I was lucky enough to attend the International Consumer Electronics Show in Las Vegas last week. As you may have read, automotive dominated this year’s show – no fewer than nine automakers held press events over the course of the week.
Consumer tech is a pretty recent focus for the OEMs. Ford, for example, was one of the first automakers to open an innovation office in Silicon Valley, and that happened just four years ago.
What were the main themes I saw at International CES – and what do they say about the state of the auto market?
In-car tech has improved a lot in a very short time. A few years ago, Bluetooth was your best bet for in-car connectivity. Now, the standards are Android Auto, Apple CarPlay, and the third-party option called MirrorLink.
These standards, which let smartphone owners “mirror” certain phone functions on their dashboards, are only a couple of years old. Yet even tapping an in-dash screen will soon become passe. BMW’s 7 Series already lets drivers adjust climate and radio settings with a wave of the hand. At International CES, the company previewed a fully gesture-based user interface it calls AirTouch.
What We Think: People (especially Millennials) are accustomed to having their smartphones on hand at all times. Automakers, in a bid to appeal to the next generation of drivers, are making it possible to stay connected even from behind the wheel.
Consumers’ desire for connectivity is affecting how they shop for cars, in addition to how they drive them. We expect consumers to continue demanding connectivity improvements where they spend the most time – including in retail stores.
2. Autonomous Vehicles
Perhaps you heard last year that Tesla would roll out autonomous-drive functionality to certain of its electric cars. The more-established OEMs aren’t sitting on their laurels, however. This year’s International CES saw autonomous vehicle announcements from Ford, which plans to triple the size of its autonomous car fleet, and Toyota, which is investing $1 billion in a driverless-car research center.
What We Think: Autonomous vehicles won’t become a reality for several more years, at minimum. They won’t be commonplace until 2030, OEMs say.
Still, self-driving features are growing more common with every new model introduction. Certain BMWs can park and unpark themselves, while Audi is introducing highway self-driving on its new Q7 SUV. Even the new Chevy Malibu can accelerate and brake to keep pace with highway traffic.
These kinds of features give consumers another reason to upgrade their rides. New-vehicle sales – especially leases – should remain strong in 2016.
3. Distributed Ownership
There are more cars than licensed drivers on American roads, and those vehicles aren’t going away overnight. Recall, as well, that new-car sales set a record last year.
Still, as a longer-term trend, expect distributed ownership, or car-sharing, to become increasingly popular. In urban centers, Zipcar, Enterprise Car Share and Car2Go vehicles are already a common sight. Peer-to-peer car sharing companies like Turo and Getaround are also an option in certain markets.
What We Think: The surest sign that car-sharing is gaining traction is that the OEMs are getting on board. Daimler has operated Car2Go in Europe since 2008, and GM just announced a $500 million investment in ride-sharing company Lyft.
Ford’s new FordPass app also includes car-sharing functionality: It integrates with FlightCar, an airport parking operator that lets drivers “rent” their parked cars to travelers.
Distributed ownership’s appeal lies in the convenience, as well as cost savings, that it offers. Affordability matters to today’s consumers.
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