The auto industry has been at the forefront of innovation for many decades but has not quite kept pace with the new era of digitalisation. It is only in recent months that a host of leading carmakers have made known that they will rev up plans into the uncharted territory of electric, autonomous and connected vehicles.

Doubtless, these are now fashionable buzzwords within the industry, but they have the potential to throw unprepared players off track. Companies will not only have to change the way they make money but also find innovative ways to retain their brand positioning. Automakers which, until last year, were planning to launch such cars in 2030 are now being forced to pull back their plans. It now looks as if they will put these out on the roads over the next five years. Technology giants Google and Apple have already thrown their hats into the ring (though there have been reports that the latter could be reviewing its plans) while others are readying their ‘robo-cars’. These pose a real threat to the brand value of those companies built over the last 150 years largely by bending iron. Tesla is a case in point whose order backlog of the Model 3 has baffled many OEMs. Clearly, times are changing and how!

With its auto pilot, Tesla has already proved from a technology point of view that this is an entirely feasible option. However, the real challenge for mass-market OEMs is to forecast or keep track of customer psyche over the next five to ten years.

The early adopters of the next generation would be extremely well versed in using these technologies as they have been hooked to the apps world since childhood. As a result, they will hardly have any having emotional attachment to a car quite unlike the preceding generation where owning one was a big deal for the entire family.

In addition, cars will become more expensive in the next five years which only poses the obvious question on ownership. Why does anyone need to buy a car when he/she can rent one by merely clicking a button?

Every leading OEM today wants to understand the rent-and-ride sharing business which also puts in perspective why they are investing on individual branded based apps such as DriveNow, Car2Go, Lyft, Zoomcar and so on. The near future could see many more added to this growing family and it is only natural that these apps will end up understanding the customer better and build a stronger bond with them.

Will car companies become the next generation of fleet companies? Providing subscription-based services and quick personalisation (the seats, mirrors, air-conditioner and infotainment automatically adjusts to your last used settings from another car) will help retain customers. Will only subscriptions help deliver a profitable business model or do companies need to monetise beyond just selling miles/kilometres?

Keeping the security, privacy and legality aspects aside, a family of four sitting in a rented car for an hour or two everyday is bound to splurge since it will have pretty much nothing to do! And who can better understand this better than e-commerce giants such as Alibaba or Amazon? Are they the next Trojan Horse that the auto industry needs to be truly worried about?

Take the case of Alibaba which has claimed that it has a 400-million active customer base in China alone that uses its platform. It has already announced development of an Internet car with SAIC Motor Corp.

These companies will be well armed with tremendous amount of data from their customer transactions. As a result, they will be better equipped to understand the psyche of the new age consumer. Sure, they do not own any ‘hard assets’ but tomorrow’s business is going to fought in the soft(ware) world. As the car becomes the next moving mobile device, the paradigm for the auto industry will change forever.

The writer is an automotive enthusiast

comment COMMENT NOW