Monday, November 13, 2017

Mobility as a service is the new business of the automotive industry

Car makers, vendors and market entrants are betting on recurring revenue.
By Giovanna Riato / Automotive Business 11/9/2017

       As it struggles to understand its role in the face of so many transformations, the automotive industry seems to have come to a consensus with startups and technology providers: the business of the future is not to sell cars but deliver mobility as a service. The challenge is to understand which are the most promising solutions for the consumer. The advantage, on the other hand, is that this model will guarantee recurring revenue, not just the punctual billing with the sale of the vehicle. "With this approach, companies can interact with customers constantly, monetize services, increase after-sales results and, above all, retain loyal customers," says Alexandre Guimarães, director of electric and electronics at General Motors in Brazil.
       The executive participated in a panel at the SAE Brasil 2017 Congress, held on Thursday (9), in São Paulo (SP). In the event, he presented the good results of the company's successful local experience with the offer of other solutions and services."Outside we have two brands linked to mobility, Lyft, a competitor of Uber, and Maven, of shared cars," he says, as long as the company tests the latter in Brazil, but for now only with employees of the factory of São Caetano do South, at ABC Paulista. "The private car is, on average, only 5% of the time in use. We managed to raise that number to 24% with sharing, but it can still improve, "he says, commenting on the first findings of the experiment.
      According to Guimarães, only with investment in services will the automotive industry be able to survive in an environment where the car is no longer the object of desire."We need to be able to recognize that people no longer want to have a car like they used to," he says. The executive recalls that, globally, the middle class is expanding.This move should pull demand for vehicles for a few years, but in the long run, the trend is downward.
      While engaging Maven's offer locally, General Motors has more experience with the OnStar connectivity system offering, which already has 195,000 users in the country who pay a monthly subscription to rely on features such as location, emergency call, and concierge included in the package. Guimarães says that the company's greatest achievement with the convenience is proximity to the customer, who accesses the company by the application on the cell phone or by a button in the car.
      Sérgio Luis Reis, director of the industrial area of IBM, reminds that the automakers need to build the relationship that will guarantee the future of the business. "We see many companies being run over by competitors with the complete shifting of some markets. With services, companies guarantee recurring billing, "he said. The company is a partner of General Motors in the OnStar offer. The executive notes, however, that there are a number of other possibilities for IBM solutions in the automotive industry."We are developing with a carmaker in Brazil a digital manual for the car, which will work with Watson," he says, citing the company's cognitive intelligence system.
      While the automakers update their service format, there are a number of young companies that already have great experience in the challenge of improving the customer's journey. One of them is Zazcar, who also participated in the debate in the SAE Congress. "We face a series of challenges to ensure that everything runs through the application and runs digitally," says Bernardo Mazzino, CEO of the company. It seems that the company has been successful in this evolution: the customer can even unlock the car door that will use the online system developed by the startup.

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