As Toyota hires Google’s former head of robotics to lead a new Toyota Research Institute, Sally White considers what the opportunities and implications really are

Is 2016 the year of peak car? Or at least that of private car ownership? Is this why the major motor manufacturers are rushing to cosy up to the ride-booking apps groups Uber, Gett and Lyft?

Toyota has taken an undisclosed stake in Uber, which is also talking to other manufacturers, according the Financial Times. VW is putting $300 million into Gett and General Motors has announced plans to buy a $500 million stake in Lyft.

BMW (whose brands include the Mini and Rolls Royce) has taken another route. It has just announced the launch of its own new car-sharing service in Seattle called Reach Now. This uses a fleet of 370 BMW 3 series sedans and Mini Coopers. All cars in the ReachNow fleet have a "promotional" rate of 41 cents per minute while driving (normally 49 cents) and 30 cents per minute while parked.

ReachNow isn't BMW's first shot at car sharing, as it has tried out several programmes in European markets.  Ford got in earlier in Europe, testing last year a London car-sharing operation called City Driving On-Demand. It launched this as GoDrive a one-way service (so you don’t have to take it back) with guaranteed parking at your destination that charges by the minute.

And Ford has developed a new leasing programme that will allow ‘self-organised groups’ of three to six individuals to group-lease Ford vehicles. It's called Ford Credit Link and was launched at Ford dealers in Texas in February.

Another DIY entrant, Daimler, is already operating its Car2Go in a few US cities. Its fleet of ‘smart cars’ are also priced by the minute. Also trying out new formats is Zipcar, the Avis-owned stalwart of the car-sharing industry. It recently launched per-minute and one-way service in Boston and Los Angeles with more cities to come.

There is a global shift in process from ownership to access, according to international consultancy PwC in a report on attitudes to car ownership globally, and particularly in China. Its forecast seems to indicate that you ain’t seen nothing yet. ”With car sharing alone growing at double the rate of new car sales in general, we predict that car sharing will become one of the prominent share economy sectors by 2025,” it says.

Behind this evolution, says PwC is urbanisation, with new property developments in many countries designed to be car-less. There is generally more concern for the environment and governments are acting on this.

Disruptive environment

Disruption is rife in the motor industry at the moment. The car manufacturers feel under attack on all sides, analysts point out. First, planners are trying to squeeze cars out of cities. Then there is the assault from Silicon Valley as Apple and Google, for two, are working towards producing electronic and autonomous cars.

More and more internet companies have crossed the boundary into the auto industry, commented the chairman of Chinese largest carmaker, SAJC Motors, Chen Zhixin, at China’s Global Automotive Forum in Chongpong last week. Hence the strategy of investing in the taxi app groups and the IoT, on the basis of if you can’t beat them, join them.

….if you can’t beat them, join them

As he graphically put it...”the barbarians are at the gate. We won’t seal ourselves off and defend the city, rather we will open the gate and invite them in”.

At stake, as Reuters quoted ‘industry experts’ as saying at the Consumer Electronics Show in Las Vegas earlier this year, are “potentially trillions of dollars in revenue from selling both vehicles and ‘mobility services’ - ride sharing, car sharing, connections to mass transit, travel services, repair work, and access to valuable data on what consumers do with and in their cars.”  Automakers may need major stakes in such emerging industries to replace potentially massive losses, over time, in traditional auto sales to individuals it reported.

Motor industry magazine Automotive News Europe talked to consultancy group McKinsey’s Hans-Werner Kaas for his read on what is going on. Profiting from ride-sharing and other service businesses will require automakers to overhaul their corporate structures, was his view.

"You need new management systems," he said. Automakers also need different kinds of employees. Toyota, at least seems to realise it as it! It has hired Google’s former head of robotics to lead a new Toyota Research Institute.

Not everyone sees car-sharing being such a dire threat, however. The influential Boston Consulting Group’s (BCG) recent report, What’s Ahead for Car-Sharing? calculates that it will reduce vehicle sales by 550,000 vehicles worldwide in 2021. Then global auto sales are expected to approach 100 million vehicles (up from 75 million forecasts for 2016.). In hard cash that would be a sales loss of a mere $8 billion.

While he sees car-sharing subsidiaries as a good financial move for the car-makers, he comments that: “The attention and buzz surrounding car-sharing and shared mobility is disproportionate to the impact it will have on vehicle sales”.