Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Google, the future Apple in automotive industry

26 January 2015

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Automotive has been buzzing for some time now as technology is reshaping the business. To me it seems that most people are micro managing these seemingly unrelated issues: cybersecurity, self-driving, self-parking and telematica. Probably I even omitted a few buzz words.

The introduction of the first car caused a lot of uproar as it left stinking exhaustion fumes and caused loud noises. People tried to forbid this new machine but in vain. While the first car was for the happy few, mass production of cars changed the automotive industry and owning a car became available to millions. The history of the passenger car took off.

Henry Ford’s slogan ‘You can get any colour you want as long as it’s black’ (1909) was not sustainable. Product differentiation – and resulting higher margins – became a huge success.

Overcapacity and increasing fuel prices caused the first demise in the automotive industry. Several brand names and some car producers did not survive. Overcapacity maintained itself however, mostly due to new market entries (e.g., Japan, Korea and China).

The difference in American and European fuel prices have long caused two almost separate markets: small, low cost, highly taxed, fuel efficient cars in Europe with low margins and big, inexpensive, low taxed, fuel inefficient cars in the USA with high margins.

Overcapacity and low margins caused a second shift in European automotive in which former independent importers became factory owned and car retail outlets (dealers) received lower margins and ever increasing demands regarding the quality of their location. Many car dealers did not survive.

Technology in cars became more and more important: airbags, air conditioning, automatic brake systems (ABS), automatic gear boxes, burglar alarms, car audio, car lightning, car phones, climate control, cruise / speed control, motor management systems, navigation, park distance control, etc. Nevertheless, a slogan like BMW’s ‘Freude am Fahren’ (since 1965) was never questioned.

Even the computer game and video game industry profited from the ‘fun of driving’ with clear examples such as Daytona, Gran Turismo, Need For Speed, and the famous Grand Theft Auto series (since 1997). Let’s also not forget the movie industry with blockbusters like Days of Thunder (1990), Speed 1+2 (1994, 1997), The Fast and the Furious (2001 onwards), Pixar’s Cars 1+2 (2006, 2011), Gone in 60 seconds (1974, 2000), Drive (2011) and #1 Bullit (1968).

The technology that is now on its way will cause another fundamental shift in automotive industry as the fun part – driving – will be taken away from us. A car will become a tool and a means of transport but will no longer be an emotional item as it was branded in advertising for decades.

I expect a similar situation as in computers and telecom: technology or software (Apple, Google’s Android and MicroSoft,) will earn the revenues while the hardware (all current car makers) will have a hard time surviving except for the future Apple in automotive.

While rereading my article, the Google (self driving) Car suddenly makes perfect sense…………

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