Toyota’s Bill Fay: We’re In The Business Of Mobility As A Service
"For the auto industry, rapid disruption is the new norm," says Toyota SVP Bill Fay, who outlined a "small steps" approach to shared mobility and autonomous vehicles at the NY Auto Forum.
Changing consumer preferences, the Connected Car, Shared Mobility, self-driving cars, and electric vehicles are the primary “disruptors” of the automotive industry, according to Toyota’s Bill Fay, addressing the audience at last week’s NADA / J.D. Power Automotive Forum.
And in discussing the automaker’s approach to meeting those challenges, Fay, SVP of the Automotive Operations Group of Toyota Motor North America, couched it all in terms of the potential opportunities.
Fay also discussed the pedestrian fatality in a Phoenix suburb resulting from the test of a self-driving car operated by Uber last month. A year ago, Toyota made a strategic investment in Uber that focused broadly on the growth of on-demand apps as well as the longer term value of ridesharing, self-driving cars, and location intelligence.
“It’s very disappointing and our thoughts and prayers are with the family of the victim,” Fay told Craig Trudell, Automotive Editor, Bloomberg. “But we have a growing awareness of autonomous vehicles, but its hard to determine what this accident will have on the impact of bringing those vehicles to the market and we have to work to get past this incident.”
In his presentation before his fireside chat, Fay discussed how Toyota is evolving its sales and marketing for Millennials, while developing the concept of “Mobility As A Service” to describe the interlocking software and technology work that is an integral part of making and selling cars.
“Software and technology, or more specifically, ‘mobility as a service,’ are a major topic of disruption in our industry,” Fay said. “And are also driving opportunities for growth in the near term.
“Software and technology have the ability to help generate new products such as active safety and infotainment,” Fay continued. “Most importantly, these tools can improve the ownership experience. As cars become more integrated with the connected world, these kinds of features are required for consumers.”
Citing a Kinsey report that found that 37 percent of consumers would change brands for a more Connected Car, Fay noted that a decade ago, most consumers based their purchase decision on their experience driving a vehicle. Today, the “in-vehicle experience” is just as important.
That focus on the ancillary features of a car related to tech is what prompted the creation of Toyota Connected, a standalone company that “functions just like a startup,” Fay said.
“The mission of Toyota Connected is to use the power of data to deliver new services that make life easier for drivers and to make driving more safe, convenient, and fun,” Fay said.
Millennials And Mobility
One of the most popular forms of the Mobility As A Service concept are ride-sharing and car-sharing. Last summer, Toyota Connected created to come up with a round-trip, station-based car-share program in partnership with Toyota distributor Servco Pacific in Hawaii.
The program involves an app on a driver’s smartphone, opening a system that manages driver identification, payment, suite management, and smart-key box to let users lock and unlock the vehicle.
“Not only are we providing a helpful mobility service through this pilot, we’re exposing consumers to Toyota Lexus products through a new and easy process,” Fay said.
The primary audience for these new Connected Car and Shared Mobility features are Millennials.
“In the immediate future, the changing dynamic of our customers is a major disruptor,” Fay said. “Let’s start with who they are: Millennials are expected to represent 40 percent of new car buyers by 2020. Their expectations are different from the generations before them. They want a car that can do it all. For them, convenience is king. But safety and technology are their kingdoms. They are multitaskers who want to make the most of their time.”
How Millennials shop and buy is also changing, he said. They do all their research online. And by the time they get to the dealership – if they get there at all – they know what they want.
“It’s a whole different ballgame,” Fay said. “Research into their behavior has been consistent. They want a process that’s timely, transparent, and trustworthy. At Toyota, we know the best way to meet and exceed consumer expectations, is by partnering with our dealers.”
Rethinking The Dealership Sales Process
Brands like Toyota recognize it needs to do more than sell cars online, Fay said.
“Regardless of whether they’re shopping around, ready to buy, or already own a car,” he said. “We want to be there for our guests.”
As an example of how Toyota intends to do that, Fay pointed to the Lexus-Plus pilot that was started more than a year ago.
The goal is to create “a more transparent, customer-focused purchase and ownership experience,” Fay said. This dealership sales strategy promises upfront, negotiation-free pricing and a single point of contact out of respect for the guest’s time.
“At Toyota, we’re currently testing different solutions across several different markets from easy, transparent online pricing, in-store sales by way of tablet, online scheduling for service appointments, and parts sold via e-commerce,” Fay said.
“These digital processes honor the time of our guests and ensures that their information is seamlessly transferred to a dealer before they get to the showroom,” Fay said. “Our ultimate goal is to be flexible for our guests and our dealer partners in order to develop a lifetime relationship between the two.”
In addition to the purchase experience, the preferences consumers are expecting are changing rapidly too.
In just the last four years, the auto industry has seen 2.5 million consumers make the switch from cars to light trucks, Fay said.
“This 15 percent shift in market is a huge transformation and one we’ve never seen before,” he said. “This has caused a paradigm shift in everything from vehicle design to planning to production. The industry is still racing to meet the changing desires of consumers.”
Touting Toyota’s notice of this trend way back, Fay noted that in 1994, the company released the Rav-4, which “combined the amenities of a sedan with the driving experience of an SUV.”
“In today’s market, Rav-4 is exceeding our expectations, becoming our sales leader with 400,000 sales,” Fay said. “That’s great news as we release our fifth generation Rav-4.”
Gradual Steps To The Self-Driving Future
Among the “most exciting” prospects that Toyota is working on is the future of autonomous vehicles. Fay emphasized a cautious approach, albeit one determined to shape how self-driving is brought to market and is regulated.
“You can’t talk about disruptors without focusing on autonomous driving systems,” Fay said. “Some will tell you they will sell you a fully autonomous vehicle by next year. But we’re taking a more realistic approach. Don’t get us wrong, we’ve been working on autonomous technologies for a very, very long time. We secured our first patent on autonomous vehicles in 2006. And we hold more than 1,400 patents on automated vehicle technologies.”
Knowing that, Fay said Toyota is aware that self-driving vehicles will take some time to become mainstream. It will also take careful, collaborative efforts to overcome critical safety and performance challenges.
Plus, the government is yet to weigh in. It will also take the government time to carefully establish the regulatory landscape. But here, too, Fay said Toyota has the structures to help form the way self-driving cars emerge.
“The Toyota Research Institute was established to provide leadership in automated mobility,” Fay said. “Our realistic approach will introduce consumers to automated driving systems gradually like steps up a ladder. We want to ensure, by the time we get to the top, that we will deliver an automated ownership experience — for all our guests.
“Safety is paramount to our success in automated driving,” Fay continued. “That’s why we have partnered with several facilities in the U.S. to support the development of innovative, connected, and automated vehicle technologies in a safe, controlled environment.”
With that in mind, Toyota’s “Mobility Teammate” concept is being positioned as a “differentiator” in the automotive marketplace and as a way to bring Mobility As A Service to life.
“The Mobility Teammate concept allows us to use the same technology stack to take two different approaches to automated driving,” Fay said. “You’re already seeing small steps toward safety, like automatic emergency breaking and lane-departure alerts, are leading us to a safer, automated world.”