High Gear: Auto VC advises market players to focus on 'mobility' not sales figures
CGTN Global Business
The global car industry is struggling with slumping sales. Market players should change their business models and mindsets, according to Amy Gu, managing partner at Hemi Ventures, an early-stage venture capital (VC) fund based in Silicon Valley.
The German auto trade association, Verband der Automobilindustrie (VDA), recently reported that sales in all major car markets dropped in the first half of this year.
Japan experienced one of its bleakest half-year sales, as the registered new passenger cars during the January-to-June period were down 0.3 percent from a year ago. Light vehicle sales in the U.S. contracted almost two percent in both June and the first six months of this year.
Across the pond, the EU's new car market contracted three percent in the first half of 2019. Top car buyers, including Britain, France and Italy all witnessed a sales slump. And car sales in China fell 14 percent due to uncertainties brought about by import tariffs.
Gu suggested that it is time for carmakers to make a change, and she advised automakers to pay more attention to the whole "mobility ecosystem," rather than staring at sales number.
"I think the mindset about the auto industry should change. It should not only be about automotive, but also about mobility," she observed.
"People probably not only need a car, but also a bike, public transportation like planes, trains and even walking," she said, adding that car brands should "design your products around the whole mobility ecosystem, rather than just focus on selling cars."
Meanwhile, China still remains the largest single-country car market in the world based on VDA, and Germany has had its best record in the first half with registrations up 0.5 percent. The two countries are enhancing their cooperation in the auto sector, especially joining hands in developing autonomous driving technology.
Autonomous driving means an exciting affair for all participants, including large Original Equipment Manufacturers (OEMs), consumers, investors and governments.
"In our view, it will be a step-by-step process," Gu said. In her opinion, related technologies and regulations are "not quite ready yet."
When tech giants enter the autonomous driving area, she appreciates collaborations rather than "spending billions of dollars on buying a facility in the rural area to build out a car."
"I think collaboration will be a smart move. The biggest reason is just because tech giants are not carmakers. It takes a hundred years, probably more, for carmakers to build their factories, manufacturing facilities and hiring workers. And tech giants are just not in general good at [those things]. So I don't think it is necessary for them to acquire a brand," Gu told CGTN.
Moreover, the development of autonomous driving will inspire auto brands to work as transportation service providers. And she agreed that consumer vehicles or delivery vehicles should be in the first waves of adopting autonomous driving. "Another example would be robot taxis, also the first case using autonomous driving," she added.