How can the auto industry give users what they want in the post-COVID-19 world?

In vast swathes of the world, most movement has been halted. Once people are able to travel once again, will they go back to their old ways of moving around?
Unlikely.
In attempting to predict a likely future state for the automotive industry specifically, to me one thing is clear: this crisis will trigger a shift in consumer preferences.
I predict two main—but somewhat opposing—shifts.

Firstly, more people will prefer to use a car rather than public transport.
When people will once again be able to travel, it is fair to assume that many will be reticent to use public transport that is packed with people, in close proximity, touching dirty surfaces. Given the choice, would you be willing to do that on a daily basis to get to work? Or exposing your family to that?
Another factor to remember is that falling oil prices may make using a car more attractive, at least from an economic perspective… if and when the fall in oil prices are translated to the prices consumers pay at the pumps.

The second shift is that less people will want—or be able—to buy a car.
While the value of having your own personal space is clear, the economic crisis means that people are not going to be able to afford a car. It is obvious that the immediate macro-economic impact of the crisis has led to high unemployment, which will directly translate into less demand for new cars.
Even for those people whose work has not been affected, many will have become accustomed to teleworking, which will likely become far more prevalent even once the crisis is over. This will mean that fewer people will need to commute, and those that do will do so less often, translating into less willingness to pay for an expensive/new car.

And what about the newfound, widespread focus on sustainability? This year’s crises—including the Australian bushfires and COVID-19—have brought people highly visible, immediate, and tangible effects of what is being characterised as a lack of respect for and acknowledgement of the limits of the environment. I predict that this will also have a downward effect on demand for new, privately owned cars. Yes, fuel prices might fall, but increasing fuel consumption and buying and throwing away cars are not going to be seen as part of the answer.

Given the reduction in willingness to use public transport and the reduction in ability/willingness to buy a new car, my prediction is that there will be a surge in demand for shared (and preferably electric) vehicles.

In the short term, this will be a boon for electric shared car service providers—such as Ferrovial’s Zity, VW’s WeShare, and Daimler/BMW joint venture SHARE NOW—but there are two key pain points that these services do not address:

• Peace of mind around the service: How will the service provider guarantee that the in-car environment—particularly the steering wheel, touchscreens, etc.—will not be contaminated.

• Fitness for purpose of the vehicle: Given that these vehicles were designed first and foremost for the private ownership market, do the cars do the jobs that car sharers want from them? What could they do better if they were built, first and foremost, for sharing?

I believe that both of these challenges strike at the heart of automakers’ traditional weaknesses, but could be sources of opportunity.

Designing a mobility service for the post-COVID-19 world
It is no secret that automakers’ traditional strengths and core competencies in manufacturing have caused them to lag behind in how to successfully design for, and capture value from, Mobility as a Service, relying instead on a traditional waterfall approach beginning with the vehicle and considering the service a mere add-on.

How much more powerful would it be if an automaker really looked at the shifts in consumer behaviour, and designed new mobility solutions based on consumer pains and jobs to be done focused on the service, with the form of the vehicle following the function required from it?

We have seen mobility service providers quickly roll out minimum viable solutions to the coronavirus challenge: for example, Didi Chuxing (China’s answer to Uber) started sticking up protective plastic dividers between drivers and passengers in its cars, setting up 46 shield installation points and 9 disinfection stations around Beijing. But this was in response to taxi drivers taking matters into their own hands and making makeshift barriers themselves, or even wearing hazmat suits.

However, these are temporary solutions that illustrate a real problem.

What could service providers—automakers, ride hailing companies and car sharing companies alike—do to ensure not only that vehicles are safe, but that people feel safe?

To successfully address consumers’ concerns, companies must firstly make sure that they understand deeply what consumers care about and secondly, make service design a priority.

Designing a vehicle for the post-COVID-19 world
Even if services are put in place to give users peace of mind around shared vehicles, the fact remains that these vehicles were never intended to be shared, and therefore are not built for purpose. Some upstart companies—Chinese/Swedish Lynk & Co springs to mind—have created cars with shareability in mind from the start, but we are still a long way from a car that has been designed with the needs of car sharing as being foremost.

While in the old days, interactions with the car and the use cases for a car were limited to those dictated by one owner, shared cars will be used by multiple people for multiple different purposes on any given day. How could one car adapt to all those needs? How should a car allow interaction with a multitude of different people?

What could a purpose-built shared car look like?
Answering these questions would require a deep study of customer needs and behaviours in different contexts, and an integrated approach that takes in service design and digital touch points, as well as the physical design of the car.
Any car company that does this could really build themselves a differentiated advantage. It is here that automakers could really shine, as Uber and other service providers cannot suddenly start building cars.

Driving forward

The world is going to look and feel rather different to the world we had before, and all companies must prepare to address new concerns and understand new consumer preferences.
An integrated design approach across service, digital, and physical, based on a deep understanding of customer’s needs and concerns, will be key to make the changes required to business for survival post-crisis.

Whoever answers the call to understand new consumer preferences and make a vehicle that is more adaptable, more sustainable, and with a service that feels secure, will surely find a place in the post-COVID-19 world.

What are you doing to prepare for this shift?

Maruan El Mahgiub
Director of Business Strategy at Mormedi