We are swiftly arriving at something magical: a new and disruptive transportation mode in which driverless vehicles are coupled with mobility services. Consumers will want this, and it will be transformative in the same way the smartphone and personal computer have been.
Consumers will likewise flock to this new transportation mode, changing forever their relationship to cars and transportation.
But adoption won't roll out the same way it did for cellphones and computers — instantly across the country and world. Instead, it will arrive metro market by metro market in what we call "islands of autonomy" — metropolitan areas that each have their own distinct mix of consumer travel needs delivered by autonomous mobility services. To win in this marketplace of the future requires a new way of thinking. Meeting customer needs will demand complex new analyses of local travel requirements based on trips and missions.
In the U.S., there are 169 communities of 300,000 persons or more — in Census Bureau terms, cities with distinct metropolitan centers economically and socially linked to surrounding areas. Each of these communities fit the demographics of an island of autonomy.
To gain a better sense of the individual nature of markets using geographic information systems, KPMG analyzed anonymous cellphone ping data that identified the location and time of travel for individual trips within prototypical American cities — Chicago, Atlanta and the greater Los Angeles-San Diego metropolitan area.
The research revealed different vehicle segmentation within each island market based on miles traveled, average trip duration and estimated vehicle occupancy. The findings showed that each island will require a different mix of vehicles and services to fit its trip mission characteristics.
For automakers, this means the future business model is about understanding trip origin and destination, duration, distance, occupancy mission and velocity for each and every trip in a metro area; understanding the optimal service and vehicle for each of those trips; and then looking across those metropolitan islands to find platform scale. For carmakers and others in the transportation and mobility industries, the consequences and opportunities of the islands are enormous and will demand new tools to evaluate the market, new services and all-new types of vehicles.
Going forward, consumers will have far more choices in transportation.
They can push a button, and their driverless car will appear, or push another button, and a mobility service will arrive.
Those greater options translate into different consumer buying behavior — less of a need to own, which signals a far more rapid decline in auto sales than many automakers expect. That is especially true with mass-market vehicles in the A, B, and C segments. As consumers increasingly utilize autonomous vehicles and mobility as a service and choose a car to drop from the household fleet, we calculate a massive decline in personally owned U.S. sedans, dropping from 5.4 million units sold today to just 2.1 million units by 2030.
This decline in traditional sedans will lead to greater and more narrowly targeted overcapacity in supply than many manufacturers have anticipated.
In this increasingly competitive market, some carmakers and major brands may struggle to stay in business unless they actively refocus their offerings or can develop a unique right-to-win. Stock markets are aligning with these perceptions. Think of the shockingly low valuations of some global behemoths relative to those on the vanguard of change.
While uncertainty remains on the timing of when this transformation will occur, not all is lost, however, as a trillion-dollar market will soon arise around mobility and selling miles.
The key to understanding the decline and the opportunities are the islands of autonomy.