Huge opportunities if automotive and travel industries converge

What happens when the experiences that one industry wants to offer to its customers and its growth opportunities intersect with another industry? By Emily Weiss and Axel Schmidt

Consider this: What if we could make travel carbon-neutral? If your ride became your meeting room, your office, your cinema or your restaurant? If it were possible to book a journey from door to destination to bed in one step, no matter the mode of travel? If we booked a trip by selecting an economy, premium or first-class filter rather than a brand?

Automotive World Magazine – May 2021

These are compelling consumer propositions that represent just a tiny slice of what’s likely to be a US$15tr market for the world of mobility over the coming decade. Realising this value will require that the automotive and travel industries converge like never before. For players that can achieve this, the opportunity is huge.

What’s driving the opportunity?

If we think about mobility as the movement of people and things from point A to point B, then mobility is heading for a revolution. In today’s digital world, consumer expectations around products, services and sustainability are evolving rapidly. With everything connected and always online, we’ve been spoiled with one-touch instant gratification and context-aware hyper-personalisation.

In addition, personal values, like sustainability, have become a driver of our decision-making. Witness the shift toward electric vehicles, with some municipalities—and even entire countries—considering banning combustion engine vehicles altogether. California, for example, plans to stop allowing people to register such vehicles beginning in 2035, and the term “CO2 shame” is quickly becoming a part of our common vocabulary.

It’s all about convergence, which occurs when the experiences that one industry wants to offer to its customers and the industry’s future growth opportunities intersect with another industry

At the same time, we’re witnessing the emergence of the sharing economy, as pairing houses and goods that are sitting idle with people who want to use them has become increasingly popular. The growing trend of car-sharing is an innovative approach through which vehicle owners temporarily rent their personal automobiles to others on a short-term basis—like Airbnb, but for cars. In fact, an Accenture survey found that 48% of all people are willing to give up car ownership for other mobility options. In a nutshell, people favour experiences over owning products and want to extract more from less, driving greater value from those experiences and making the most of their available time.

Digital is what makes this all possible, but the resulting emergence of platform plays from the technology sector also brings tremendous disruption to traditional players and industries—including automotive and travel, which are being disrupted on multiple fronts. Tesla is removing barriers to electric mobility and the car as a true connected device within a service ecosystem. Uber means consumers never have to think about how to get where they’re going on the ground. Google’s Waymo subsidiary has become the most advanced autonomous driving company, and Google Flights helps consumers find the cheapest flight without having to connect with an airline.

Traditional players are trying to catch up to more nimble, digital-first players that don’t have to deal with decades of technological debt and outdated operational models—such as the travel industry’s custom-built solutions hampering the transition to cloud solutions.

Trafi multimodal mobility app
Think about a world in which a traveller’s entire itinerary, starting from home to the travel destination and back, is managed via one service provider

In automotive, value generation is shifting from hardware to services. In fact, it’s estimated that within the next decade, 22% of automotive-related revenue will come from digital business models. And while customers expect a seamless experience while travelling, the mode of transport has become far less important than getting there in the most comfortable, affordable and environmentally friendly manner. As the mobility sector continues its shift from a product-oriented to a service-oriented business, the car is being transformed from a commodity to a smartphone on four wheels—defined more by its software than its hardware.

The path forward

So how can the industry deal with these changes and take advantage of the opportunities? It’s all about convergence, which occurs when the experiences that one industry wants to offer to its customers and the industry’s future growth opportunities intersect with another industry.

Think about a world in which a traveller’s entire itinerary, starting from home to the travel destination and back, is managed via one service provider. You get picked up by a ride-hailing service to get to the airport or the train station. Your preferred seat and the desired hotel room are chosen during the booking process, and the required insurance (for your luggage, medical assistance or other needs) is customised to your needs, purchased on demand and secured via smart contract technology using blockchain.

Traditional mobility players that stick to the status quo will soon be fighting for their survival

Of course, no single company can do this alone; it requires collaboration through an ecosystem of like-minded partners. Any such model would need to provide a level playing field, ensuring that no player or sector benefits at the expense of another. And with new business models—whether teaming with one partner, creating a joint venture or forming an ecosystem with a host of other partners—comes the need for new capabilities, requiring the upskilling or reskilling of at least some of a company’s workforce, and possibly the acquisition (i.e., external hiring) of new skills.

Mobility providers need to prioritise widening their ecosystem—considering potential partnerships not just with complementary players such as tech companies (to take advantage of their software-related skills), but also with companies they might otherwise see as competitors—in order to pool resources, share expenses and innovate more quickly. And developing these partnerships is not a one-time step, but rather, a continual process, as it will be necessary to continuously evaluate the relationship to ensure that it is equally beneficial to both sides.

Clearly, traditional mobility players that stick to the status quo will soon be fighting for their survival. But those willing to adapt, embrace new business models and team with an ecosystem of partners—including some who might once have been competitive threats—will be well-positioned on the road to continued success.


The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Emily Weiss is a Managing Director at Accenture who leads its Travel industry group. Axel Schmidt is a Senior Managing Director at Accenture who leads its Automotive industry group

The Automotive World Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com

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