Mobility, mobility and more mobility.
From Auto China 2016 in Beijing last month to CES Asia in Shanghai last week, and many industry events and forums in between, the term has been used over and over again by executives of existing carmakers in the industry and new ones that are in the process of entering.
It has become the new catchphrase and buzzword for the industry fast, and for good reasons.
Carmakers nowadays understand more and more that the auto industry is no longer just about selling a physical hardware – the automobile – to consumers, but rather a service, to make going around places hassle free, safe, and fun while connected. Frankly, sitting behind the wheel stuck in traffic does not give you freedom, which is associated with the ability to drive a car in the first place.
It was at the Frankfurt Motor Show last year that the CEOs of the three German carmakers – Volkswagen, BMW and Daimler – all said that their companies will transform from traditional car manufacturers to mobility solution service providers. At CES in Las Vegas in January this year, Ford CEO Mark Fields said that automakers should be part of the $5.4 trillion transportation services industry rather than just part of the $2.3 trillion traditional auto industry, and his company is aiming to become both an automobile and mobility company.
BMW Group Region China President & CEO Olaf Kastner said in his keynote speech at CES Asia on May 12 that the world of mobility appears going through iconic changes, as highly automated driving, digitalization, mobility on demand, younger customers and the post ’85 and 90s generations with substantial different likings and disklikings are challenges that the traditional carmakers all face.
In his speech, he raised an interesting question: are the traditional car manufacturers about to enter a dinosaur fate of becoming extinct because of the above challenges? To which he answered “we don’t know.” In order to stay competitive and attractive, according to Kastner, BMW wants to become a leading provider of premium mobility solutions, offering services around its core products – the cars. He went on to say that for the car industry, new elements will evolve, customer interactions are changing and value creation is shifting from hardware to include more software and services, while holistic ecosystems are taking shape. He specifically mentioned car sharing and hailing companies that are bringing supply and demand together by basically providing brokerage IT platforms, rather than offering owned physical products.
Apple’s recent $1 billion investment in Didi Chuxing (Chuxing in fact means mobility in Chinese) is a prime example of how companies are racing to take part in or even lead the mobility game.
The traditional carmakers aren’t likely to become extinct anytime soon, but companies such as Didi, which is expanding into services such as test drives and possibly selling cars online, is giving the traditional players run for their money.
In the mobility game, there are no alternatives but for the traditional carmakers to disrupt themselves.