Could once status symbol cars slide into B2B? Credit: Image credit: Fingerhut / Shutterstock.com
Mobile Working

Could once status symbol cars slide into B2B?

This is a contributed piece by Dylan Stuart, a partner at creative consultancy, Lippincott

Car manufacturers have spent the best part of a hundred years perfecting how to design, build and market a product intended for personal ownership – with all the emotional and design content that goes with it. Pride of ownership has been, for many brands, the ultimate higher order need they are seeking to tap into.

But people’s mobility needs are changing. With the advent of sweeping technological advancements, including new platforms, new ownership models and driverless capabilities, the days of universal car ownership may well be numbered. And as consumer preference moves towards mobility networks, where its possible to drive or be driven on-demand, people will increasingly expect to buy mobility as they need it – just as they do water, electricity or even cloud-based software services.

For perhaps the first time ever, the car industry is being forced to wrestle with fundamental changes to the way it operates, how it develops customer relationships and, how it builds emotional bonds with consumers. With the prospect of brands like Uber and Lyft increasingly intermediating the customer relationship, a tough road lies ahead.

The biggest question is how car manufacturers will maintain their direct bond with the customer.

One scenario is that the car manufacturers create their own branded networks. Consumers will still have a direct relationship with the car brand, they just won’t own the car. We are already seeing embryonic versions of this with ventures like BMW DriveNow and Audi On Demand.

The challenge is not only how to scale the network, but also how to deliver a branded service that matches the promise of the product, with all the added complexity of billing, insurance and privacy. Typically this is a recipe for weaker customer relationships, not stronger: we have a stronger bond with our phone maker than with our phone service provider.

An alternative to the branded network approach is a setup similar to cable TV. In this scenario, platform brands, such as Uber and Didi, would become the ‘providers’ that car companies supply with content (the cars). For carmakers, a setup like this would rely on consumers having a strong brand preference towards a specific car brand. This may prove difficult given the degree of separation between the carmaker and the customer. The cable TV example is instructive: a few channels get to call the shots because they are the ones that drive cable subscriptions, but most have to pay to be on the cable system and get access to their viewers.

As recognition of this reality, Toyota has begun partnering with Uber and Volkswagen has invested $300m in Uber rival, Gett. Apple has also entered the market, investing $1 billion in the Chinese Uber equivalent, Didi Chuxing Technology.

It is clear that car brands need to consider how to deliver their brands through the experience beyond the car. To maintain brand preference and meaningful differentiation, carmakers must look at the services, interfaces and experiences that go beyond the materiality of metal, plastic and leather they have spent a hundred years mastering. 

If not, the risk is that carmakers will return to being manufacturers, supplying the new mobility networks as a B2B rather than a B2C. Uber’s reported order of 100,000 S-class cars from Mercedes Benz could be a sign of things to come.

 

Also read:

Connected Cars World: Auto makers still adapting to a changing market

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