GM Not Standing Still as Personal-Mobility Era Dawns

General Motors is on a personal-mobility tear.

It recently announced a program to allow drivers at Lyft, the ride-sharing company in which it invested $500 million in January, to lease cars short-term. A few months ago, the automaker launched a car-sharing program that allows users to reserve and unlock vehicles with a smartphone. The moves are gathered under a brand GM calls Maven.

“With Maven we are just providing an opportunity to have the freedom of a car without having to actually own one,” says Annalisa Bluhm, manager-Urban Mobility & Maven Communications.

GM’s traditional business is making and selling cars and it has a network of franchised dealers whose job it is to make that happen. The automaker is expanding into new business models that deviate from that path and seem to diminish the need for dealerships.

The good news is plenty of people still will be buying cars in the short term. And the expanding personal-mobility options offer opportunities for dealers. Longer-term, however, dealerships will need to adapt to a changing retail car market.

“Ride sharing and car sharing are going not to tear the industry asunder in the short term,” says Jim Ehrlich, director-research at Kelley Blue Book. “That’s over the next half-decade. It is nascent to forecast past five years out.”

The use of a ride-sharing service such as Lyft does not mean a consumer eventually won’t want to own a car, according to a recent study by KBB. The user just had a short-term need for a car.

“Some 76% of those surveyed indicated they would consider buying or leasing a car within the next two years,” says Ehrlich.  That presents an opportunity for dealers.

“It is a way to identify future customers,” he says.

Ride sharing is not expected to be that widespread. Even in major metro areas, penetration of such services is expected to be less than 30%, according to the KBB study.

Ride sharing involves being driven rather than actually driving. Another growing form of personal mobility is car sharing, which allows a consumer to use a car at a given time but not actually own one.

Car Sharing as Marketing

Car sharing represents an opportunity for dealerships in that 30% of respondents in the study said they would consider a dealership as a car-sharing provider. Dealers should consider it “a more in-depth (test-) drive opportunity,” Ehrlich says.

It is an alternative form of advertising, Maven’s Bluhm notes. Urban buyers and younger buyers often don’t pay attention to traditional advertising, she says.

Through its car-sharing program, GM aims to create a bespoke brand experience while allowing users to enjoy mobility on their own terms, says Bluhm. “This is a form of advertising that is natural (and) completely additive,” she says.

Car sharing will have a minimal impact on actual vehicle sales in the near term, says Brian Collie, partner and managing director at The Boston Consulting Group.

In the U.S., car sharing will reduce new-vehicle sales by only 52,000 units annually through 2021, and the ramp-up to that figure would be gradual, he says. Some of the lost sales will be offset by sales to car-sharing fleets.

GM thus far seems to have left dealers out of the Maven planning process.

Joseph Schrage, owner of Sage Auto Group in Los Angeles, which includes a Chevrolet dealership, says GM hasn’t consulted with him “even a little bit” about a dealership’s role in Maven. But, he says: “I can’t imagine GM is going to shoot themselves in the foot. They need to build cars and they need to run their office (in a way) to sell more product.”

While that is true, the product GM sells in the future may change dramatically. In early March the automaker bought Cruise Automation, a San Francisco-based developer of autonomous-vehicle technology.

The automaker is working with Lyft to develop a fleet of self-driving vehicles. Customers eventually may be able to choose between being picked up by a driverless car or a car with a driver.

“The real future is autonomous” driving, says Bluhm. “Autonomous will be so disruptive and so huge.”

GM is just preparing for a certain future, according to Collie’s Boston Consulting Group. In its “Revolution versus Regulation: The Make or Break Questions About Autonomous Vehicles” report,  the consultancy says that despite unresolved legal and regulatory issues, “society stands to gain so much from (autonomous vehicles)  that their acceptance is all but inevitable.”

Dealers Urged to Not Sit Out Changing Game

Autonomous vehicles will be the game-changer for dealerships, says Collie, who suggests now is a good time for dealers to challenge the fundamentals of their business model. They should be looking at the actual number of registered vehicles that will need to be on the road in an urban environment and figuring out what portion of the value a dealership can hold on to.

Maintenance would be a good place to start. Vehicles will be used more, so the need for service will increase “pretty dramatically,” says Collie. “From a parts and service standpoint, will (dealerships) be able to offer a more flexible platform?” he says.

Charlie Obaugh, owner of the Charlie Obaugh Auto Group in Staunton, VA, doesn’t think he will see driverless cars in his neck of the woods for 10 to 15 years.

“I am not losing sleep (over autonomous vehicles),” says Obaugh, 76, whose holdings include Buick, GMC, Chevrolet, Mazda and Kia dealerships. “If I were, I would be losing sleep over how my grandkids are going to figure it out.”

Nonetheless, autonomous vehicles are a global trend dealers shouldn’t ignore, says Maven’s Bluhm.  “There are certainly opportunities for dealers,” she says.  “How do we partner moving forward?”