May 31, 2016, 12:32 PM ETOther

The future of the car industry

Global urban centers are witnessing a decline in car ownership as ride-hailing apps (e.g., Lyft, Ola, Uber) become the primary mode of transport, with a cultural shift where "riding is the new driving."
Smartphone adoption is the critical enabler; in India, 20% of the population was projected to own smartphones by 2017 despite only 2% owning vehicles.
In the United States, a University of Michigan study shows the percentage of 20-to-24-year-olds with driving licenses dropped from 92% to 77% over three decades, with a 20% drop for 18-year-olds, driven by a preference for digital connectivity over vehicle ownership.
Younger generations no longer view car ownership as a rite of passage or symbol of freedom, preferring the convenience and cost-efficiency of on-demand ride services.

Ola Cabs (India):
- Founded five years ago and valued at $5 billion, processing 1 million booking requests daily across 350,000 vehicles.
- Operates as a technology marketplace aggregating supply and demand without owning a single vehicle.
- Challenging traditional gender norms by employing women as auto rickshaw drivers, such as Shantam, to expand market access.
Lyft (USA):
- Claimed to be the fastest-growing ride-hailing app in the US, with rides and revenue increasing fivefold last year.
- Employs over 700 people with offices in San Francisco, Nashville, and Seattle.
- Distinguishes its brand through "fun" elements, such as in-house trivia games for passengers.
Strategic Partnerships:
- Lyft formed a global partnership with Asia's top ride-hailing services to allow seamless cross-border app usage.
- General Motors invested $500 million in Lyft in 2016 to combine GM's manufacturing hardware with Lyft's software operating system for future shared driverless fleets.

Local Taxi Drivers: Licensed cabbies in India and globally face financial distress due to underpricing by app-based services; many have parked cars and left the industry due to unpaid fares.
- Ola is actively courting struggling local drivers to join their platform to mitigate the loss of business.
Automotive Manufacturers:
- Ford reported its best annual sales performance in a decade but is simultaneously "rethinking" product development to focus on customer experience rather than just vehicle manufacturing.
- Ford is launching pilot schemes like "GoDrive" (vehicle sharing) and "Ford Shuttle" (on-demand buses) to reduce reliance on one-off sales.
- Major competitors (Mercedes, Nissan, Ford) are racing to develop proprietary driverless technology to avoid becoming mere hardware shell providers for Silicon Valley tech giants.

Self-Driving Technology: Ford's research centers utilize 32-laser sensor arrays to map environments in 3D with no blind spots, employing machine learning algorithms to distinguish humans from inanimate objects in real-time.
Industry Revenue Shifts: The global revenue pool for transportation (mass transit, Uber, motorcycles) is estimated at $5.5 to $6 trillion, currently yielding 0% for traditional car manufacturers.
Future Outlook:
- Carmakers anticipate a future where "horsepower" is replaced by "processing power" as vehicles become part of the Internet of Things.
- Ford's leadership acknowledges a paradigm shift where societal trends like texting and online gaming have diminished the perceived need for personal vehicle ownership among youth.
- The industry faces a survival imperative to adapt to software-driven mobility models or risk obsolescence.