The Future of Automotive Brands: Learning From the Airlines
Once again, automotive brands played a prominent role at CES. As cars continue to evolve to become the ultimate mobile devices, two factors, autonomy and sharing, will likely drive significant changes in car usage. According to Deloitte, by 2030, approximately 40% of miles driven in the US will be in either shared or autonomous vehicles. By 2040, shared miles will account for 80% of all miles driven, with more than 50% of those miles traveled in autonomous vehicles.
In a future where there are no drivers and no owners, what will happen to car brands? Will anyone care about styling or performance--the key automotive differentiators today? Will they even care who built the car that they use? If customers use cars as they are available, and car sharing services take care of the maintenance, will end users have any relationship at all with car manufacturers?
In fact, in search of efficiencies, car manufacturers are already diluting the role hardware in brand building. In recent years, companies like Nissan, Mercedes, FCA, Mazda and others have engaged in extensive platform and powertrain sharing agreements between unrelated manufacturers. Thus, the Mercedes truck that you buy, may be manufactured by Dodge or Nissan on a Dodge or Nissan platform.
Could this actually be the first step in an entirely new model? One in which there are at best a handful of automotive manufacturers who supply cars to mobility service providers? Think Boeing and Airbus. In such a world, it is unlikely that there will be much differentiation at all on the outside of the vehicle. Instead, like airline brands, all automotive brand differentiation will be derived from in-car experiences.
What can automotive brands learn from airline brands to ensure that they are able to build shareholder value in the future?
The first, and perhaps most important learning is to strive for differentiated experiences, rather than differentiated prices. Airline focus on price and cost cutting has provided a valuable lesson in how quickly pricing to supply, without building demand, can lead to sub-par customer experiences and shrinking profits.
Putting that aside, there are many ways that automotive companies can differentiate by leveraging their own brand DNA to emulate some of the world's best airlines:
Personality
Quality of Experience
National Pride
In a future where there are no drivers and no owners, what will happen to car brands? Will anyone care about styling or performance--the key automotive differentiators today? Will they even care who built the car that they use? If customers use cars as they are available, and car sharing services take care of the maintenance, will end users have any relationship at all with car manufacturers?
In fact, in search of efficiencies, car manufacturers are already diluting the role hardware in brand building. In recent years, companies like Nissan, Mercedes, FCA, Mazda and others have engaged in extensive platform and powertrain sharing agreements between unrelated manufacturers. Thus, the Mercedes truck that you buy, may be manufactured by Dodge or Nissan on a Dodge or Nissan platform.
Could this actually be the first step in an entirely new model? One in which there are at best a handful of automotive manufacturers who supply cars to mobility service providers? Think Boeing and Airbus. In such a world, it is unlikely that there will be much differentiation at all on the outside of the vehicle. Instead, like airline brands, all automotive brand differentiation will be derived from in-car experiences.
What can automotive brands learn from airline brands to ensure that they are able to build shareholder value in the future?
The first, and perhaps most important learning is to strive for differentiated experiences, rather than differentiated prices. Airline focus on price and cost cutting has provided a valuable lesson in how quickly pricing to supply, without building demand, can lead to sub-par customer experiences and shrinking profits.
Putting that aside, there are many ways that automotive companies can differentiate by leveraging their own brand DNA to emulate some of the world's best airlines:
Amenities
Emirates is known for it's first class suites that offer the over the top luxury and amenities of any airline. Rolls Royce, Bentley or even Mercedes could leverage their heritage to create the most luxurious cabins, chock full of in-transit comfort and amenities. Grey Poupon, anyone?
Personality
On the other end of the spectrum, Southwest offers the basics with a cheeky attitude. This is clearly territory for Kia to dominate. Imagine riding along, singing karaoke with the Hamsters.
Quality of Experience
Singapore offers some of the best service in the air. Lexus and Toyota could leverage their quality/service reputations to emulate Singapore's business and economy class service.
National Pride
Qantas offers the spirit of Australia, with cuisine prepared by local chefs, and a decidedly Aussie in-cabin personality. This is a great territory for a brand like Chevrolet to own. Baseball, hot dogs, and apple pie, anyone?
Entertainment Content
Entertainment Content
Jet Blue pioneered in flight access to Direct TV. Could a car company be known for the ultimate in flight entertainment? Could Hyundai, with its high profile sponsorships take this territory to create a sports bar on wheels?
Class of Service
Class of Service
Some airlines offer all business class service. Tapping into its Town Car heritage, Lincoln could offer mobile offices to business executives. Moreover, Uber, who will likely play in this space in the future, has already set the stage for classes of experiences, with its X, XL, Select and Black service. Its autonomous fleet could offer extensive in-car experiences commensurate with each of these classifications.
So, for those auto brands who see the future, moving from sheet metal and speed need not be the end of the world. But it will take a definite shift in orientation, and a deep understanding of their brand heritage and how that heritage can help them uniquely fulfill in-car customer needs.
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