Automakers have been innovating and adapting to change ever since Henry Ford invented the first moving assembly line and made vehicles affordable on a mass scale. Fast forward nearly a century later, and the Great Recession nearly destroyed the American automotive industry –– yet they survived –– and adapted once again with technology and innovation at the forefront. A global pandemic is threatening the mobility landscape that has dominated the auto industry for the last decade and its impact has automakers navigating uncharted territories.
So how is COVID-19 transforming the future of mobility in this age of uncertainty? A recent analysis from McKinsey & Company offers some insights. To help break it down, we caught up with Mike Szudarek of Marx Layne, who has these critical takeaways on the outlook of mobility.
Health and safety are paramount
As the number of COVID-19 cases continues to trend upward, and the country braces for a second wave of the coronavirus crisis, consumers are aptly focused on health and safety when choosing their transportation mode. More people are working from home and avoiding public transportation due to health concerns. While ride-sharing and public transit have quickly become overshadowed by less vulnerable transport options during the pandemic, such as personal vehicles and biking, commuters are expected to resume some normalcy in ridership post-pandemic. The more substantial mobility shift is likely to be on long-distance travel, with more commuters favoring cars over airplanes and trains.
Policymakers have a say
The rising number of coronavirus infections prompted governments worldwide to restrict mobility by implementing lockdowns and social distancing measures to contain the virus’s spread. However, in the wake of the crisis, policymakers are likely to increase their influence over the future of mobility by either advocating its economic growth or stalling its progress.
For example, regulators may enact policies that support low-emission vehicles or, by contrast, relax emission standards. They may also work with cities to stimulate eco-friendly travel by building more bike paths or offering tax incentives.
Mobility will vary by region
The impact of COVID-19 on mobility may be different by region. Stakeholders will need to pivot strategies based on the virus’s outcome. For instance, cities that are considered hotspots may have higher restrictions in place, limiting mobility.
McKinsey & Company forecasts that by 2030 some major European cities will see a sweeping decrease in the use of private cars, whereas, in North America, the reduction in driving private cars is marginal. In South Asia, where public transit is highly relied upon by the populous, it is likely to remain unhinged by 2030.
Business models are changing
Pre-COVID, automakers were already reevaluating their business models in response to personal mobility developments, including autonomous vehicles, connected cars, electrification, and ride-sharing services. Innovation and technology have become the new business model for the auto industry. As the virus propels forward, automakers are forced to reexamine their business models yet again as tech companies compete for their place in the market, and e-commerce dictates how vehicles are sold. Not only will OEMs need to invest in more technology, but they will also need to quickly understand their role in mobility as a service or MaaS. Instead of purchasing vehicles, consumers will buy miles (mobility). How automakers respond will be key to their survival.
Innovate, innovate, innovate
Through so much uncertainty, one thing IS certain: innovation is essential and must triumph for those with a stake in mobility to avoid their shrinking status in the ecosystem.
In conclusion, the impact of COVID-19 on mobility and consumer behavior has certainly created challenges for those with a stake in the game. Stakeholders have had to pivot strategies and focus on day-to-day operations and safety protocols. However, post-COVID, leadership will need to reprioritize, refocus on innovation and reevaluate their unique value propositions.