Hold the excitement about global car industry changes

By Jeff Osborne

According to a recent influential and widely publicized report from PwC, three major trends – electric cars, self-driving vehicles and ride sharing – will generate radical disruptive change in the global automotive industry by 2030.

The authors of the research also highlight two consequent phenomena from these trends – there will be more vehicles but fewer owners and there will be more traffic but it will flow better.

This all sounds dramatic and very future forward but I would caution against extrapolating too much from PwC’s ‘EASCY – The Five Dimensions of Automotive Transformation’ report into the next dozen years of motoring in South Africa. In fact, I suspect the authors may even be well ahead of themselves even in terms of the USA and Europe where they’re still very much at the early adoption phase of most of this stuff, and the complete re-engineering of the industry, and subsequent mass adoption, will take longer than most suspect.

Here the barriers to a quick uptake of electric vehicles, for instance, are obvious. We don’t trust the debt hole that is Eskom to keep the lights on, let alone to keep our cars running. Most SA vehicles do distances that European drivers could never comprehend – batteries will need to reliably deliver well over 300km without recharge before most of us would head off down the N1 from Gauteng to the Cape. And the necessary infrastructure rollout across the nation has not yet even begun.

Hybrid vehicles are a partial solution but they remain expensive and top end in our market. It’s also worth noting that second hand vehicle sales in SA are nearly double that of new vehicles each year, so yesterday’s technology will last a long time into tomorrow’s world.

As for self-driving cars, we simply will have to wait and see. There’s a hornet’s nest of regulatory issues – including the alarming thought that security services around the world want driverless cars classified as potential weapons! – to be resolved, even assuming that the technology is reliable and affordable enough to roll out into mass ownership. We will have to check what emerges in key test markets abroad before even contemplating their introduction here. I give that at least ten years.

One area highlighted by PwC where we have seen a fast take up is in ride-sharing. SA was a very early market for uber and grew here at a rate, among a very narrow band of users, that was among the fastest in the world for that company. I suspect that was due to the paucity and insecurity of public transport in our urban areas and the generally dilapidated nature of the existing taxi services.

In terms of long term impact on vehicle ownership, the rise of ride-sharing might put a small dent in first time car buying by varsity students but I doubt there will be much more. In first world markets like Melbourne or Copenhagen or New York, it is both trendy and practical to forego vehicle ownership and source a multiplicity of alternative options. In our market, the distances even in urban commuting are prescriptive, public transport is abysmal, parking is far less at a premium, and vehicle ownership remains aspirational, especially for the upwardly mobile and expanding black middle class which, hopefully, our economy will continue to generate.

I am not doubting that the PwC research authors are right that the transformative technology that’s now available is hugely exciting in its implications and momentous changes are afoot in the industry.

But, for the next 12 years in the real world of South African roads, I suspect its more ‘same old, same old’ than brave new world.

Jeff Osborne is Head of Automotive for Gumtree SA 

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