Kriben Reddy, Head of Auto Information Solutions at TransUnion Africa.
Kriben Reddy, Head of Auto Information Solutions at TransUnion Africa.

2020 outlook: the more things change, the more they stay the same

By Kriben Reddy Time of article published Dec 13, 2019

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JOHANNESBURG - Okay, petrolheads. It’s December. That means only one thing: time to make predictions about what’s going to happen in the automotive world in 2020. Will self-driving cars invade our roads? Will we stop owning our own cars? Will every family have a helicopter in their garage?

Let’s start with the easy one: no, every family won’t have a helicopter in their garage. Which must be galling for the publishers of Popular Mechanics, who predicted back in 1951 that every family would have at least one helicopter by 2020. What can I say? Some predictions work. Others don’t.

But there are some interesting trends emerging in the local car market that will affect how we buy and own cars in the future. Let’s fire up the crystal ball and see what it throws out.

Will the way we buy cars change?

I’m often asked whether more people are going to start buying cars online, like shoes, instead of going to a dealership. The short answer is no – but we’re certainly going to see a lot of the admin and process around buying a car being optimised online.

One of the reasons for this is that South African remains predominantly a used car market, and no two used cars are the same. Secondly, buying a car remains a deeply emotional experience for most people: they want to touch and feel the car, sit in it, and look under the hood. Whatever you do, though, just don’t kick the tyres, unless you’re removing horse manure from your shoe. There’s no other reason to do it.

But what we are going to start seeing is online aggregators putting the customer at the centre of the experience, instead of the vehicle. We’re also going to see more elements of the buying process done online: get finance pre-approval, sorting out insurance, filling in the paperwork. You’re even going to be able to get a provisional trade-in price for your existing car by taking pictures of the car and licence disk instead of having to physically drive to the dealer.

Will the way we own cars change?

We see a lot of talk nowadays about how we won’t own our own cars in the future – we’ll share them, or put them in a pool of vehicles that allows the car to be used throughout the day, instead of standing idle while you’re at work or sleeping. Although there’s no shortage of people needing transportation, I’m not convinced this is going to happen any time soon.

For one, South Africans love their cars. They’re status symbols. Many people would sooner stick needles in their eyes than allow strangers to drive their pride and joy. Another challenge is that car ownership is still strongly linked to the current financing model, which only allows for one primary owner. What would be interesting would be if banks allowed multiple people to finance the same vehicle, and share in the payments and maintenance costs of the vehicle.

In the US, we’re starting to see a couple of car manufacturers doing trials of a subscription model, which would allow you to switch between different models of a brand’s vehicles for a monthly fee, and to use a car only when you need it. Right now, it’s a highly niche market that’s limited to the very top end of the market, and I don’t see new entrants into this market in 2020.

What about electric and self-driving cars?

I don’t see the viability for self-driving and electric vehicles in the short term. We’re starting to see electric vehicles on our roads, but there’s simply no motivation for the average consumer to get into one: they come at a specific price point, and the infrastructure to support them is still lagging. This isn’t Amsterdam, where there are charging points on practically every block.

As for self-driving vehicles, don’t hold your breath. Our current GPS navigation systems has a tolerance of meters, which is good enough for simple navigation. But for self-driving cars, you need tolerances of 2-3cm, which you only get through high-definition mapping – and which we’re some way off.

So what uber-trends can we expect to see in 2020?

We’re already seeing the diversification of services like Uber, which has an active fleet of vehicles, into areas like courier services, food deliveries and in the US provide microloans. There’s even a local booze delivery app called Bottles, which uses Uber to do its deliveries. We’re going to see more businesses either leverage off the Uber concept, or use Uber itself.

We’re also going to see the current pattern of lower car sales continue into the new decade. But it’s important to realise that the reason for lower volumes is not changing ownership models, but a really tough economy. People aren’t replacing car ownership with Uber – it’s still a convenience-based service, rather than a vehicle replacement model.

Ask me again in a few years, and my answers might change. But for now, the world of motoring is evolving, rather than revolutionising. Have a glorious holiday season, and stay safe out there!

Kriben Reddy is Head of Auto Information Solutions at TransUnion Africa.

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