Embrace disruption, pioneer change: Cameron

New Jaguar Land Rover Australia managing director Mark Cameron has encouraged retail automotive Dealers to embrace disruption during what he described as “the most significant changes in private mobility for over a century”.

Delivering the keynote address at the 2019 AADA National Dealer Convention & Expo in Melbourne this week, Mr Cameron said Dealers and OEMs must cooperate with each other and work with governments to adapt during these volatile times, with the inevitable approach of electrification and autonomous vehicles changing the way people use cars.

“The future is uncertain. What is certain, however, is that we are at the beginning of a major shift in how we use the car for the next century. Will we even call it a car in several years’ time, or will we call it an ‘urban mobility pod’ or will some other descriptor become the common name?” Mr Cameron said.

“For Jaguar Land Rover and other OEMs, we have to think about the implications of shifting priorities away from things like designing-in brake steering feel, driving dynamics, and think about other attributes, such as comfort, connectivity, and interior technology features. The quality and design of interiors in our cars, including the use of materials, may become ever more important to customers in the future.”

He pointed out that new challenges have changed and even destroyed old business models in no time at all, in industries such as banking, telecommunications and travel.

“The automotive industry must embrace this disruption. We must pioneer change, for mobility cannot stand still,” Mr Cameron said.

Mark Cameron encouraged Dealers to embrace change

Destination Zero

Jaguar Land Rover has a future vision for mobility that it calls ‘Destination Zero’: zero emissions, zero accidents, and zero congestion. It is committed to developing a ‘tool kit’ to bringing to life all that future mobility promises, including better batteries and materials, Artificial Intelligence, and The Internet of Things.

“Our ambition is to make society safer, healthier, and the environment cleaner,” Mr Cameron said.

“Jaguar Land Rover is committed to R&D and has hundreds of patents pending for electrification technologies, extensive knowledge in materials and composites, and skills in battery system integration.

“From next year, including in Australia, for all new vehicle models we will offer our customers a full choice of electrified options, including plug-in hybrids, mild hybrids, and battery-electric vehicles, as well as our clean petrol and diesel engines.”

Mr Cameron predicted autonomous driving would democratise mobility by giving the elderly and disabled the freedom and basic rights of mobility. He explained that as with any new and emerging technologies, collaboration is essential, which is why Jaguar Land Rover has a long-term strategic partnership with Google company Waymo to engineer the world’s first premium, self-driving electric vehicle.

“By next year, 2020, there will be 20,000 autonomous electric Jaguar I-Paces on the highways of the United States. This isn’t science fiction; this is a reality,” he said.

Doing nothing is not an option

Mr Cameron pointed to rising emissions, the statistic that every year 1.3 million people die in car accidents around the world (equivalent to eight jumbo jet crashes every day), and that last year the average speed of traffic in London was the equivalent to around 12 kilometres per hour – “no quicker than a hundred years ago when horse-drawn carriages were the primary mode of transport”.

“So why are these facts important? Because they succinctly highlight why doing nothing is not an option. We have to think differently about mobility, and that’s why OEMs such as Jaguar Land Rover and others and thousands of other collaborating businesses are hard at work to bring a new vision of mobility to reality. And this will at some point affect all of us,” Mr Cameron said.

“The environment is changing, attitudes are shifting, and the emergence of new technologies is initiating profound changes in the way people, goods and services move around.”

A full auditorium paid close attention

Not all change is equal

Mr Cameron said the shape of the future was not black and white as headlines suggested. He encouraged Dealers to think about the pace of change in Australia not as a whole but split into cities, rural and regional areas.

“That’s important, because the change in cities will be much more dramatic and will happen much quicker. And so, we’ll be operating in a tandem world of technologies for some decades to come. We won’t see, for example, the sudden adoption of electric vehicles, or the rapid demise of the combustion engine, but actually a blended future over many years. Customers themselves will ultimately decide what’s right for them, wherever they live, but clearly external factors will play a huge part in these decisions. Factors for example such as fiscal policies, charging infrastructure, access to 5G networks, pricing, and of course the range of vehicle choice available.

“Today more than half the world’s populations live in cities. By 2030, it is forecast that 60 percent of all people globally will live in urban areas and that one in three people will live in a city of more than half a million inhabitants.

“Demographic change will also be significant for our industry. Latest forecasts indicate that the number of people aged over 60 will more than double by 2050, and more than triple by the year 2100.”

As well as being the fastest-growing age group, older people are also more reliant on vehicles for independence and connection. In contrast, younger people are growing up in a sharing community, where owning a car might not be as important as it has been in the past.

“What matters to this group is having the freedom of mobility twenty-four seven, whatever blend of options that is,” Mr Cameron said.

“We need to change the perspective on total cost of ownership, and consider incentivising customers to change their buying behaviours.”

Mr Cameron said the average price of electric vehicle batteries would reduce dramatically over time, while the convenience and speed of recharging them would increase, with the gap between combustion engines and electric vehicles forecast to close by no later than 2030.

Adapting to change

“The most exciting and fascinating revolution in the history of mobility has begun. It will not only fundamentally change the way we move, but also the way we live, and the way we work. The opportunities for mobility of tomorrow are compelling. But the challenge for all of us in the room, I guess, is to understand and plan for these changes, and above all, put our customers at the centre of our thinking. Although the introduction of some of the technology I have outlined today hasn’t occurred yet, there is no doubt that customers are beginning to think and behave differently right now,” Mr Cameron said.

“I’m convinced that as we move to a more fragmented and high-tech private transport system, the role of the traditional motor retailer will have to change and adapt. But it won’t disappear. Location will continue to be super-important, as customers will continue to seek greater levels of convenience.

“We know already that customers are open to flexible ways of meeting their mobility requirements, and will increasingly question the economic wisdom of owning a car. We see the rapid increase in car-sharing schemes, such as Go-Get, Car Next Door, and the dominance of Uber, which incidentally, floated on the New York Stock Exchange at a value of 80 billion dollars earlier this year, despite having never returned a profit.”

Mr Cameron cited research showing that many people who do want to own their car find the purchase experience and test drive routine unsatisfactory.

A UK study found that 20 percent of under-35-year-olds considered dealerships intimidating, and more than half would be happy to buy without a test drive at all. Twenty-five percent did not want to haggle on price.

“So maybe a more flexible sales process, or route to sale, is required, with consideration up-front placed on understanding how the customer wants to be treated, and importantly, what are their mobility requirements? Certainly, we should be thinking about customers’ online experience prior to the face-to-face experience, and how that can be seamlessly integrated. Convenience, and bespoke service, particularly for luxury brands, will be key differentiators in the future. Given the current challenging trading conditions, we frankly can’t afford not to understand our customers better, and embrace the future.”

Mr Cameron joined a long list of OEM heads to address AADA Conventions

The role of government

Mr Cameron also called on governments to assist in facilitating the shift in mobility habits.

“We should now look to government, with their budget surplus, to not only make important infrastructure investments, but to also have the courage to reform taxation. And in our industry, I think this has been long overdue. The layering of federal and state taxes for the car buyer is unwieldy, and Luxury Car Tax, the increases in stamp duty here in Victoria for luxury cars, are unfairly punitive to hardworking, successful Australians. And inevitably, I think, in Victoria it will probably cost some jobs as well,” he said.

“So, we need constructive dialogue between our industry and government, to find solutions that modernize the tax framework for car buyers, and create a fair and level playing field.”

Mr Cameron implored government to consider “the urgent need to address the constipation in lending. Particularly in point of sale retail finance. Ironically, there’s no shortage of cash, but the criteria and the processes that are required to gain access to that credit are costing us all. I’m sure we agree that it would be foolish to return to some of the looser lending practices of the past, but the complete oversteer in the opposite direction is currently unnecessary and destructive to our businesses.”

Role of OEMs in securing bright future

“We as OEMs also face many challenges, given the adverse global traditions, and headwinds, and the huge research and development investments that we have to make as we transition to Destination Zero,” Mr Cameron said.

“Jaguar Land Rover, we’re not stopping investing in combustion engines; we still are bringing in the next generation. So, all of the autonomous and electrification technology are on top of what would normally be the R&D budget.”

Mr Cameron said it was critical the industry address the supply and demand imbalance in Australia.

“With all vehicles sadly now being imported, and often spending many weeks on the water to get here, turning the tap up or down on production quick enough to respond to very volatile market conditions is very difficult, and when you compound that with the homologation issues that we’ve seen, you can see how difficult it is to plan supply,” he said.

“But we have to get better at planning, and recognise that no one wins when inventory levels are too high. Margins erode, the resale values of our customers’ cars fall, and it becomes a race to the bottom. This is about partnership, recognising the challenges we each face, and working together to find solutions.”

Embrace the future

Although the industry currently faces challenging times, Mr Cameron said the future was exciting, and called on Dealers and governments to approach it with enthusiasm.

“I hope you agree that the future really is inspiring. Our industry does move people, and deliver a higher purpose of mobility. It does enable people to make more of their lives, and what a great time it is to be in the thick of it. It isn’t an exaggeration to say right now we are witnessing the most significant changes in private mobility for over a century.”

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