2020 consumer trends in the automotive industry: Is this the end of the consumer car?

In our recent report, Augmenting the daily commute, we presented 15 service concepts related to the cars of the future to commuters around the world. From a consumer standpoint, it was clear that cars are the gold standard of convenience and personal space – two critical factors positively affecting the travel experience.
 
But consumers are at an inflection point: this year has created new conditions and behaviors that may or may not stick in the long run. What will happen to workspaces? Will consumers go back to their pre-2020 routines? Even those that have high awareness of the climate crisis, would they choose public transport in the near term and forget the all too prominent social distancing rules and recommendations?
 
The automotive industry is also at an inflection point: increasing consumer awareness of the impact transport modes have in their personal carbon footprint, coupled with a pandemic that has shaken their supply chain, production output and sales performances.
 
In parallel, 5G is likely to unlock new revenues from adjacent sectors for communications service providers. The greatest revenues in the adjacent category are expected to come from consumer spend for in-car services. Key use cases here include in-vehicle Wi-Fi hotspots, media and entertainment, and consumer-facing car safety/security applications – as summarized in our recent 5G consumer potential report.
 

Consumer automotive trends are evolving
 

This year has led more consumers back into cars. Not necessarily that they are buying new cars, but that those who already own cars rely on them more in order to maintain safe distances. The market for secondhand cars has increased this year for the same underlying reason. There is also a rather imminent possibility that, as more people expect to work from home indefinitely, some will abandon expensive city centers in favor of the outskirts. This is a trend that may swing the soon-former-urbanites into cars as public transport services are less efficient outside metropolitan areas.
 
As Arwed Schmidt, Technical Sales Lead at Easymile, says in the report: “Personal cars are still the main mobility solution in places that haven’t reached peak car. When the road infrastructure is saturated, other solutions take more relevance as it happens in most large cities.”
 
Not all consumer behaviors and expectations are equal. A lot is said about declining interest in car ownership among younger generations. However, what we have seen from consumers is that, rather than age being the differentiating factor, it is the life stage that pronounces the difference in interest. Of millennial parents living in cities, 76 percent say it is very important to own a car since it is the only way to coordinate the multiple schedules, chores and activities for the family. They face the difficult dilemma of balancing their environmental concerns with their daily parental duties without having a convincing or practical alternative to owning a car.

Perhaps the car is losing its relevance as status symbol, but it is gaining more relevance as a solution based on user experience, something that is increasingly reliant on digital features. This leads us to another interesting aspect that is crucial in shaping the relationship consumers will have with future automotive: their tech engagement and interest, since we see digital technologies clearly influencing mobility experience and even innovation in transport modes and services.
 
To assess consumers’ tech engagement and interest, we surveyed a global sample of 16,000 respondents and grouped them into consumer types, based on their interest in cars on the one hand, and their interest in technology on the other. Four distinctive consumer groups emerged:

Above: Consumers grouped by interest in cars and technology.

• The (car) enthusiast: these consumers show high interest in digital technologies and everything car related, as well as high involvement in the driving experience.
• The cautious (driver): this group demonstrates high involvement in the driving experience but is overly cautious about new technologies.
• The (roaming) multitasker: these consumers are highly involved in digital technologies but show very low interest in cars or driving involvement.
• The pragmatic (commuter): this group mostly cares about getting from A to B, and shows no particular interest in cars or new digital technologies.

 Below we present these groups’ preferences and sentiments around cars and the wider context of urban mobility in the future.

How can automotive players address growing and diverse consumer needs?
 

One of the big challenges in developing solutions for the future of commuting is being able to create solutions that satisfy the varied needs of diverse consumers. This becomes even more complex as we see the mobility experience not only being driven by the shape, comfort and performance of a car, but also being elevated by additional digital features.
 
Seventy-five percent of the enthusiasts are parents and many of them have dependent children at home. For this group, nothing seems to compare to the flexibility and convenience of having a car that, for example, has the right child seat fixed and readily accessible at all times. 
 
The multitasker group does not have a particular inclination to commute by car on a regular basis, neither today (only 43 percent currently do) nor in 5 years (only 31 percent expect to). However, they signal high interest in future concepts related to in-car experience, and one in five expect to commute with autonomous cars or shuttles in five years.

 
Future service concepts set to augment the car experience

We presented 15 service concepts to consumers and evaluated how each concept is perceived by the different consumer groups. There is clearly a link between interest in different kinds of services and interest in technology, so much so that it seems to be even more relevant than the actual interest in cars.
 

Above: Fifteen concepts to augment the car experience

Enthusiasts and cautious consumers, the groups with high interest in cars, favor safety, assistance and convenience concepts, while multitaskers have a strong inclination towards in-car entertainment services. Nevertheless, distracted driver detection (a service that triggers alerts when a driver is not paying attention to a danger ahead) is the concept with the highest consumer interest overall, even for the multitaskers that are so particularly drawn towards entertainment concepts. The research shows that consumers are not only interested in safety features; they also have high willingness to pay for the right safety concepts.

Distracted driver detection service concept
 

One such 5G-assisted advanced driver assistance system includes a set of cameras to identify when a driver is not paying attention to a danger ahead, alerting the driver to the danger or even activating automatic breaks if needed.
 
It is interesting to note that, for 13 of the 15 concepts, less than 15 percent of the pragmatic group say they are really interested in that concept. It is only distracted driver detection and connected assisted drive (a service that would allow drivers to receive information from other cars and road sensors to improve safety, focus and convenience) that score slightly higher. It is safe to assume this group is not interested in novel features and their sole focus is to move from point A to point B. There is therefore no need to scrutinize their take on particular concepts. A similar reflection can be drawn for the cautious group regarding entertainment concepts; they simply don’t see them as highly interesting and only favor concepts related to safety and convenience.
 
By understanding these groups and their interests, automotive players can develop more targeted solutions that address each group’s needs and capture their willingness to invest.

Above: Reported high interest in service concepts according to different consumer types.

What are the monetization opportunities for these service concepts?

 
Willingness to pay can be seen as a good indicator of general interest to acquire a feature. But how would consumers prefer to pay for them? Some prefer a single upfront sum that will make the service always available, others would opt for subscriptions, while many still prefer to pay only when the services are used. Understanding the preferred payment methods of different groups can allow automotive players to strategically position each service in the market, to best address their target group. In addition, according to our 5G consumer potential report, 5G is likely to unlock new revenues for service providers as their ownership of connectivity will support revenues of around USD 8 billion, 25 percent of a USD 31 billion opportunity in the connected car segment by 2030.

Above: Preferred payment option for the different groups

While there is a trend within the groups, with enthusiasts generally preferring a one-off payment and multitaskers preferring to pay per use, this preference also depends on the type of service. Distracted driver detection has the highest proportion of interest to pay with a single sum. Safety features should always be ready to act!
 
For other services, consumers across all groups show a little more reluctance to commit to a one-time payment. For example, the subscription model is most relevant for in-vehicle continual connectivity, while pay-per-use models resonate better with features such as autonomous parking (valet mode). One thing is certain – subscription models don’t come as a natural choice for consumers. Pay-per-use models still are the most comfortable choice and will likely remain so until consumers are more familiar with what to expect from each service.

 
Further monetization opportunities lie in retrofitting of services

Even though these 15 services are future concepts, it is interesting to test the water and see if consumers are so interested in them that they would consider investing in a brand-new car just for those features. In reality, all groups show a strong desire to have these features as aftermarket products they could retrofit in their existing cars. Enthusiasts strongly feel they would like to install these features in their current car, while an average of 32 percent of the cautious and multitasker groups don’t think it would be possible to install those features in their existing vehicles, even if they would really like to do so.

Above: Would consumers like to install these features as add-ons in their current cars?

This gives us a lot to think about in terms of sustainability. While the industry is buzzing about the possibility to move to car sharing and subscription models in the future, we also see a strong signal from consumers’ desire to keep and improve their existing cars. Perhaps the missing piece is an effective way to monetize on such aftermarket solutions without compromising safety and trust, especially since nowadays most of these solutions are provided by brands that are relatively unknown to consumers. In fact, the European Commission is already studying the possibility of retrofitting lifesaving ADAS systems in existing vehicles.

Above: Consumer responses to the distracted driver detection service concept.

Find out more
 

To learn more about what people want in order to increase their commuting satisfaction, and the roles connected technology will play, read our report: Augmenting the Daily Commute.

Explore the interactive Connected Commuter Dashboard to discover more of our extensive consumer research, representative of 130 million smartphone users worldwide.

Read our blog post How tech can help us create a better world: a fresh perspective.

Read the car focused supplement