Mobility is the New Black for Motoring Associations
Access, not ownership
It’s not just homes: Millennials have been reluctant to buy items such as cars, music and luxury goods. Instead, they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what’s being called a “sharing economy.”
“25 YEARS FROM NOW, CAR SHARING WILL BE THE NORM, AND CAR OWNERSHIP AN ANOMALY.” Jeremy Rifkin, Author and Economist
Source: Goldman Sachs Global Investment Research
Automobile associations around the world are being challenged by increasing vehicle reliability, growing use of sharing economy options and rapidly aging memberships, as millennials see no reason to join.
On the surface things look fine:
- Close to all time high membership levels
- Most automobile associations are the largest clubs in their countries
- Fabulous brand values based on trust and helping members
Roadside assistance is being used only once every 4 to 7 years, depending on which clubs you talk to
- You can rejoin on the spot if your car breaks down without a significant penalty
- Vehicle ownership has peaked in many Western countries and millennials are the first generation to consider whether they need to own a car
- The average car is parked 96% of its life
- Ridesharing, car-sharing, carpooling and improved public transport are causing many to consider whether they need to own a car at all
- And, autonomous vehicles are not too far away, with some reports suggesting one shared autonomous vehicle will replace up to 17 privately owned vehicles.
Moving from motoring to mobility, or automobiles to automobility!
Motoring associations are perfectly placed to become the mobility associations of the future. Their membership bases are enormous and their core focus is mobility, albeit through privately owned motor vehicles. Extending this to 21st century mobility is the most logical adjacency. It can also be done in such a way to provide millennials a reason to believe and belong.
While many mobility models are emerging, the fundamental driver of their success will be customers — or in the case of Automobile Association’s — members. Organisations highly trusted with large numbers of customers will be best placed to influence their members to use existing, new and emerging mobility services in the future.
Their members trust them, and in an era of rapidly changing mobility options, Automobile Associations will be the trusted reference point for many people.
Mobility Drives New Business & Revenue Models
Traditionally the major revenue stream for Automobile Associations has been membership fees of typically $100-$200 per year. For those with their own insurance companies or a branded insurance relationship, this has been another significant revenue stream — it too is threatened by mobility as car ownership levels are forecast to decrease.
In the future members will be more likely to pay for “renting” vehicles when they need them or sharing mobility needs with people they know — in private vehicles or sharing rental costs.
Automobile associations are logical distribution partners for car-sharing, ride-sharing, bike-sharing and lift-sharing as members adopt new options. There will be opportunities for Automobile Associations to own stakes in these businesses as they drive their success and/or to earn margins on member usage. Mobility insurance covering members in any form of transport is likely to be another form of revenue.
Mobility Can Drive Automobile Associations to Greater Success
If the mobility model emerges as outlined here and predicted by many experts around the world, progressive Automobile Associations will have much greater potential to grow membership and revenues than they do today.
Mobility will be a more attractive offering to the broader population including millennials. Revenues from mobility services will likely be much higher than roadside memberships, and with potential equity stakes, total returns to members will likely be greater than ever before.
Costs are also likely to reduce as less asset intensive roadside assistance will be required.
Member Data and Identifying Relationships Between Members will be Key
Automobile Associations have extensive membership databases; however, many have not developed sophisticated data driven marketing skills, and have issues with data completeness and integrity. Developing and importing these skills quickly will be important to capitalise on the opportunity.
Leading data driven organisations now focus as much, if not more, on the relationships between customers/members as more insights can be gained from these relationships than individual member data.
If automobile associations can identify linkages between members, which drive their shared mobility needs with other members — around common activities and locations — the Associations will be even better placed to be the trusted distributor of mobility services to members — independently or collectively in their “social mobility groups”.
Leading Countries with the Greatest Opportunities
European, Antipodean and North American Automobile Associations have been most successful in growing large trusted membership bases around roadside service. They have the greatest opportunity and greatest threat if they do not grasp the opportunities available today. Major UK, Dutch, Australian and NZ associations have more than 50% penetration into their country’s car owners. The next 5 countries all have more than 25% penetration of their current car ownership market
About the Author
Stephen Coulter is co-founder of Localift and a former financial services, loyalty and telecommunications executive with significant data-driven business management expertise. Localift enables anyone in the world to create and manage social mobility groups to arrange shared transport by any mode.