TRAVERSE CITY, MI – IBM Corp. recently asked 125 executives in 15 countries to gaze into the future and predict what the auto industry will look like in 12 years.
Some of the results were surprising, says Sanjay Rishi, vice president and global automotive industry leader here in a presentation at the Management Briefing Seminars.
“One big difference we saw in northern Europe is the passion for the automobile is significantly down and decreasing,” Rishi tells attendees Wednesday.
“The technology we could access growing up was the vehicle,” he says. “We could aspire to a vehicle because that was a piece of technology we could touch, feel.”
Now, electronic devices have become more interesting and concerns about environmental sustainability are quelling passion for the automobile.
In “Automotive 2020: Clarity Beyond the Chaos,” fuel efficiency, eco-friendliness, traffic congestion, personalization, safety, alternative modes of transportation and lifetime cost of ownership were rated as the most dominant vehicle-buying criteria expected to emerge from 2008 to 2020.
Regarding alternative modes of transportation, Sanjay says interview subjects, who ranged from top OEM and supplier officials, to futurists, government officials and academicians, predicted buyers also will rent vehicles or have access to them when needed on a regular basis.
“We buy vehicles today based on maximum needs,” Rishi says, referring to large trucks and SUVs.
However, some buyers only occasionally need such vehicles, and prefer to purchase cars, he says.
The car-buyer of the future, “as part of his buying experience with (a) small vehicle, gets access (for) a prescribed number of days to trucks (and) SUVs,” Rishi says, claiming this scenario already is “real” and happening in the U.S. and globally.
Similarly, mass-transit users in large urban centers will have access to vehicles on an as-needed basis.
Developing markets such as China, India and Russia, already are moving toward this type of model, he says.
Fuel efficiency and eco-friendliness topped the list of future vehicle-buyer considerations, and Rishi says respondents predicted “every new vehicle will have some level of hybridization” by 2020, although some may have only stop-start systems rather than mild or full hybrid systems.
Hydrogen fuel-cell vehicles will be present in the market in 2020 but “probably” won’t make up a large percentage of new vehicles. “Beyond 2020, absolutely,” Rishi adds.
Biofuels will be available, but hardly any will be food-based, such as ethanol derived from corn.
“Non-food based biofuels will be real and will have penetrated the market,” he says, noting an exception would be a market such as Brazil, which produces ethanol from sugar cane.
Survey respondents predicted 65% of new vehicles produced globally in 2020 would run on fossil fuels, down from 95% currently.
Officials interviewed by IBM felt the investments made today in alternative propulsion “would pay rich dividends by 2020.” But perhaps signaling a continuing public-relations problem for the auto industry, Rishi says “expectations continue to exceed what is probably practical, probably real to achieve, by 2020.”
Other study findings predict more product development and manufacturing will take place in emerging markets by 2020.
This doesn’t mean developed markets no longer will manufacture parts or automobiles, for instance, Rishi says.
“What will happen is the complexion of manufacturing ownership will change ... as economies and experiences mature.”
Emerging-market companies will purchase existing plants or establish greenfield plants in developed countries.
And vehicles in 2020 will be more connected than ever, with consumers expecting technology that refreshes quickly, such as personal MP3 players, demanding the same up-to-date technology in their vehicles.
Buyers also will want to be connected at all times, seamlessly transitioning between their house, office and car.
With such vast changes in the market, new business models will develop, presenting opportunities for “the Googles of the world” or entirely new companies, Rishi says.
Possibilities such as separating a vehicle from its battery and using the battery to return power to the grid “allows an entirely new business model.”
Such notions no longer are “pie in the sky,” he adds.