Automotive

IBM study says consumers want different car ownership options

IBM study says consumers want ...
Ford's pilot program for a fractional-ownership lease scheme uses an app to allow those involved to interact, as well as pay their portion of the vehicle's costs
Ford's pilot program for a fractional-ownership lease scheme uses an app to allow those involved to interact, as well as pay their portion of the vehicle's costs
View 1 Image
Ford's pilot program for a fractional-ownership lease scheme uses an app to allow those involved to interact, as well as pay their portion of the vehicle's costs
1/1
Ford's pilot program for a fractional-ownership lease scheme uses an app to allow those involved to interact, as well as pay their portion of the vehicle's costs

In an automotive consumer study presented at the North American International Auto Show in Detroit, IBM found that consumers expect to use cars differently and don't necessarily want to own one in the traditional sense – especially when the car has "self-enabling" technologies. Meanwhile, Ford has taken the lead in creating an alternative ownership model.

The IBM Institute for Business Value (IBV) developed its A New Relationship - People and Cars report, based on the study. According to the report, consumers have a high level of interest in "self-enabling cars," defined as cars that can learn, heal, drive, and even socialize. These are characteristics of autonomous cars (self-driving vehicles), self-repairing vehicles, and vehicles utilizing various forms of artificial intelligence to learn over time. The study is the second part of a series IBM has been conducting titled Automotive 2025.

Nearly 16,500 consumers in 16 countries were interviewed by IBM to determine how they expect to use vehicles in the next decade. This is in conjunction with the first report, which interviewed automotive industry and supplier executives.

The consumer interviews found that the clear majority liked the idea of diagnostic and preventive repair capabilities, with 59 percent of respondents liking the idea and 10 out of 16 countries placing it as a high priority.

The idea behind this is that as sensors and computing improves in the automotive industry, so will the ability of the vehicle to self-repair and compensate for problems, eventually leading to more and more self-repair options in future vehicles. This would include vehicles that can access the cloud and report information as well as gather updates for repair, another popular self-enabling option among many interviewees.

Some may find it surprising that the majority of consumers interviewed (67 percent) still think that the dealership, in-person buying model is an important part of the car-buying process. At the same time, 46 percent would consider buying online, direct from a manufacturer and 38 percent would do so from a third-party seller (such as a dealer or broker).

The other side are alternative ownership options. Personal cars still reign supreme among most of those interviewed, but more than a third (42 percent) would consider alternative ownership models like subscription pricing, and about a quarter (24 percent) liked the idea of fractional (shared) ownership. Another third would consider car-sharing or on-demand ride sharing as options. Consumers surveyed liked the latter two for various reasons, including retaining ownership but marking a return on investment when the vehicle is not otherwise being used.

On that final front, Ford has taken a leading role by creating a new pilot program for a shared car purchase option. This fractional ownership option allows Ford Credit buyers in Austin, Texas to self-organize into a group ownership model involving three to six people. This could be anything from a family with multiple drivers to a neighborhood or community organization buying as a group. Occasional-use vehicles such as pickup trucks are prime for this type of ownership, Ford says.

Lease groups can purchase a vehicle on a 24-month lease as a group and set up ownership fractions based on reserved drive times, maintenance costs, etc. Fractional payments from each party can be done through an app, which also tracks maintenance requirements, the vehicle's status and location, and facilitates communication between owners.

Sources: IBM, Ford

4 comments
SuperFool
Terms like "self enabling" and "59% liking the idea" sound very much like ad spin. I like the "idea" too but I definitely don't believe for a second that it would benefit any but the company and a target user in the top 10% income. The rest of us are wannabees who buy penny stocks online hoping that appearance equals reality.
Mel Tisdale
At least some are realising that the motor vehicle is going through a metamorphosis and is attempting to bring the public into the discussion, though one hopes that it will spread much further than simple ownership models. I wish them well, especially when it comes to discussing driverless vehicles and their introduction into general use. (And how that will affect hospital A & E departments.)
Island Architect
New approaches are in order.
Considering the extremely outrageous red lining in Detroit which places the Insurance companies in the position of making as much as 5 times the cost of the vehicle itself (I personally don't believe that they deserve that much considering the schooling.) Why doesn't the Auto industry consider simplify the process into a single monthly payment.
That would be a huge advance in simplifying ownership.
bill
icwhatudidthere
I've done car sharing and fractional ownership before and the only way I'd go back is if you could guarantee car availability and it cost less than owning your own car. Those were the two big road blocks in my experience and I don't see them going away in the future.
Many people want cars at the same time, whether you're talking about time of year (summer and holidays) or time of week (weekends) or time of day (rush hour commuting times). So availability will still be an issue.
And with car subscriptions, you'll probably end up spending as much if not more than you would if you bought it outright. Cars have very little maintenance these days and electric cars require even less. So that's a decreasing advantage for car subscriptions. And the $199 lease special will almost definitely be cheaper than a car subscription.