Audi Mulls Next Mobility Plays

NOVI, MI – Audi of America is looking hard at ways to involve its dealer network in its mobility play, a strategy the automaker sees as both a competitive advantage and a necessity as new transportation business models emerge.

A ready-made distribution network is something the OEs have that many of the upstart mobility providers can’t match – at least not as quickly, easily or inexpensively. Not exploiting that advantage would be a huge mistake, says Scott Reynolds, Audi mobility business development manager.

“We have a lot of brick and mortar out there,” he tells WardsAuto here on the sidelines of the TU Automotive Detroit 2016 vehicle-connectivity conference and exposition. “If we’re not thoughtful about involving our dealers as partners, we’re going to be looking the gift horse in the mouth, so to speak.”

Audi of America management this week is kicking around proposals on additional new-mobility initiatives that would be offered through its U.S. dealer network, Reynolds says, but he declines to provide details on what the options or timing might be.

It’s unclear how ready dealers are to jump into the new-mobility fray, he admits, noting it’s difficult to gauge dealer receptiveness without presenting them with a concrete proposal.

In addition, he notes, Audi is doing quite well these days when it comes to its core business of selling cars, so any moves to get dealers up and running in the mobility sector likely will be small ones initially.

“It’s hard to tell dealers to (stop focusing so much on that) and dabble in car-sharing on a whim.”

Reynolds, part of a panel on vehicle-sharing economy with Car2Go Chief Financial Officer Michael Mikos and Oracle’s Sanat Joshi, says he doesn’t believe new-mobility players such as Uber, Lyft, Zipcar and Car2Go have disrupted the auto industry just yet.

“As for our core business of selling and servicing cars, there’s been no impact,” Reynolds says. “We’re not at the point where (car-sharing) has replaced ownership yet.

“But our job is to look at what it will be like in five years,” he adds. “We’re starting the journey to find those answers.”

Mikos agrees the auto industry’s traditional model won’t be threatened near-term.

“As for people shifting from car ownership, we’re still in the early days,” he says. “Even cities are just starting to understand what that shift means and trying to determine how they want to provide mobility services.

“But if you’re not ready, you’ll be left in the dust like Blockbuster was when it thought Netflix was just another fad.”

Still Wrestling With Business Models

Joshi, Oracle’s industry principal-automotive and manufacturing, says the new-mobility movement already is having an effect on OE thinking, however.

“OEs will have to start…(seeing) themselves as business-to-consumer companies,” he says. That will require new billing methods, for example, as they begin to charge for vehicle use rather than ownership. “They’ll need to think about the customer’s needs over the entire lifecycle and support (that).”

Reynolds says automakers continue to wrestle with the business model. He points to two experimental programs, where Audi is partnering with condominium complexes in Miami and San Francisco to provide rent-by-the-hour vehicles to residents, with very different results.

The program is a hit in San Francisco, he says, where the for-hire Audis are becoming “must-haves.” But in Miami, many of the cars are gathering dust. “There’s still very much an ownership mentality (in Florida).”

Mobility providers also are seeing more success in densely populated urban settings, where parking a car can be onerous and costly, than in the sprawling suburbs, panelists say, and they are unsure if or when that scenario will change.

“A lot of people are trying out things,” says Mikos of Car2Go, owned by German automaker Daimler. “But it’s different outside that urban core. At the end of the day, personal freedom and convenience are valued (more in suburban areas). I’m not 100% sure (mobility will catch on) outside the urban core.”

Here again is where the dealer network comes in, Reynolds says Audi wants to be able to offer a suite of services through its retailers so customers have access to a variety of vehicles to suit specific needs: a small electric car for commuting, perhaps, and a bigger, gasoline-fueled vehicle when more cargo hauling, passenger room and longer range are needed.

“Getting dealers involved is how to turn on the suburban area,” he says. “If we leave dealers out of this core business, we’re going to have a big problem.

“There has to be a suite (of dealer-offered) services that allows us to supply the right vehicle for use at hand. That’s what’s most compelling and exciting for us and our dealers. That’s what lights us up.”

[email protected] @DavidZoia