Viewpoint: The future of mobility
- 3 January 2013
- From the section Business
The rise of the smartphone and new forms of car mobility are forcing change at a rapid pace.
The current economic climate presents significant challenges to all businesses, but is also a catalyst for innovation across many industries.
As consumers change the way they behave, they will push industries in unforeseen directions.
For our market sector, the response to such trends centres on attitudes to car ownership and the impact of smartphone technology.
The West has had a love affair with the car since the 1950s, but in the richest cities and especially in their centres, car ownership and use is declining.
Over the last 20 years, more and more people are living in cities, so the density of the city centres has been increasing rapidly. People now prefer to live in multi-use areas that combine residential, office, shopping and schools in close proximity.
In London, 40% of households do not own a car, according to a 2012 report by Transport for London.
The decline in car ownership is particularly evident in the capital's fall in multi-car households, which dropped from 21% in 2001 to 17% in 2007.
Instead of the traditional focus on cars and driving, people are mixing and matching their transport choices - using what they need when they need it - and the radical advances in technology are making such "smart mobility" possible.
Mobile apps can make travelling by different modes of transport seamless. It is now easy to combine air, rail and car travel in new ways to reach a destination.
Londoners can access Boris bikes, the Tube, rail networks, taxis, car sharing schemes, car rental and even hire practical vans for visits to B&Q - all via their smartphones.
Changing attitudes to car ownership
Both car ownership and vehicle-kilometres driven in cities in developed countries may be reaching saturation, or even be on the wane, according to a recent report by the Organisation of Economic Co-operation and Development (OECD).
People no longer automatically associate mobility with owning a car.
Instead, many of them want access to as many transport options as possible.
It is vital for companies in the motor industry, whether carmakers or rental car firms, to keep in step with and respond to these changing trends around smart mobility.
Car ownership, with all the costs involved, is not necessarily the right model for city dwellers any longer.
In the mature European market in particular, we are seeing multi-car households cut back to own just one car.
This has increased demand for solutions such as hourly car sharing schemes, as well as for a far wider range of cars for hire at all price points.
Car sharing is particularly attractive to younger consumers, whose attitude to ownership has been compared to dating.
People get to try out different cars, different lifestyles, and different identities. For them, owning a car feels like being tied down.
Impact of smartphones
The ownership shift is made possible by the widespread availability of smartphone technology and mobile apps.
Accessibility is now 24/7 and everything can be done on the mobile phone or a tablet. Find a vehicle nearby, reserve it, pay for it, change destinations and drop-offs, and access guides and navigation.
Smartphone apps also now enable users to find a taxi in less-trafficked parts of the city, thereby increasing utilisation of the taxi fleet, or they can use their handsets to find parking places and walking routes.
Such spontaneity means travel and transport providers have to be increasingly flexible and reactive to their consumers' needs.
We cannot expect loyalty; we have to earn it.
Speed of response and customer service is what sets businesses apart, as people base their decisions upon ease and value.
Amidst all this technology, it is vital that customers can still interact with companies directly and face-to-face.
Convenience must also be balanced with a good customer experience. Companies simply cannot afford to lose that human element.
Era of the electric vehicles
As car ownership continues to decline in many Western cities, we will see a higher adoption of electric vehicles - including both bicycles and cars, city-centric cars and other forms of compact motorised vehicles not yet seen.
Electric mobility has a critical role to play in achieving the goal of sustainable transport, and we - along with others in the motor industry - have a responsibility to help reduce emissions.
Electric vehicle adoption has started slowly as infrastructure of charging networks are still being built up.
But as these networks reach critical density, the rate of uptake will pick up.
China in particular has focused its strategic plan on using electric vehicles as way to provide a cleaner, more sustainable transport option.
Shenzhen stands out as a city that has deployed several hundred all-electric taxis, all-electric municipal buses and a charging station network.
In London, meanwhile, electric taxis are expected to be trialled in 2013. It has been claimed this could eliminate 20% of the capital's exhaust pollution caused by its 22,000 black cabs.
In Rome, holiday-makers and commuters travelling into the city by train can now continue their journey using electric vehicles based at the two main stations at a cost of just 8 euros ($10.60; £6.50) an hour. We see this model spreading throughout Europe.
We, and some of our rivals, are partnering with city authorities and electric infrastructure providers worldwide to make electric vehicles in cities a viable option.
This is already happening in London, Oxford and Paris.
Hiring alternative fuel cars without having to worry about infrastructure is a great way of making people more comfortable with this technology and tackling worries such as range anxiety.
Many city mayors are implementing car sharing and electric vehicle schemes for these purposes, while we see more corporations asking for electric and petrol-electric hybrid models in their fleets to support their corporate sustainability targets.
Innovation, whether in terms of embracing new technologies or tapping into consumer trends, or both, is critical in many market sectors to drive a successful future in a still uncertain economy.
In my industry, we need to adapt to new modes and patterns of transportation. Sustainable mobility needs to also offer choice, convenience, flexibility and value.
This is why we are focused on smart mobility; you need to be smart in the current market to remain competitive.
Michel Taride is president of Hertz International and executive vice president of Hertz Corporation.
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