LAS VEGAS — The nature of the vehicle fleet is changing with the onset of ride-sharing and vehicle-sharing, but they still present opportunities for independent repair shops, according to a noted Frost & Sullivan analyst.
Kumar Saha, director of mobility for market researchers Frost & Sullivan, told an audience at the Automotive Aftermarket Products Expo (AAPEX) last fall that is it wise to look at what will happen down the road in the automotive industry because things are changing, and disruptions are coming.
"The one trend that is already here and is really impacting us is connectivity. That is what is enabling some of the other changes to take place," Mr. Saha said, noting that connectivity will be the driving force on how cars and fleets operate in the future.
Autonomous vehicles and car sharing aren't possible without some form of connectivity, he added.
The growth of online retailing has increased the number of vehicles delivering goods.
About 90 million new vehicles are sold globally every year, 20 percent of which are sold to fleets — some are connected, some are electric, some are shared, he said.
He predicted that by 2040, with about 120 million units sold every year globally, about 40 percent of vehicles will be operating in a fleet environment, especially in Asia.
"Overall we see a huge growth in fleet vehicles in the market," he said, adding, "Future fleet vehicles are going to be more connected, more automated, more shared and more electrified."
These vehicles will generate a lot of data, he noted. "That, in itself, will probably be the biggest transformation that you will see in the industry in the next five, 10, 15 years."
Already almost 60 percent of vehicles on the road in the U.S. and Canada have some level of connectivity embedded in them, he said, noting that Frost forecasts that in the next seven to eight years there will be about 170 million new connected vehicles in North America alone.
Even older vehicles without connectivity can be upgraded by fleets with aftermarket connectivity solutions, he said, noting that fleets are the first adopters of telematics/connectivity.
"As fleet usage rapidly changes and it's more intense, they would need to use these solutions to keep vehicle uptime so they can reduce cost of ownership and also serve the industries as best as they can."
Vehicles with adaptive driver assistance systems (ADAS) will see the biggest growth by 2030 with nearly 80 percent of U.S. vehicles having some level of ADAS technology, he said.
"Until 2025 we don't see a significant difference in collision claims or collision impact," he said, "but then after 2025 we see collision and claims start to go down because, in a tested environment, these vehicles are supposed to reduce collisions by 25 to 40 percent. And if some of that even holds over into the real world, we would see some of those things pan out.
"Reduction in collision claims or collisions may not actually mean that there's going to be a reduction in dollars because a lot of these vehicles are going to be at least 20- or 30-percent more expensive to repair. And the cost of sensors that are embedded in some of these vehicles are going to be really high. So that would also have an impact on revenue. So this is not directly transferred to any kind of revenue loss."
Mr. Saha said there are four paradigms of vehicle sharing: e-hailing (such as Uber and Lyft operations); ride-sharing; car/bike/scooter-sharing; and vehicle subscription.
E-hailing automates ride-hailing operations, such as taxi services, ride-sharing and other hailing transportation modes, and is typically executed by a phone app. Ride-sharing, offered by such services as UberPool and Lyft Line, is an extension of the e-hailing service with people carpooling to lower the transportation cost.
"These vehicles have really created a big impact on vehicle miles traveled, particularly in urban areas," Mr. Saha said.
"The main impact ride-sharing has had in overall vehicle space is that it has rapidly increased vehicle miles traveled. If you look at just urban areas, vehicle miles traveled have increased by about 200 percent in the last three years. So think about what that does to failures and maintenance."
While the e-hailing/ride-sharing vehicles don't necessarily operate in fleets, they are operating on a single platform, so even the nature of the fleet is going to change, he said. While a fleet is usually defined as an entity owning a number of the vehicles, the very nature of fleets is being redefined by e-hailing, he said.
Hundreds of thousands of Uber or Lyft drivers are individual vehicle owners operating on a single business platform.
"Because they are on a single platform, there's almost a quasi-fleet nature to them so that you can reach those customers through a single platform," he said. "They have a very similar operating matrix. So it's very important to understand, especially when it comes to ride-sharing and e-hailing, to think of the evolution of the fleet in itself."
Car/bike/scooter sharing enables individuals to use a vehicle on a short-term basis for a fee.
Mr. Saha estimated that each car- sharing vehicle would replace about 18 to 20 vehicles from the car parc, or about 2 million to 3 million vehicles by 2030.
Since the boost in vehicle miles traveled will increase the maintenance cycles on these vehicles, "we feel that the opportunity created by those vehicles will be far greater than the impact they'll have in reducing ownership," he said.
Vehicle-subscription programs are all-inclusive programs offered by auto makers that cover maintenance, roadside assistance and insurance for a monthly fee. Some programs allow customers to exchange vehicles during the year.
Several car makers, including BMW of North America Inc., Mercedes-Benz USA L.L.C. and Audi of America Inc. are testing this service in limited markets, while Ford Motor Co. is testing a used-car subscription service.
These vehicles will be maintained as if they are fleet vehicles, since maintenance will be included in the subscription cost, he said.
Used subscription vehicles would be serviced by the OEM dealership, removing them from service in the aftermarket, he noted, adding that Frost & Sullivan believes the subscription service will become a common purchasing option by 2025, involving an estimated 70 million vehicles in North America, and will be popular among millennials.
"It brings a different dynamic to fleet vehicles and brings them back to the dealership," he said.
Overall, Frost & Sullivan predicts consolidation among ride-sharing companies and vehicle-sharing operations; greater OEM experimentation in shared mobility modes; and growth in vehicle subscription programs.
Telematics is becoming critical for optimizing cost of ownership, providing information fleet managers "now need access to or want access to for better operation of those vehicles. This will add and augment the connectivity that's already embedded in some of these fleets," Mr. Saha said.
He said he expects a huge amount of growth in connected fleets, as well as in fleet-optimization apps, including those used in maintenance.
The apps are targeting not just the operation of fleets but also other services, such as tracking/parking, installer information and parts supply.
Tire suppliers will be among the first suppliers to offer connected maintenance services, he said, offering conventional tire services, such as balancing, life cycle management, TPMS service and mobile installation, as well as connected services for regular maintenance, maintenance parts replacements and service reminders.
"Tire suppliers are probably the most proactive. Pretty much everyone, like Michelin, Goodyear, Bridgestone, all of them have (introduced) or are introducing some level of fleet solutions that would create some kind of connective maintenance services," he said.
"It's important to understand that suppliers that are actually at the forefront of this would be able to control or have more visibility to the fleets and gain more of their business."
Mr. Saha said that data are going to be the battleground.
"All of these vehicles, because of the levels of connectivity, autonomy, electrification and being in this connected environment, the smart parts that suppliers are trying to put into these vehicles will generate massive amounts of data. And they'll have their own uses. The question is, 'Who will own this data? 'Who will access the data?' and 'Who will harvest the data?'"
The future will be about supplying parts but also having access to the data will give a company an edge.
For repair shops: "Getting access to the data also means investing in new types of tools for the shop," he said.