I have been dreaming since my childhood of becoming an automotive professional. Now, at 26, as I am just about to finish my college degree and preparing to turn this childhood dream into reality. And all of a sudden, the industry worldwide is experiencing an unprecedented downturn over the past two quarters. This is a concern for all of us because the auto sector is one of the largest contributors to job creation and economic growth in almost every country.
India, being the world's fourth-largest auto market, produces around four million vehicles annually and employs approximately 35 million people in various roles. With the current recession, these jobs are now at risk, making it crucial to understand the shifting dynamics of the industry.
Understanding the auto industry's century-old business model
For over a hundred years, the auto industry has operated on a linear business model. Automakers manufacture cars, consumers buy them, visit service centers for maintenance, and occasionally upgrade to newer models. This traditional cycle has sustained profits and employment for decades.
However, the landscape is changing due to several factors: climate change, urban congestion, rising fuel prices, electrification, the convenience of ride-sharing, and banks tightening loan approvals. Millennials' evolving buying behaviors may also play a role (as per our FM, Mrs. Nirmala Sitaraman), though I personally believe other factors have a greater impact.
For instance, my sister, who works at Microsoft in Bangalore, recently got married. She and her husband love cars and driving but were discouraged by the worsening traffic congestion. Instead of purchasing a car, they rely on bikes for daily commutes, use Ola or Uber when necessary, and rent a car for weekend getaways. It's the story of many people who live in big cities.
"Change is happening rapidly, it's inevitable. The question is not about how to stop it, it's about finding what's coming next or at least finding what's causing this behavior and look for possible solutions"
Kondratiev wave and creative destruction. Understanding the disruption (change)
Change is inevitable, it has to come now or sometime later. But how do we notice when it's time for a change and how to create new opportunities? Two management concepts from my entrepreneurship course help explain this: Kondratiev waves and creative destruction.
In simple terms, every major trend follows a cycle; whenever a new trend is identified, it creates new opportunities and the demand will rise continuously till it reaches a tipping point and fall thereafter. And another new trend will evolve, rise, fall and repeat! We have already adopted many trends that have enhanced our lives. why should the auto industry be left behind?
"We have already adopted many trends which made our lives smarter and better and continue to make better; we are used to it. I think it’s time for the auto sector to join the party!"
Disruption=new opportunities and ultimately equals to being a part of rewriting the history
Disruption is so common, it's happening in many other business areas. Consider the camera industry; about a decade ago, we used roll cameras, we bought film rolls, took pictures, developed those and made a nice photo album. Things have changed now, the way we take photos, storing and sharing..everything has changed. We have social media such as Facebook, Instagram to share, storage services like Google photos that lets you to store unlimited photos, stock photography like Shutterstock to sell your best photos, and action cameras like GoPro to document your adventures. These companies now generating high revenues and providing jobs all over the world. All this happened once we shifted from old roll cameras to something new (digital age in this case). Disruption is good, it has to happen to make our lives better and exciting. Do you prefer to go back to roll camera age instead of what all you are having now?
"Every time a disruption happens, the customer benefits a lot"
Reshaping the auto (transport) sector and why we should be optimistic about it!
I think its time for the auto sector to encourage creative destruction; leave the old traditional way of doing business and figure out what's best and foster them. Soon, ride-sharing will become even more convinient (ride-sharing 2.0), sci-fy like vehicles with advanced technologies, more and more smarter mode of transport system, hyperloop will take passengers long distance in a shorter time and at convenience. And who knows other such ideas may evolve rapidly (definitely), maybe Elon musk's boring company idea will solve congestion in cities and people may again love to buy cars and enjoy driving their own, non-autonomous driving lanes may be set up for them and tax those roads and governments generate revenue. Double-decker buses will reduce road occupancy, air taxies may fly legally, virtual track trains and straddling bus (transit elevated bus) may become practical. Many of these may be just concepts, but they seems to be very interesting, they create new businesses, new jobs, bring wealth and make travel a lot easier and efficient. I think this's how we need to think and act. May be the future is now but we are ignoring and busy worrying about the recession (still holding the old way of doing business or a usual "Innovator's dilemma?")
Aeromobil, a flying car concept displayed at IAA, 2017 (Frankfurt Motorshow) in Frankfurt, Germany.
I think the challenge for the auto industry and the whole transport industry is all, all about how we move people from point A to point B and satisfy the customer of every segment and create jobs and revenue out of it! We are now moving into the age of open business environment where innovations are becoming more and more economical and even free (open source). It's all there for anyone who needs them!
I have attended a technical conference this year in April in Riga, Latvia (Deep tech Atelier, 2019), many great leaders shared their views about the future possibilities, I think we need to be aware of what's happening instead of what was there. We can make things better, it's possible now! (Click here to watch this talk, Lab to market discussion from Magnetic Latvia's Youtube channel)
As a startup enthusiast, I believe the future of the automotive and transport industry is a blank canvas. It’s time to restart, rethink, and rewrite history by embracing rapid technological advancements to reinvent the joy of motoring and push humanity forward.
I think these two quotes are a great way of ending this article.
Guys, dream big and have the courage to pursue it! Our world needs dreamers and risk-takers or this kind of situations may throw us into deep troubles!
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