Automakers Want to Sell You Much More Than Just a Car

So much for the Siren song of horsepower. At the North American International Auto Show, which opened Jan. 11 in Detroit, traditional auto virtues–power, speed, handling–were overshadowed by talk of apps, connectivity and vehicles that leave the white-knuckling to algorithms. To be sure, automakers spent plenty of time showing off glitzy new models. But most seem to be grappling with the same existential questions, namely the matter of when and how the industry will be disrupted.

Ford CEO Mark Fields took the issue head-on by unveiling a strategy to transform the iconic company. He said Ford would continue to build and sell cars as it traditionally has but would also turn itself into a “mobility” provider through apps and services that offer ride sharing, transportation assistance and new types of leasing. “Everybody is talking about Silicon Valley disrupting the car business,” said Fields. “We’re going to disrupt ourselves.”

Silicon Valley’s ambitions are a growing preoccupation for old-line automakers. To wit, Fields spent time outlining the ways in which Apple transformed itself over the past 18 years, upending the music and phone markets along the way. His point: Ford doesn’t plan to let California firms do the same to it.

Not that the car business is ailing. The automotive industry sold more new cars and trucks in 2015 than ever before. In the U.S., manufacturers sold some 17.5 million light-duty vehicles, a 5.7% increase from the previous year.

But the convergence of several trends–autonomous cars, electric power and the new business models of startups like Uber–amount to so much writing on the wall. The global car business is worth $2.3 trillion annually. By comparison, the transportation-services market–everything from cabs to trams–is worth over twice that and is likely to surge as the world urbanizes in coming years.

The real difficulty is which bet to place. General Motors is investing $500 million in Uber rival Lyft, with an eye toward developing a fleet of self-driving vehicles that would arrive with the tap of an app. Toyota executives recently told the Financial Times that personal robotics might eventually outshine the Japanese firm’s auto business. And during a press conference at the show, Volvo CEO Hakan Samuelsson pledged that “no one should be killed or seriously injured in a new Volvo by 2020,” a goal made possible by autonomous technology.

In other words, there is consensus forming on one thing: the road ahead will have bountiful curves.

–MATT VELLA/DETROIT