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How the disaster is altering our love of driving and the way entrepreneurs can react to it

August
19, 2020

6 min read

The opinions expressed by the entrepreneur's contributors are their own.

According to a consumer survey conducted by McKinsey earlier this year, the ongoing health crisis has changed the way Americans drive by reducing the frequency of our journeys. However, this shift is just the continuation of a trend. America's love affair with automobiles tended towards a breakup – or at least a temporary hiatus.

Even before a Zipcar survey of millennials in 2016, there were cracks in this relationship, showing that carpooling was preferred to the debt and total cost of owning a vehicle.

Related: 7 Ways Technology Works To Address A World In Crisis

Fast forward to 2020, when most vehicles have been sitting in driveways for weeks and months. When drivers look at their cars, which are now much less used but still cost money, many may reconsider how much they want to spend on future vehicle purchases.

Indeed, there are numerous indications that our country's relationship with vehicles may never be the same again.

Increasing used purchases

According to June 2020 statistics from auto warranty provider Olive, people are buying more used cars (as opposed to new ones) and are increasingly doing so online. As Olive found in his research, a used car that is only a few years old can save a buyer between 30 and 50 percent off the cost of a new car.

The shift in buying preferences to used car purchases includes those who used to ride the subway or bus system, according to an Ipsos survey from May 2020. This underscores the ongoing concerns about the health and safety of public transport. Almost half of the respondents in the survey predicted that they would drive one more time (or if they would) return to work in their company's physical offices.

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Change work environments and lifestyles

How we work and live now could advance our perspective on personal vehicles. For example, millions of people can switch to remote work permanently. Twitter, Square, Google, and other large companies now have most or all of their employees either permanently or at least remotely for the next several months.

Related Topics: 17 large companies that have announced employees will be able to work remotely in the long term

The added convenience of delivery, errands and ridesharing has also changed our perspective. These services can perform many of the same tasks that we previously performed with vehicles on a daily basis.

New vehicle rental models can also reduce dependency on vehicle ownership. For example, the startup fair based on automobile subscriptions offers used cars for as long as the user needs one. All a consumer needs to do is prepay and pay a monthly subscription fee.

In contrast to vehicle leasing, the trade fair user can then cancel the subscription at any time. This can help workers who still need to travel to a physical location but don't want to risk the health and safety concerns that many associate with public transportation today.

Related topics: How the crisis is changing consumer behavior and how entrepreneurs can react to it

Time for industry changes and innovations

This shift in the relationship between American consumers and their vehicles gives entrepreneurs the opportunity to develop solutions with these trends in mind. At the same time, these new solutions can put a lot of pressure on the auto industry to change its model and innovate processes for vehicle development, manufacture and service.

When it comes to vehicle purchases and online trade-ins, one of the biggest challenges was getting that online experience through to delivery. Additionally, traditional automakers may be scared of abandoning the showroom model, which is all they have ever known.

Carvana, Vroom, CarMax and Tesla show vehicle manufacturers what online trade-ins and online purchases of vehicles with delivery can look like. They have proven that this approach is possible thanks to digital sales tools and personalization of a customer's digital experience. Some brands are starting to take off, including GM's "Shop.Click.Drive". Program for the delivery of vehicles to the home or office. Ford also offers vehicle delivery through many of its dealerships.

Many in the auto industry are also finding solutions to current health and safety concerns. A paperless, digital approach to purchase forms can become the norm, along with touchless or touchless delivery with delivery notifications via an app. In turn, it seems that more consumers are becoming familiar with the idea of ​​buying a vehicle online.

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Startups and big automakers are mixing in new ways

Given the challenges and need for change, there is significant potential for entrepreneurs and startups to disrupt the auto industry.

From startups leading the development of autonomous vehicles and components to augmented reality that projects maps onto the windshield, there are ways to ensure that vehicles remain an integral part of American life. This automotive innovation also includes introducing changes to vehicles that can help reduce accidents and road deaths, as well as adding features like in-vehicle payments to facilitate on-demand ordering and roadside collections.

Also, given the ongoing challenges facing large automakers, entrepreneurs may have the opportunity to work together and deliver the innovation needed to keep vehicles relevant to current and future generations. As early as 2018, Crunchbase statistics show that vehicle manufacturers were already partners and were acquiring startups that pushed their vehicle products and processes forward.

These acquisitions include the purchase of ParkMobile by BMW for the payment platform for mobile parking spaces and the purchase of the Flinc ridesharing app by Daimler. In addition, Ford has bought companies that help with vehicle connectivity and data transfer, while the PSA Group acquired a used car sales platform and Volvo added an online car market.

A relationship in flux

Whether used or new, with a human or an autonomous driver, driving will remain with us for the foreseeable future. And like any relationship, our relationship with vehicles will change over time. It's up to the automakers and startups to restore tension and relevance to the relationship if they want to keep us busy.

Related: Thanks to the cheaper Model 3, Tesla is no longer the "Apple" of the auto industry, analyst says

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