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Sunday, June 13, 2004

Cars as a service

When I was talking to a technical director of a car company, the subject eventually veered of to the concept that in Europe, at some point, people will eventually be buying cars for 5,000 euros. It seems that this already a reality for eastern europe countries but we eventually figured it would be the case for western europe as well after a while. At this price range and below, we imagined the car to become a commodity but we also came to the conclusion that for all intent and purpose, that car could very well come with an engine that the customer could not have access to. The idea is interesting but current cars still require some type of maintenance that makes this idea a little far fetched. And then I read this :
" ...Because the StarRotor engine promises to require little maintenance, it is possible to consider a novel marketing concept in which the engine is leased, rather than sold. The average driver has little interest in the automobile engine. Most really do not want to own an engine; rather, they are only interested in the service it provides. Most drivers are primarily interested in body style and interior furnishings and only become aware of their engine when it requires maintenance. At this point, it becomes a hassle for the driver because he must arrange for alternate transportation during the repairs, which sometimes take more than one day to complete. In contrast, if the driver leased the engine, rather than owning it, he would simply take his vehicle to the auto dealer where the broken engine would be replaced with a working engine, perhaps taking only 30 minutes to do the replacement. Then, the engine repair becomes the responsibility of the automaker..."

This would be a totally different model for a car company. It is pretty obvious that since this is a disruptive technology, it cannot be marketed like your average car and needs to find a specific group of people for which the car is indeed just a service, not a second skin. In Paris, you can rent cars for 9 euros or 10.80 dollars a day, tax included. When Clayton Christensen talked about electric cars in his book on disruptive technology, he made the comment that electric cars being slower than their gasoline counterparts would have to be marketed for a public that was required to drive slowly (teenagers). In this case, the cycle is different and there is no expectation to have a car that runs slower. So, it really looks like this motor should be sold to a different public.

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