Corporate Mobility Breakthrough 2020
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Virtually all new cars sold by 2020 will have the sort of advanced driver assistance systems that allow for full-autonomous driving on highways (and highly-supported driving in cities). By 2020, Uber, Google and Apple will have launched their electric, fully autonomous fleets. Road platoons of driverless trucks will leave the port of Rotterdam across Europe. Companies will have reevaluated their own use of vehicle assets. All will strive for vast improvements on emissions and sustainability; many will reach the conclusion that utilisation rates must be improved upon; some will have launched pilot programs using autonomous logistics, including drones.
The world of mobility is undergoing a vast transformation. This book highlights the changes inherent in the mobility revolution, and how corporate and commercial users are playing a key role in supporting a breakthrough by 2020.
Lukas Neckermann
Lukas Neckermann is a strategic advisor, entrepreneur, ex-insurance company director, and – most importantly – a car guy. With his ears close to the ground, his eyes focused on the future, and a sharp mind and pen, Lukas keenly analyzes developments in the automotive industry for a wider impact on the world.
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Corporate Mobility Breakthrough 2020 - Lukas Neckermann
Authors
Introduction
The Corporate Vehicle Observatory is a neutral knowledge sharing platform dedicated to all corporate fleet stakeholders whether they are private or public companies, fleet owners, fleet lessors, car manufacturers or media.
The CVO was founded in 2002 by BNP Paribas and its subsidiary Arval, specialized in the full service leasing of corporate fleets.
The Corporate Vehicle Observatory is present today in 15 countries across Europe, with a mission to inform all the players of the industry, and engage them in discussion about the developments of corporate mobility in its broadest sense. Safety, alternative energies and fuel, social changes and technological developments are just some of the key industry trends that the CVO observes and analyses both at local and national level.
Lukas Neckermann is a thought-leader with whom we share the same interest in the future evolution of the company car and corporate mobility in general. After publishing a special edition of his first book, The Mobility Revolution, last year with the CVO, Lukas is back with a very in depth analysis of the future of Corporate Mobility by 2020, highlighting the main challenges of today’s working model… His book is not unrealistic science fiction
as he likes to quote… this is happening and this book gives a view of all the changes that will occur in the coming years and why these changes need to be taken into account today.
I hope you will enjoy this publication as much as we did.
Virginie Chassard
Head of CVO
Author’s Introduction
We stand at the cusp of a foundational shift in how people and goods move about our cities and countrysides. As a result, companies and organisations of all sizes and kinds will need to evaluate their own business models for future-fit, question their projections, modify their assumptions and amend their strategies. We are already seeing this happen throughout the automobile industry – virtually all major players have redubbed themselves, claiming now to be mobility providers
rather than merely original equipment manufacturers (OEMs), and we will see it happen throughout associated industries as well.
Corporate fleets represent well over a quarter of new vehicles sold throughout Europe and are often more progressive with the adoption of new technologies than individuals. Given the scale of this transformation (and more broadly, simultaneous changes in the future of work itself), we felt it was time for a comprehensive deep-dive into impending changes on corporate mobility. This book is meant to be both an introduction and a guide, with a timeline through 2020 and beyond. Naturally, not all countries and regions will adopt the changes at the same time or the same pace, but one thing is clear: they will happen more quickly than most planners expect.
Since publishing our first book and coining the term for this transformation as The Mobility Revolution
, we’ve had the pleasure of supporting a number of organisations across Europe and North America in their strategic aims. The Corporate Vehicle Observatory has been particularly responsive and open to our ideas. We are truly grateful for their ongoing support and sponsorship of this second book.
Lukas Neckermann
Managing Director
Neckermann Strategic Advisors
Chapter 1:
Have we reached peak car?
Young people are not just falling out of love with the car, but not falling in love with it in the first place.
Welcome to the Mobility Revolution. We are living in a time of unprecedented change in the world of transport. It is transforming our lives as we become increasingly nomadic and urbanised. Fundamentally, the working models that we have known since the first Industrial Revolution are being challenged. Much of this has to do with the smartphone in our pockets and the confluence of political, economic, social and technological trends towards renewable energy, globalised online marketplaces, robotics and social connectivity. But all of these come together around one thing: mobility.
We are moving toward environmentally-friendly, productivity-enhancing, electric, autonomous and shared transport. The cost of ownership of private vehicles will become unattractive for many – perhaps most – users from the breakthrough year of 2020 onwards (which is no arbitrary year, as we will discover in this book).
This will change the way we live and consume, but it will also radically transform the business world too. It will change office spaces, logistics and remuneration packages. It will not just passively influence corporate mobility (the transport that is bought and paid for by businesses, either as necessity or as a perk). Business will in fact be early adopters. Just as individuals will shun their cars, organisations worldwide will progress to more efficient and reliable alternatives to grey-fleets and pool-cars. Employees in cities will be encouraged to use car clubs, bikesharing and public transport; goods will be transported via driverless vans. Autonomous trucks will efficiently flow bumper-to-bumper, sensor-to-sensor, while a single human operator in the front vehicle types away on a laptop or smartphone. Commuters will catch up on emails or the latest Netflix box-set as they ride to work. Driving will transition from a necessity to a hobby.
What I’m describing isn’t unrealistic science-fiction, but can already be seen in advanced pilot stages on roads all over the world.
But before we discover how and where, and what it will mean for the world of work, we need to look at the why. Is this a technology-driven revolution, or is it being led by societal change? Has the way we live already transformed so dramatically that it is in fact the technology – and the automobile industry – that is itself playing catch-up?
Peak car: the decline of the automobile
In January 2015, global asset management firm Schroders issued a worried note to investors titled The end of the road: has the developed world reached ‘peak car’?
Schroders sector specialist Katherine Davidson wrote: longer-term data suggest that, cyclical tailwinds aside, the market for automobiles in developed markets could be in structural decline. For the past decade, the developed world has shown signs of hitting ‘peak car’: a plateau in vehicle ownership and usage
.¹
From a business perspective, total cost of vehicle ownership in many cases has risen over the past years as a result of road taxation, congestion charging and parking costs – which is causing fleet managers and finance directors to take note. Efforts to optimize and minimize commercial vehicle routing abound, now through the help of GPS navigation and telematics. Some companies now even guide and route their salespeople to greater efficiency.
In most of Europe (except Germany), kilometers driven per capita have shown a decline since the early 2000s. Car sales in the European Union fell by almost 25 percent between 2007 and 2013. In Italy, more bikes were sold than cars in 2011, for the first time since the Second World War.² And even in Germany, the last bastion of petrol-heads where the automobile industry is directly championed by the Chancellor, the trend is beginning to show in larger cities. Berlin saw vehicle density decrease for the first time in 2015, and even BMW’s hometown of Munich has seen the number of cars per resident fall slightly.³
Trends amongst the younger generation are most telling. Car ownership among 18 to 29-year olds in Germany dropped an astonishing 44 percent between 2000 and 2010 – from 424 to 239 cars per 1,000 persons in that age group.⁴ The proportion of the population by age who have a driving licence in the US, UK and across Western Europe, is falling. In 1995, some 43 percent of 17-20 year-olds in the UK held a full driving licence. By 2014 that plummeted to just 31 percent. The decrease is sharpest among young men, which dropped from 51 percent driving-license ownership to just 30 percent.⁵ In Italy, driving licence applications decreased by 19 percent – or almost 200,000 – in 2011 alone.⁶ Young people are not just falling out of love with the car, but not falling in love with it in the first place. In France the average age of the new car buyer is well over 50; under-30s account for less than 10 percent of new-car customers.⁷
The automotive industry has been feeling the hit like never before. In the first decade of this century, the industry averaged a two percent per annum growth rate, trailing behind global GDP (2.5 percent) and – perhaps most tellingly – behind the total mobility market (3.5 percent). Much of that growth was seen in emerging markets. In the mature American, European and Japanese markets, industry revenues from car and motorcycle sales shrank during 2000-2010 at an estimated -0.4 percent annually. Mainly as a result of carsharing and ridesharing, Morgan Stanley expects virtual stagnation in vehicle production from around 2022 onward.
This isn’t simply an economic trend. Data from the UK suggest that car use is declining fastest amongst highest income groups.⁸ The affluent are first in choosing to ditch the car. Beneath the surface is – among other things – an increasing preference for city living, and city centres in particular. As cities strive to become cleaner and more liveable, young people are moving into city central districts, reversing a long-term preference for suburbs. Alternative forms of travel are cheaper and hassle-free compared to finding a parking space and insurance. Using public and shared transport rather than individual car ownership is no longer an undignified option for the urban poor, but the chosen option of the urban middle class.
In 1950, 70 percent of the world’s population lived in rural areas. Over the next 60-plus years, the world’s population began to shift into urban areas in search of work and excitement. In 2007, for the first time, the global balance shifted to more people living in urban areas than not. The UN believes that continuing urbanization and an additional 2.5 billion people will see 66 percent of the world living in cities by 2050. Leading the way, 75 percent or Europeans already live in urban areas.
Growing rejection of road deaths and injuries
There are an estimated 1.3 million road deaths globally⁹, more than those caused by HIV and armed conflict combined (2014 figures).¹⁰,¹¹ Road traffic injuries rank among the four main causes of death for children above five and are the number one killer of teenagers. The proportion of road fatalities from motorcycles and mopeds has increased steadily since 2000, with the highest share of rider fatalities recorded in Greece (38 percent), Italy (29 percent) and France (26 percent). Vulnerable road users are also disproportionately injured. On average, London buses hit two pedestrians or cyclists per day between 2007-2012.¹²
The culprit