How self-driving cars could impact auto finance
With self-driving cars fast becoming a reality, it won't be long before fully autonomous vehicles hit the streets.
Here's a look at some of the changes that the driverless car revolution will bring and how they could impact finance brokers in the not-so-distant future.
Driverless cars are coming
Once the stuff of science fiction, self-driving cars may be here sooner than we think. Engineers at Google expect to have their first driverless car prototypes ready for public use by as early as next year, with major auto manufacturers not far behind. While it may be a few years before we see driverless cars dominating the roadways, the impact of driverless cars promises to be big and far-reaching.
For starters, consider Google’s goal to increase car use by up to 75 per cent or more with shared driverless taxis. As driverless ridesharing services go mainstream, many people may reconsider the need to own a car. Fewer cars means fewer drivers, less traffic and fewer accidents on the road.
Which begs the question: As consumers turn to driverless cars as a solution to rising fuel and transportation costs, what will happen to businesses that rely on cars for their bread and butter?
What does it all mean?
Manufacturers will need to rethink the design and materials used to create cars. After all, who needs a petrol-guzzling SUV with reinforced steel and airbags if road accidents can all but be eliminated? However, if the cost per car drops as a result of further development and adoption, transport providers or businesses that manage a fleet of cars would also benefit from a cost perspective.
It is already clear that traditional taxi services will change – in January, General Motors announced a $500 million investment in ridesharing service Lyft, with the intent of developing a new line of on-demand autonomous vehicles.
Whilst this may seem like it could negatively impact the automotive industry, some experts are predicting the exact opposite. Suggesting that the extra kilometres driven on each shared car could increase the demand for vehicles due to wear and tear.
According to Deutsche Bank AG, "Each on-demand vehicle will travel more miles (10 to 20 per cent more) than the cumulative six to nine privately owned vehicles that it replaces.” So, while ridesharing may reduce the number of cars on the road, it could lead to more cars being purchased overall.
While the future remains to be seen, it's clear that auto finance brokers and dealers must adapt themselves to the changing needs of the market. The automotive industry will need to be flexible in creating the right mix of services and products to meet new needs that come with the revolution of the autonomous car.
It stands to reason that self-driving cars will drastically change the automotive finance landscape in the coming years. Contact your Pepper Money BDM to discuss our customised approach. We’re here to help service your clients in changing times.