi, Hyundai and Kia have all joined the club of available products and the list of available cars on the horizon is getting longer by the day.
Smartphones are now foldable and will soon overrun the tablet market – this will put the tablet market in the same spot as the CD – a technology that was there for some years but ultimately got replaced by its competitors in the vicinity of the product. For the tablet, their market is being squeezed out of existence by smaller more flexible PCs and bigger foldable smart phones. While the tablet was invented around 1989, it took until 2010 when Apple launched the Ipad to become a mass market device. In 2017 the market was still 38,2 Million devices but in 2018 it declined to 33 Million a 15% decrease within one year – it will be interesting to see how quickly it’s market declines and if it even survives in the future.
That was a little excursion to give you some representative scale on how quickly things can sometimes change and something you expect to be there forever can be gone in no time, relatively speaking.
Let’s now connect this to the automotive industry and what is happening there. PSA has taken over Opel and is now forming the 2nd biggest European manufacturer. The Chinese group Geely has not only bought Lotus but it also has given birth to Lynk&Co as well as Polestar both as individual brands, whilst all the while growing its Swedish Volvo business at an impressive rate. Daimler Benz and BMW have founded a company for all of their car sharing services and other new businesses are realizing that consolidation is not only needed but necessary because only scale will help them to be competitive long term.
Lead by an Amazon inspired spirit, manufacturers are reviewing their direct to market possibilities and although changing the distribution model from ownership to mobility which is reflective of Netflix and other subscription models.
Looking at the dealership landscape if you look at the German market the number of total active companies has gone down from 47,000 in 2000 to 38,400 in 2015. The number of employees has gone down by 80,000 people, yet the revenue has increased from 127 Billion to 156 Billion in the same time.
If you reflect on the cost of a CD when it first came out and calculate the per song fee at the point of market saturation it was about 2-3 € in Germany for your fresh and up to date music, today the average Spotify account gives you access to millions of songs anywhere and at any time for an average fee of 7,99 € per month. So, it is fair to say the price has gone down to almost negligible levels.
Now, for a second, imagine instead of having to think about a 20 000 € c or a 90 000 € car purchase someone could offer you the flexibility to change your car at a cost of 500 € a month or even less. Contemplating even further ahead – time behind the wheel is time that you cannot use for doing other stuff, so now someone offers you the ability to go from A-Z individually at any moment with little to no waiting time at a cost of 300 € if you stay in a circle of 200 km with one time charges in the range of 15 – 50 € for longer trips. Individual mass transportation at a similar budget as your monthly commute ticket – would you consider this? I am almost sure you would. Now we all agree it will take some prerequisites such as fully autonomous vehicles and the 5G infrastructure to be established to handle the data, but the future is really not that far away at least in modern urban areas. The 5G standard is assumed to be 20 times faster than 4G. From 3G that most of us remember when compared to 5G there is a difference in top speed of 42Mbps to 10Gbps and latency will go down from 4G’s 50-100ms to 1-10ms. All this will likely be arriving in 3-5 years in Germany, in South Korea it is already deployed.
The car industry is ticking slowly towards this pivotal acceleration point, however I am sure that we will see these next levels in my life time. Being 39 today I am expecting to be chauffeured in driverless cars for at least the expected last 40+ years of my life.
I am likewise convinced that the cars are going to be electrically powered and this fuel source will be produced centrally as well as supported by decentralized renewable charging stations . The current battery challenges of range and charging times will be solved, be it by solid state or other emerging technologies. When I was young my Remote Controlled car could run on the charge of 8 small batteries for about 20 minutes at full speed – today an electric car can take 4 adults more then 400km at multiples of the speed I used to race my model car. This simple example demonstrates roughly 25 years of developmental time, so I have no doubt that at the current technological evolvement rates and with our society’s current focus levels on renewable energies these challenges will be cracked and everybody will be chauffeured in driverless electric cars by 2045.
Yes, I might be utopian in your eyes, but in many people’s eyes I am maybe conservative. It all depends on what you know and what you think humanity will be able to do. I am preparing myself and our business for a future that looks a little like what I described above as I truly believe it will happen.
Looking forward to your thoughts and comments.
Keep kicking and clicking.