US Big Three Auto Makers Exploring Car Alternatives

The accompanying photo may be fanciful but the challenge the auto makers face is not.

The signs for the auto makers are troubling. Drivers' license registrations for American teenagers have dropped 20% over the past generation. Getting that license used to be the most cherished symbol of the passage to adulthood, to freedom and the key to the American dream.

However, a countervailing mega-trend, urbanization, in the US and most of the rest of the world has changed that. Congestion and expense have combined to render the auto less efficient and - most importantly to the 24/7 text-centric population - less convenient than alternative modes of transportation.

The auto companies have already begun vying with each other to become the favored provider for car-sharing services. This makes perfect sense as the manufacturers have invested for years in the car rental companies like Hertz and Avis, so car-sharing is essentially a business in which they have had experience and success.

The companies are also exploring alternatives further afield from the car in every garage model. As the following article explains, they are exploring the multi-modal model, buses, rapid transit and other transportation forms. From a strategic standpoint, the car makers are redefining their market from one model - the auto - to transportation. Which, given the trends, seems sensible and timely. JL

Robert Wright reports in the Financial Times:

The big three US carmakers are eyeing increasing involvement in alternatives to private car ownership such as e-bikes and buses, amid a dip in car use and ownership. The three – General Motors, Ford and Chrysler – are reacting to figures that show young people are delaying learning to drive and more young professionals are moving to city centres.

The vehicle manufacturers are increasingly involved in local car-sharing services intended to serve urban professionals who occasionally need a car but prefer to avoid full-time ownership.

The new thinking marks a significant change for companies that once encouraged the US’s steady shift in many areas towards almost total reliance on the private car.

Sheryl Connelly, Ford’s futurologist, said the carmaker started studying the changes’ impact after noticing the proportion of 16-year-olds holding a driving licence in the US fell from 50 to 30 per cent in the 30 years to 2008.

Ford recognised there would be days in a city such as London where a commuter would conclude train travel made most sense, Ms Connelly said. On others, it would be more practical to rent a car.

“The future of mobility is going to be multi-modal,” Ms Connelly said. “It’s going to be context and purpose-driven.”

Peter Kosak, GM’s executive director for urban mobility, said increased urbanisation worldwide – including an apparent drift towards formerly rundown inner cities in the US – had changed the carmaker’s thinking.

Among GM’s responses had been its investment – which it increased in November – in Proterra, a North Carolina-based builder of electric buses. The company is also studying whether to start manufacturing, selling or managing sharing systems for electric bicycles. E-bike use is growing fast in many parts of the world.

“Bikes and e-bikes are going to be a part of urban mobility solutions to a growing extent,” Mr Kosak said. “So, certainly, that’s something we’re looking at as well.”

JoAnn Heck, Chrysler’s director of consumer and market insights, said carmakers would increasingly work with local governments and other companies to provide customers with choices about how to move about.

“It may be that companies think more about addressing a business model associated with open ownership,” Ms Heck said. “Particularly in cities, there are a lot of ways that this can be addressed.”