November 1, 2019
Week 1 of 8 – The next Decade in Transportation
As Business Leaders, you have a responsibility to continuously connect with your target customers. There are significant factors lining up that will shift mass consumers transportation behaviors in the next decade. The following are three areas this blog will explore to help understand what’s coming:
The new Mass Consumer and Wealth Inequality
New Commercial Models – Exclusivity
Transportation Shared Service Offerings
The New Mass Consumer and Wealth Inequality
Millennials will outnumber Baby Boomers in the next decade, and they’ll have different experiences and challenges concerning relationships, children, and managing finances. They need companies that provide solutions to transportation needs unique to their generation.
Wealth inequality is positioned to increase beyond 2030. There will be competition between non-traditional players for disposable income. For example, Transportation vs. tech spend vs. entertainment. It’s important to understand that basic transportation budgets are open to downward pressure and disruption.
The vast majority of Millennials (around 85%) desire exclusive use of a car according to a study by OC&C Strategy Consultants; this is a Want. At present, Mass-Millennials cannot afford traditional cars, so they have found alternative ways to commute, fulfilling a Need. Will their Transportation spend gravitate towards Wants or Needs in the next decade? Is there a way to combine the two? Accepting downward pressure to transportation budgets, let’s explore two scenarios. First, new commercial models in exclusive vehicle use and second shared service models.
New Commercial Models – Exclusivity
The opportunity for mass-market exclusive vehicle use lies in the consideration that millennials buying power has range and elasticity. The following graph indicates that your business needs to focus on experience.
Experience is more important than ever. Shared Tribe experience is critical to keep younger consumers engaged. Your business needs to stay on top of how, when and why they move from point A to B. Subscription models are the right language for these customers. Companies should start testing and moving towards bundled subscriptions with reward point systems. An example is to bundle monthly Car Subscription + Rent + Gym equating to points towards expensive restaurants, airfare, and hotels. Models like this will work as we know that buying trends are moving towards experience.
Car Dealers need to embrace their customer’s desire for experience. Intelligent car dealers will survive if they understand why Apple has physical stores versus an on-line only model. Traditional car ownership models will continue in the next decade; however those models are at risk of stagnation or decline. Winning growth models will focus on customer’s desire for exclusive vehicle use combined with the right price and experience.
There are 91 million people actively engaged with Uber every month. Customers stopped using taxis and buses while at the same time increased the number of hail rides per year. This is the most impressive adoption of change in transportation behavior without compare.
Entrepreneurial Tech and Shared Service providers understand their customers because they ask the right questions. To understand the desire for exclusive car use, they will ask the question “Why does a typical 30 something consumer with limited disposable income desire exclusive use of a car? Why exclusivity?” They may find that they enjoy their stuff and personal space in their car. Once that is understood, a Shared Service provider will engage, test, and iterate creative solutions to optimize value, time, and experience. Will this reduce the demand for exclusivity in the next decade? On a limited budget, it absolutely will. Winning growth models will optimize monthly transportation spend, commute time, and offer safe, reliable, and timely transportation for young families.
Existing Models Resistance to Change
Automotive sales channels continue to show resistance to change. Those that remain resistant may try to defend their models in ways that distance themselves from desired consumers (legislation, defense of franchise territories, etc.). The confluence of wealth disparity, desire for the exclusive use of a vehicle, and adoption of shared service is enough to understand that there will be change. While no one can predict how fast or at what adoption rate change will occur, I hope you are at least open to what may play out. Right now, be honest with yourself and ask, “Is my business relevant to future mass consumer Transportation needs? ” If the answer is no, understand that there is still time to adapt a relevant model.
Thank you for taking the time to read this blog. I look forward to engaging your comments and continuing this dialogue.
Next week’s post will focus on Collaborative, Agile Workforce – Authentic organizations win in the next decade
Leader in Automotive, Tech and Digital Data.
I’m incredibly excited about the intersection of Auto, Data/Tech and Artificial Intelligence in the next 10 years. I believe agile organizations with authentic leaders have set the blueprint of how companies will operate in the next decade.
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