GMADA Supplement - S9

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Boyadjis said.
Furthermore, those driverless vehicles will account
for the majority of those 100 billion ride-sharing miles
traveled by 2030, he said.

STRATEGIC ALLIANCES

Automakers are investing billions of dollars to
develop autonomous vehicles and mobility services.
They're also forming partnerships with ride-sharing
carriers, sometimes sidestepping dealerships in
the process. Witness the commitment of Google's
ride-sharing subsidiary, Waymo, to buy as many as
62,000 self-driving Chrysler Pacifica minivans, a deal
potentially worth more than $2 billion for Fiat Chrysler
Automobiles.
And that's where electrification steps into the
equation, Boyadjis said. Shared-mobility carriers-Lyft,
Uber, Waymo, Ola, Didi and the like-are increasingly
driving the design of autonomous vehicles, which
will likely be podlike units aimed primarily at carrying
passengers and delivering goods.
The carriers' primary goal is to decrease the cost
of owning and operating large fleets of autonomous
vehicles. Electric platforms, which require less
maintenance and eliminate the high costs associated
with fuel and drivers, help achieve that goal, Boyadjis
said.
Here's where the last piece of the puzzle-
connectivity-falls into place. "It's kind of the catalyst
that holds this all together," Boyadjis said.
How? For starters, consider that the 3 million or so
lines of computer code that allow autonomous vehicles
to drive themselves will require periodic over-the-air
updates, just like cellphones and software.
In addition, electrified powertrains generate "tons
and tons and tons of data," Boyadjis added. In fact, the
global consulting firm McKinsey & Co. estimates that
connected cars will create up to 25 GB of data per hour.
That prodigious stream of intel will help automakers
improve vehicle performance.
And connectivity is the glue that holds it all together,
Boyadjis said.

WINDS OF CHANGE

The main upshot of all the technological
convergence? Decreased revenue from vehicle sales
and service as young adults eschew car ownership and
manufacturers sell fleets of vehicles directly to mobility
providers. In addition, digital connectivity-think overthe-air updates-will diminish dealers' traditional role as
customer managers and reduce customer touchpoints,

Boyadjis noted.
"I would argue that you [dealers] have potentially
the most disruption to your standard business model,"
he said. "So you need to consider how this is impacting
you because it will fundamentally change your revenue
models going forward."
All is not lost, however. The rise of large fleets
of autonomous vehicles will create a need for fleet
management services and service centers. And service
might shift from dealership bays to on-site repairs,
Boyadjis said.
As an example, he cited a partnership between
AutoNation and Waymo in which the former provides
on-site service for Waymo's fleet of Pacificas. The two
partners also recently expanded the service agreement
to include using Waymo driverless cars to deliver
parts from AutoNation Toyota Tempe in Arizona to
independent repair shops and other customers.
"It's like a [Safelite] AutoGlass type of situation,"
Boyadjis said. "That could be a positive because the
dealer networks have that infrastructure in place today."

LOCATION, LOCATION, LOCATION

Dealerships also possess another built-in advantage:
Real estate.
The current mobile-carrier model relies on
independent drivers who take their vehicles home.
But as fleets become driverless, carriers will need large
parking areas-and land is expensive. Dealers can fill
that void, Boyadjis said.
While noting he doesn't want to sound like
an alarmist, Boyadjis told Automotive News that
dealerships must shift their focus from monthly and
quarterly sales quotas to a big-picture perspective that
takes into account these CASE technologies.
While the changes won't happen tomorrow, they're
accelerating fast enough that dealers need to pay
attention and start rethinking strategies.
"The people who build cars are investing tens of
billions of dollars in what's going to happen 10 years
from now," Boyadjis said. "So if dealership groups
don't want to be left behind, they're going to have to
think about investing in the future while still trying to
maintain current revenues.
"Dealers already are seeing changes in revenue
models, so why shouldn't they be the ones to help
drive the mobility revolution?"

GMADA Supplement

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