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Car Insights

Car Insights

Insight | Alliances

Gaining tech skills requires forming new alliances

The fundamental dynamic in the car category is change. In the past year, we’ve seen alliances and cooperation agreements between companies that historically would have crossed the street to avoid each other. Two years ago, I’d have said that some kind of formal relationship between Ford and VW would never happen. But they’ve announced plans to work together on vans and pick-up trucks and on electric vehicle research. I think we’ll see more of these partnerships because the car market is becoming more challenging and the move toward electrification requires skill sets from the tech sector. The old days of the classic OEMs is evolving. We’ll have a mixed automotive economy over the next 10-or-15 years. With electrification, it is possible that car makers will look at city markets rather than country markets. The cities will regulate in favor of electric. But for people living in Nebraska, combustion engines will still have a role to play.

Chris Hunton

Global Team Leader

WPP

Chris.Hunton@wpp.com

Insight | Electric

This is the year brands position for electric cars

It feels like this is the year of going electric. We won’t see a mass shift in terms of sales, but we will see a noticeable shift in the way brands position themselves. Every brand will start talking about their electric offering and while this might only result in small sales volumes the change in tone will be significant. We have already seen from VW and Toyota and they will be quickly followed by the other manufacturers like Ford. The demand and interest is there, but the inadequate infrastructure, a shortage of batteries, high cost, and limited availability will hold back people from actually making a purchase, but this will come.

Dominic Moore

Managing Director, UK

GTB

Dominic.Moore@gtb.com

Insight | Shift East

Car category’s center of gravity shifts to the East

Along with digital, there are at least two other major trends this year. The first is the move to the East. For a century the automotive center of gravity was in the West, with most innovation coming from the US or Europe. We are seeing a shift to the East, particularly with China leading new technology, and also with a new business model where manufacturers provide not only cars, but also mobility as a service. Chinese brands like Lynk & Co are popping up and creating that shift. The second major trend is the entrance of new brands after years of the number of auto brands shrinking. In Asia, Vin Fast, Byton, and Wey have been recently been created and sleeping ones like Borgward or Polestar Technology have been revived, all reversing the brand consolidation trend. These brands bring not just new vehicles; they add a spark of nouveauté to the industry.

Guillaume Saint

Global Automotive Practice Lead

Kantar

Guillaume.Saint@kantar.com

Insight | Digital

Brand survival requires doing digital right

The brands that will survive will be those that get digital right through the entire buying process. Added value will come through integration and use of digital. That includes digital connectivity in the vehicle and autonomous vehicles, the use of digital e-commerce for vehicle purchasing, and the use of digital apps for car sharing and other variations of mobility. The car in the future will be a mobile phone on wheels. When people spend time in cars it’s not just about getting from point A to B. It’s also about social interaction and doing business.

Nick Bull

Senior Business Development Director

Kantar

Nick.Bull@kantar.com

Insight | Dealerships

Limiting dealers risks diluting brand leverage

The possibility of limiting the role of dealerships is tempting for brands, but also needs to be balanced with other considerations. One the one hand, you’ve got the potential margin gain and bargaining power gain. On the other hand, a good dealership, and a good after-sale experience is a strong leverage point for brands. It keeps customers engaged with brands and heading toward the next purchase of that brand. If you remove the dealership, or outsource the dealership role to a third party, you diminish that point of leverage. In a world where the consumer is possibly choosing a car to lease from a list, buying it online and selecting a subscription for aftercare service from a third party, you can imagine how manufacturer brands would become less and less important. For those brands, dealerships are a worthwhile investment in future if used as a means to physically demonstrate their Meaningful Difference and avoid product choices becoming less involved and led by price and convenience.

Piers Lindsay-Taylor

Senior Client Director

Kantar

Piers.LindsayTaylor@kantar.com

Insight | Electric

Infrastructure dictates pace of transition

We have seen two trends influence the transition to electric cars. In the Nordic countries, where the infrastructure supports electric cars and the government subsidizes electric car purchases, the share of electric is growing disproportionately. The shift from diesel to electric is clearly happening there. In other markets, where infrastructure does not support electric, we see a predisposition to other alternative-fuel vehicles increasing, and hybrid cars are growing disproportionately every year.

Reshmi Nambiar

Client Director

Kantar

Reshmi.Nambiar@kantar.com

Insight | Pricing

Brands consider subscription pricing models

Some manufacturers are looking at cars that can update themselves. You buy a car that has all the technology built into it. But the technology won’t be turned on. You might pay a subscription fee to turn on the technology. For example, a feature like autonomous cruise control, which automatically regulates speed, might be in the car from the start, but you’d need to pay a subscription to have it turned on. For a big-ticket item, like a car, the subscription model could create some price resistance among consumers who feel forced to pay for features they may never use.

Richard Friar

Managing Partner

MediaCom

Richard.Friar@mediacom.com

Insight | Electric

Infrastructure dictates pace of transition

There’s a disruptive transformational change that the car companies need to go through in the transition to electric vehicles. In part, that’s because the car companies work on long lead times, whereas consumer demand works on fast cycles. One of the challenges for the car companies is that they’re trying to install electric batteries in existing cars. The problem is that installing the batteries reduces the space for the boot, or trunk, and for the seating area. For fully electric vehicles, the car companies need to build new platforms and chassis that better accommodate the batteries. But that will take seven years. In the meantime, the car brands can make hybrids, which require less space for batteries or rely on advances in battery technology for better packaging.

Rod Anthony

Senior Consultant

Wunderman Thompson Commerce

Rod.Anthony@wundermancommerce.com