John Phillips of subscription management platform Zuora tells the latest Horizon podcast and attendees at a Next World Capital thought leadership event that his organisation is working with automotive giants Ford and General Motors to develop subscription services.
In a recent Wall Street Journal article on an existing subscription service offered by Cadillac – a GM brand – the US newspaper describes a customer trying out the service on the basis of “on-demand access outweighs the benefits of ownership.” This cultural change has already released the handbrake and is accelerating towards becoming de facto, the question is how long will it take? Business leaders from automotive, media, charity and travel sectors tell the podcast and venture capital organisation Next World Capital how they are adapting. The UK government though is in a panic to ensure that car manufacturing jobs remain in the UK beyond the nation leaving the European Union.
General Motors is shedding itself of its European brands Vauxhall and Opel, whilst Franco-Japanese business Renault Nissan has a secretive deal with the Conservatives that will ensure its factory remains in Sunderland. Yet listen to John Phillips; read the Wall Street Journal or look at the growth statistics of car clubs and the evidence points to the automotive sector decreasing it’s manufacturing base and increasing its service based businesses.
Of course the loss of a Vauxhall factory in Luton, Nissan in Sunderland or Mini in Oxford is devastating for the families and communities involved. Birmingham has not fully recovered from the debacle of Rover Group being sold to BMW and subsequently being asset stripped and killed the last time this party were in power.
The Prime Minister claims to have an “Industrial Strategy”; yet I wonder, does the UK really need an industrial strategy? Given every major automotive business in the UK is from overseas and if GM and Ford are working on subscription models, then so too will the PSA Group, Toyota and Nissan and others, then what the UK needs is a Society Strategy. Because the move away from large-scale manufacturing and into services will have a profound impact on cities such as Sunderland, Oxford and Luton. Cars will still be manufactured, but in far fewer numbers and one wonders if they’ll be made in a country with a high cost of living and soon to be subject to tariffs and or a rising manufacturing costs as PA Consulting Group believe.
The last time the Conservatives were in power they did not defend many industrial jobs and the economy, history and communities of this nation were changed forever. Just as heavy industry was sacrificed by them then, they may well have to do so again.
The change from car ownership to a membership model is inevitable and cannot be fought off, it will happen. When the old heavy industries were sacrificed the great failing of the government was not preparing communities and in particular the youth for the new economy and as a result only the south-east has truly come out scar free.
The government doesn’t only need an Industrial Strategy to protect the jobs of car factory workers, it must seek out the challenging thinkers who can help shape a new society that has a drastically reduced need to manufacture and buy cars, but a society that is skilled and able to respond to changing behaviour. That is a society we can all subscribe to.