A “Big Idea” for Disruption in the Auto Industry
I have a confession…
…Prior to the Auto Intelligence Summit, I had absolutely no experience in the auto industry …well I guess that’s a lie. I do own a car.
So why did I attend the Summit? …
…Curiosity.
Telematics, using Machine Learning (ML) and Artificial Intelligence (AI) to predict mechanical failures, monetizating Connected Vehicle tech to track human usage of features and behaviors within cars…yes all of this is happening…at very rapid rates.
The level of disruption taking place is requiring auto makers, dealers, auto finance, auto insurance, and all things auto, to break down silos and work together. The response required is equivalent to that taking place in healthcare which I’ve observed Healthcare Payers and Providers desperately navigate as they seek to transform in a rapidly changing marketplace.
All of that being said, I’m only going to focus on one disruption in this article because I believe the potential global impact socially and financially is so profound that somebody needed to write about it.
I am not a writer, but here it goes…
Have you ever heard of fair, the app that has created the ‘Amazon’ experience for car leasing?
(Disclaimer: I don’t work for fair and haven’t been asked by anybody to write this article)
I hadn’t heard of fair before I attended the Summit, but after hearing the CEO, Scott Painter, (also Founder/CEO of TrueCar) speak and hearing panels in following days from the leadership teams from auto financing organizations and some other auto companies, a big idea came to mind.
So what’s the “big idea”?
Before I share that, let me tell you about the Automotive Intelligence Summit (AIS) and what fair does. For those of you who already know about fair or like reading the end of a book first, see “The Big Idea” section.
What is the Auto Intelligence Summit (AIS)
The AIS inaugural event, http://autointelsummit.com, was designed to be a C-Level event and delivered the opportunity to connect with industry leaders in the automotive industry. Between P2Ps, panels, and presentations, innovations in Electric Vehicles, Autonomous Vehicles (AV), Connected Vehicles (CV), Artificial Intelligence (AI), Ride Sharing/Mobility-as-a-Service (MaaS), developments in auto Fintech, dealer targeted marketing services using AI to track user behavior across multiple sites in order to target car ads, blockchain systems, etc…every topic was on the table.
How I got there
I reconnected with an old friend in the Raleigh area, Mor Aframian, who works with Cherokee Media Group, to discuss the future of a non-profit we supported together. While she and I were discussing our current work and remembering old times, she invited me to the Summit. Mor and I, along with Jenn Halweil (gobeyondtheseries.com) and Joseph Halweil (Raleigh Little Theatre) started out as friends who connected over a passion to aid charity through Street Events and Mor through Fashion shows (MorLove). Jenn, Joe and I co-founded Legacy Event Planners (now Legacy Impacts, www.legacyimpacts.org) which “legally” shut down Hillsborough Street for the first time in 236 years along the corridor by NC State for the 1st and 2nd all day festivals ever. I say legally because it had been shut down illegally before as students carried the NCSU goal post down the street after football wins.
My digression is just a long way of saying the festivals have continued through other groups, my friends are well, and it’s fun to reconnect & learn something new.
Mor invited me to the Auto Intelligence Summit and I said yes.
So, what is fair?
What if you could rent and return your car anytime you wanted? This is what fair does. fair is to car leasing is as Amazon is to buying anything. With fair’s app, to lease a car, you simply scan your driver’s license, link your Bank Account, pick your car, pay, and pick up your car from a dealer near you.
You pick the car up, keep it as long as you want and return it anytime you want. The user pays a Start Fee (usually the equivalent of 2–3 months of the monthly rent/lease) + the 1st month lease payment. The only thing you give up when you turn it in is the Start Fee. Did I mention that routine maintenance and roadside assistance is included? There are no locked in lease terms. Also, the user has the option of getting auto insurance from fair.
Amazing…
So what?
I know a lot of you are asking, so what? Here’s what…
- fair is taking the Auto Industry from what was just Auto/Auto + Finance in a limited flexibility retail experience to Auto + Finance + Insurance + more in a retail experience which matches where the majority of consumers are already. It was said at the Summit, there is a statistic that most Millennials would rather go to the dentist than a car dealer.
- The entire global economy, especially younger generations, are moving towards companies which maximize customer experience, specifically those focused on a simplified retail process.
Allow me to provide one more piece of critical background before I reveal the big idea.
The Social Impact
Mobility-as-a-Service (MaaS) provider
I’ll skip the long story, but essentially fair bought Uber’s leasing division and then became their partner. If you want to be an Uber driver and don’t have a car, guess where Uber directs you first?…fair.
It was a bold move for a start-up, but cut one of the most critical cost metrics that kills most start-ups to near $0, Customer Acquisition Cost.
Without fair’s leasing option, how else would one get a car with the same affordability. What are better options for one in that position?
Let’s look at the majority of other use cases which don’t involve users joining as a MaaS provider (e.g. Uber driver)
Imagine the mother who is driving to her 2nd job for the day and trying to get her kids to and from childcare just so the family can survive.
How about the family who just got the news their dad, mom, or child has cancer and will be facing 10’s of thousands if not 100’s of thousands in medical expenses.
What about somebody who’s just lost their job?
We all know the impact of unexpected expenses or perhaps the expected or unexpected loss of income. We all know that with these situations, cash flow can be in short supply.
As I write this, a person could have a reliable 2013 Camry for $690 (including the 1st month lease) from fair ($90/mo) after that.
The Big Idea
So what’s the Big Idea?
Big Idea: fair + auto financing companies partnering could make a huge impact for those with limited finances or those who just hit a financial hurdle.
Practical Use Case: Let’s say you’re making payments on a car, but just had a major life event. What if there was a way to get out of those payments and still have a car? What if auto financing companies partnered with fair to get a person struggling financially into a more affordable car and let them give (or sell) their current car back to the dealership with no strings attached.
“Wait, what? What about captive finance?” That was one of the questions I received from one of the consultants I ran into at the conference. I told him, “Perhaps they can work with fair to put them into the same brand.”
During one of the panels, a few responsible for overseeing repo operations expressed how nobody wants a repo to occur. In fact, they will do everything possible to keep it from occurring.
There’s nothing like the present to test an idea, so I approached a few of the panelist afterward with the big idea. Without revealing anybody in particular, I’ll just say their responses leaned towards that it’s an “intriguing” idea, but they need to think more through the ramifications…
Financially speaking…
…for the auto finance companies, a car repo can cost thousands ($500 just for the repo, then there is the use of telematics to track the car down, lost months of lease/payments, car depreciation, back-end/other investigative work, fixing up the car, etc.)
…for the person who can’t pay at the same level anymore, a car repo can cost them their credit, their method to/from their job (perhaps their job too), and more.
Emotionally speaking…
Nobody likes repo. I know the person with the car doesn’t like it. I know the financing companies don’t like it. I doubt even the people who perform repos like it (I hope). Who likes to put somebody out of a vehicle which enables them get to work, transport kiddos, get groceries (not to mention the credit hit)…you get the picture.
Other Impacts
Think of the impact on one’s health, their mental and psychological state, their time…all wasted effort because their’s not a more efficient method to help currently.
What about personal responsibility?
Now don’t get me wrong, I’m all for personal responsibility. I think if we could get away from the credit card mentality as a nation and world, we’d avoid a majority of our issues.
We shouldn’t buy things we can’t afford or enter into payment arrangements when we don’t know if we can commit to the full term. My family and I pay for everything in cash where possible and I’m grateful that the only debt my family and I have right now is our house, but I don’t pretend for a second that my family’s current condition reflects that of everybody’s. Nor am I ignorant enough to believe that an unforeseen event wouldn’t potentially threaten stability in my family (my dad has pancreatic cancer now, so I’ve seen the impacts of unforeseen events first hand)…and having a car is an essential part of pushing through one of those events.
That being said, I am not everybody. I believe there is a large portion of the nation that could benefit from such an arrangement between fair and Auto Financing Companies.
We are here for one reason, to love and care for each other and I believe business can be used as a force for good. It’s the primary reason I work with the Management and IT consulting firm Impact Makers. The “Big Idea” above is just one example of how companies in power can not only use business as a force for good, but by doing so, it also potentially saves them money and increases their credibility in a dynamically changing competitive market place.
Conclusion
Disruption in the auto space will continue to occur and will continue to impact multiple industries. This will probably result in further disruptions in these other industries as well. So the real disruption is not really in auto. It is within how technology impacts culture and almost seems to dictate how we operate. I guess Neil Postman’s thesis in his book, “Technopoly: The Surrender of Culture to Technology,” was correct. We will get to a point at which the development of technology no longer just supports society, but defines it.
