OnBoard Winter 2016 - page 13

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ON
BOARD
WINTER 2016
Ontario is the only sub-national jurisdiction to house
five major global automotive assemblers: Chrysler; Ford;
General Motors; Honda; and Toyota, as well as truck
manufacturer, Hino.
But the numbers belie an ongoing struggle. Gross
Domestic Product from Ontario’s auto sector fell by
an estimated 14% from 2002 to 2012. The industry’s
operators, advisors and associations, along with the
government, have for years worked to address its flagging
global competitiveness. Today, the Toronto region is
gaining strength in the development and adoption of
disruptive technologies. Internet connectivity, software
applications and big data analytics could be the very thing
to address shifting consumer demands and power up
Ontario’s automotive sector once again.
Disruption is already much more than a buzzword in many
Ontario industries. Financial institutions, publishing,
media, travel and other sectors have seen dramatic
changes brought to bear upon their business models
and competitive landscapes. Jobs, profits and economic
benefits have shifted as a result. Technology trends in auto
manufacturing point to the potential for a leadership role
in this space. Once the stuff of fantasy, electric cars, self-
driving and self-parking vehicles, and Internet-connected
autos are now either in market or in concept.
Evolving consumer behaviours, at times driven by
technology, are also challenging the traditional premise
of car ownership and production. Think auto sharing and
on-demand ride sharing.
According to American venture capitalist Evangelos
Simoudis, companies at the core of automotive disruption
are primarily coming from the tech sector, outside the
traditional automotive ecosystem. Such companies often
have access to significant capital to fuel their disruptive
market ambitions. This is evident in companies like Tesla,
not just for their electric-car manufacturing, but also
for their direct-to-consumer sales model, as well as in
Google’s much-publicized Self-Driving Car Project.
Industry game-changers are also coming in the form
of car-sharing and ride-sharing companies, like Zipcar,
Uber and Europe’s Bla Bla Car. These companies position
themselves not as automotive businesses, but as
environmentally-friendly, traffic-friendly and,
ultimately, consumer-friendly technology companies.
They and others like them are capitalizing on irreversible
trends in consumer behaviour and technology adoption.
Access versus ownership
For many, especially those who live in urban areas, the
perceived value of car ownership is shifting. Increasing
environmental concerns, traffic congestion and housing
affordability are a few of the factors leading people to live
closer to their work and to choose alternative modes of
transportation such as transit, biking or walking. Add in
gasoline pricing, insurance costs and parking restrictions
and it’s easy to see why many consumers are foregoing
the once-prestigious badge of auto ownership in favour
of convenient, affordable auto access. Initially, shifts like
these sparked the rise of smart cars and electric cars. Now,
consumer car-sharing and ride-sharing services are on the
upswing. And auto makers are taking notice.
An ‘always-on,’ connected lifestyle
The smartphone has become ubiquitous in our lives.
Today, 80 per cent of Canadians have cellphones;
80 per cent of those are smartphones. With 42 per cent
of users claiming they ‘can’t live’ without their device
and 87 per cent of Millennials reporting their smartphone
‘never leaves their side,’ it’s not surprising that wireless
connectivity, without compromising road safety, is
becoming a must-have in automotive design.
Hi-tech on wheels
Where cars were once largely mechanical, they now
have “the computing power of 20 personal computers,
feature about 100 million lines of programming code and
process up to 25 gigabytes of data in an hour” (McKinsey &
Company). Cars can be considered mobile smart computers
with a hard outer shell, reimagined by consumers’ desire
to maintain connectivity and their willingness to pay for
it. J.D. Power and Associates recently found that today’s
younger car buyers are willing to pay as much as $3,700 for
in-car technology, more than any other generation before.
More advanced infotainment, in-car navigation, in-car
Wi-Fi and smartphone hookups are becoming purchase
incentives for the tech-savvy car buyer.
COVER
Ontario’s $73 billion automotive manufacturing industry has long been a
powerhouse in our economy, directly employing 101,000 people. Nearly
2.4 million vehicles were built in Ontario last year (6,527 cars per day),
the largest output of any state or province in North America.
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