Urban Mobility Services: Opportunities for Car Manufacturers

Urban Mobility Services: Opportunities for Car Manufacturers Von der Hochschule für Bildende Künste Braunschweig zur Erlangung des Grades einer Doktorin der Philosophie – Dr. phil. – genehmigte Dissertation von Maria Schnurr Erstreferent: Prof. Stephan Rammler, Hochschule für Bildende Künste Braunschweig, Institut für Transportation Design Korreferent: Prof. Stefan Bratzel, Fachhochschule der Wirtschaft FHDW, Center of Automotive Dezember 2013 Dedicated to the cities that made me who I am. Disclaimer Veröffentlichungen über den Inhalt der Arbeit sind nur mit schriftlicher Genehmigung der Volkswagen AG zugelassen. Die Ergebnisse, Meinungen und Schlüsse dieser Dissertation sind nicht notwendigerweise die der Volkswagen AG. Executive Summary The car system with all its advantages and disadvantages is ripe for a change. While vehicle manufacturers and infrastructure constructors still try to “build their way out of congestion” and achieve improvements by mere “technology fixes” there is increasingly more room for social innovations1 like mobility services. Mobility services assist individuals in changing loca- tions and include conventional “driver services”, such as public transport or taxis, “vehicle provision services” such as car rental or car sharing, and “information and assistance services” which comprise all services assisting users in organising their travel more convenient- ly. Their potential contribution to solving the pervasive burdens of urban mobility – e. g. congestion, pollution, land use – and their response to changing user needs has recently in- creased their popularity in research, planning and practice. In the past, car manufacturers were largely excluded from this growing market. However, in 2009 two car manufacturers entered the mobility services market with innovative offers: Daimler with the public vehicle fleet "Car2Go" in Ulm/Germany and Peugeot with its prepaid rental service "Mu" in many European cities. These moves sparked the interest in mobility services among competitors – Daimler and Peugeot were followed by BMW with “DriveNow”, Volkswagen with “Quicar” and Citroen with “MultiCity” – and, along with many other factors, motivated this thesis. This thesis explores the factors influencing the future demand of mobility services, before identifying criteria for customer acceptance and analysing the opportunities car manufacturers have in this new business area. The EU-15 countries were chosen as the geographical region for this thesis as they represent homogenous mobility behaviour and transport infrastructure patterns. The timeframe for the analysis are developments from now until 2020 be- cause mobility services are considered as already marketable services and do not require substantial research and development activities anymore. The current trends fostering the acceptance and feasibility of and demand for mobility services are determined in a key factor analysis process including an uncertainty-impact and a cross-impact analysis. The final set of key factors covers all the STEEP sectors and indicates that the demand for mobility services in the EU-15 is likely to grow until 2020. The main rea- sons are policies infringing car ownership or use and encouraging the use of alternative modes of travel; rising fuel prices which make private car ownership and use less attractive; increasing burdens of urban mobility which make alternative modes of travel imperative; a rise of post-modern utilitarian ethics which promote use (service) over ownership (product) and functionality/rationality over emotionality/status; and a rising environmental awareness and consumer education programs. The feasibility of mobility services will be enhanced by the progress of several smart car technologies which integrate vehicles into the mobility in- ternet2 and BEV technologies which are best implemented in shared approaches; likewise the increasing attractiveness of extending the service value chain will likely pave the way for mobility services. Additionally to the external key factors a close look at the potential users of mobility services results in clear recommendations for the design of mobility services. The main finding is the need for a tailored design for specific user groups. This includes aspects like demographic change, mobility lifestyles, and groups experiencing barriers in their daily mobility. Therefore, pricing structures for mobility services need to compete with low-cost vehicle ownership. As continuing urbanisation will increase the demand for intermodal mobility, a priority should be set on mobility services that foster intermodality, i. e. integrated information and assistance services. Finally, mobility services should respond to the challenges which actually cause the increasing demand for mobility services, e. g. rising fuel prices and regulatory policies. 1 Cox 2010; Dennis/Urry 2009 2 Mitchell 2010 Combined, these insights result in a catalogue of requirements for urban mobility services which can be used for assessing the customer acceptance of a chosen service type. It con- sists of the following criteria: Simplicity: The level to which a service can be used without further instruction or preparation. Reliability: The level to which a user can rely on the proposed service characteristics, e. g. punctuality. Flexibility: Indicates how much usage patterns can be adapted to individual needs (spontaneously). Access: Indicates the accessibility (e. g. physical proximity) of a service. Availability: The level to which a service is available at a given point of time. Transparent fare and payment system: The level to which a fare and payment system can be understood and tracked and the level of instruction needed for this. Attractive image: The degree to which a service reveals an attractive, popular image that raises the status of the user. Added value for users: The level to which using a given service provides a value to a user which cannot be achieved otherwise or by using conventional services. Usefulness: The number of use cases the service applies to. Intermodality: The degree to which the service facilitates intermodal mobility. After the frame for mobility services is set, the next obvious question relates to the opportunities car manufacturers have in this new market. The key factor results indicating a growing demand for mobility services taken together imply a much stronger growth of mobility services than generally anticipated. However, OEM still will ask at which costs these new market shares and a better image might be gained. An agenda for selecting the proper mobility services to enter the market with and a reasonable set of strategic options for entering the market will lead the way. As a first step, it needs to be determined which service type will most likely meet customer demands. This is achieved by applying the criteria from the catalogue of requirements to a set of mobility services which car manufacturers could possibly offer. The results show that those mobility services which are more innovative and challenging to the provider also receive higher customer acceptance ratings. Combined with an analysis of their fit to the main mobility types identified for 2020, it is obvious that car manufacturers should focus on a public vehicle fleet when it comes to vehicle provision services. However, as a start car sharing or even car rental could be installed but preferably only if the objective is to transform these into a public car fleet. For the information and assistance services, the personal travel assistant clearly stands out in acceptance and innovation level but also in the range of challenges it implies. Initially, the mobility card could be combined with a stationary intermodal navigation system, thus offering a set of services similar to the personal travel assistant. When choosing an appropriate strategy, it needs to be kept mind that car manufacturers are entering this market under two constraints: There are only comparatively small market shares to be expected, and they are not well prepared internally for the challenges awaiting a service provider. Since mobility services offered by car manufacturers classify as radical, systemic, social, and open innovations initiated upon market pull and therefore qualify as sustainable innovations, they generate quite a few challenges for car manufacturers. Even though the external opportunities are high and risks are low, the internal weaknesses far outweigh the strengths manufacturers can bring into this new business area. There are basi- cally six strategic options, some of which can be combined: 1) Outsourcing mobility service sub-units: Independent, but internally tightly coupled sub- units can best achieve a high innovation level within a productivity- and profit-oriented or- ganisation. 2) “White label” services: Buying turnkey solutions from existing service providers on the market who offer their systems or software as a “white label” service, including development and operation relieves OEM from the burden of developing and operating a service where they still lack experience and know-how. 3) Packaging products with services of other providers: Car manufacturers can package their own product with the offers of other service providers, especially when they are already providing vehicles for another mobility service provider (see option above). 4) Providing vehicles for mobility service providers: Partnerships with mobility service providers already exist but not to the extent desired by most

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