The two-car family of American dreams is on the decline, according to a compelling study from KPMG, “Me, My Car, My Life.” The study identifies a number of the challenges and opportunities that come along with the changing automotive industry, and follows up on 2012’s “Self Driving Cars: The Next Revolution,” and last year’s “Self-Driving Cars: Are We Ready.”
This year’s study delves into, as KPMG partner Gary Silberg explains, “the forces that are reshaping the entire automotive ecosystem. Because at this moment every aspect… is changing: from how cars are designed, produced and built, to how they are marketed and sold to the underlying economics.”
The traditional two-car garage may become obsolete if KPMG’s study is right. From Kevin Dooley.
With Silicon Valley’s help, the car has evolved into a comprehensive, digitally-managed hub of its driver’s life, a “part of an interconnected ecosystem that monitors and adapts to your schedule, your evolving priorities, your relationships, even your health.” The car has become not “just a mode of transportation: it’s the control center for your life.” Given the car’s changing purpose, the study focused on a few key questions, namely: How will economics, technology, and companies themselves shape the future of the auto industry? The study discovered a few interesting trends:
- “Everybody wants a car”: Car ownership in developing nations signifies middle-class status (or higher); in advanced countries, poor households may also own cars. “As GDP per capita increased,” according to one analysis, “people went shopping for cars.” If that correlation continues to hold true, countries like China, India, Indonesia and Vietnam are home to growing middle classes that will soon translate into — if they haven’t already — burgeoning markets for autos.
- Alternative transportation is growing: Owning a car is arguably “an irrational economic decision.” A new car loses 11% of its value the moment it leaves the seller’s lot, and it remains unused around 95% of the time. But cars, argue the study, are more than transportation: they are “mobile locker[s]” or “a giant purse on wheels” that provide flexibility and freedom for families.
Yet with the rise in mobility-on-demand companies like Zipcar, Uber, and bikeshare programs, as well as Millennials’ tendency to live in urban areas where cars aren’t a necessity, the number of American homes without vehicles may continue to climb. Though, two-car families remain the norm in the U.S., with 57% of all households having two or more vehicles, the trend is towards fewer cars, especially in major cities (in New York, for instance, that figure is just 13.9%).
In fact, the study predicts that in approximately 25 years, fewer than half of U.S. households will own more than one car.”We think that the two-car family, over time, it is not going to go down to zero, but a significant amount of people are going to reduce that number,” Silberg explains.
But the study goes far beyond this most newsworthy tidbit about car ownership decline; it also digs into the economics behind car purchases, the changing relationships between drivers, cars, and retailers, and the impending impact of technology to offer companies advice for adapting to the changing market. Among KPMG’s suggestions for companies:
- Partner with and invest in technology, talent and strategic alliances.
- “Become data masters,” by knowing customers inside and out.
- Update economic models to more accurately predict demand, profitability and expenses.
- “Tame complexity,” by creating seamless and intuitive customer experiences.
- And, last but not least, be adaptable: “Melding the rigor and discipline it takes to build zero-defect automotive grade machines in factories throughout the world with the free-wheeling culture of the most innovative high tech companies will be a challenge. But the winning companies will make it happen.”
If you’re interested in how 20-year-old techies are shaking up the car industry, read the paper in its entirety here.
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