Why the race for car subscription services will be won with software

George Skentzos
Head of Customer Experience
Subscription
September 30, 2021

What do Toast and Uber have in common, besides their huge valuation?

They both depend heavily on their software infrastructure.

For Toast, it’s their all-inclusive software capabilities that help restaurants manage online orders and operate an on-demand delivery network with payment integrations - which according to Reuters, drove their valuation of nearly $33 billion in its New York Stock Exchange debut.

And as for Uber? Thanks to its software focus, despite being hit by the pandemic, they has expanded their revenue streams into alternative forms of transportation like Uber freight which achieved $288M in revenue (Q3 2020) and autonomous vehicles where they sold the Advanced Technologies Group (ATG) unit to autonomous driving company Aurora Innovation for $4B in December 2020.

Software being at the imperative front for these two booming companies is also a reflection of the recent developments in the car industry.

Now that we’ve agreed software is paramount, here’s why investment into its infrastructure will be the pinnacle of success for new mobility services.

The Digital Age of Consumption

The days of aspirational car commercials screaming out status and style are slowly drifting away. What was once glorified in big exhaust systems and V12 engines are now being overshadowed by advanced driving assist systems and augmented reality overlays.

Digitisation is only the tip of this new iceberg, with software slowly looming up on the surface. The benefits of software investment are twofold - the first being the enablements for the business productivity improvements and the second being better customer experiences.

Hardware and software are no longer mutually exclusive, but rather interdependent. In maintaining its fundamental purpose of moving people, automakers should strive towards innovations that incorporate into the daily lives of individuals. Whether it’s delivering intelligent solutions or safety assistance, there is huge potential for software leaders to license their IP to other players and ultimately leverage data to make better decisions. It will only be a matter of time until traditional suppliers face the challenge of automakers being less tolerant of mediocre digital features and outdated safety options. And when that time comes around, software suppliers or rather players invested into their software infrastructure will see their dividends yield.  

Source: BCG


Entrepreneur and investor Marc Andreesen, famous for playing a key role in creating one of the first Web browser Mosaic, echoes such benefits. He states that software is eating the world and as we move to a post-COVID world it’s become apparent how important software is to unlocking value in our personal life, in the teams that we work with and in the way that we go about our work lives.

According to Jeremy Gupta, Chief Operating Officer at Loopit; software is the key driver of productivity and it can be an enabler (or a disabler if it isn’t fit for purpose), capable of adapting to new business models and ownership trends. To Gupta, exceptional software enables:

  • Business productivity
  • Brilliant customer experiences
  • Lower customer acquisition costs
  • Reduced risk
  • Scale

Creating new digital value

As we head towards the new emerging future of mobility, the digital value chain is evolving with respect to the changing customer journeys and needs. While value is often captured in the final product, it is important to remember that the process in these cars are made and delivered are equally important. We don’t have to look further than Tesla, whose software innovations have resulted in their valuation and loyal community.  

This experience can be seen in the car purchasing process itself. While in person car dealership interactions are gradually transitioning to the online space, much of the fundamental principles remain the same. That being, the intangible experience. Before we enjoyed the test driven incentives and free car seat safety clinics.

But in today’s era of online car purchase, we are now enjoying price transparency and information about car financing and trade in values through online calculators. All made possible with the power of software infrastructure.

Extending beyond cars themselves, mobility as a service is all encompassing. It’s deeper than getting from Point A to Point B. It’s the journey and everything in between.

It is why Uber has succeeded in their customer centricity. From their split fares to calculating fares upon booking your ride, our appreciation for these features reiterates the fact that mobility is more than a service. It’s an experience. All made possible by the capabilities of software.


Shortening the technological and adoption gap

“Incumbents in automotive are also starting to become aware of the need to adapt and change. This has led to the offering of mobility software solutions cloaked over existing software, services and platforms or entry into the mobility sector through traditional mergers and acquisition behaviour. “ - Jeremy Gupta

Volkswagen’s recent purchase of Europcar for their logistics and distribution proves just that.  Nissan CIO Tony Thomas also affirms the movement where he comments that the Japanese car manufacturer has set up digital hubs to double down on new new-product development, data, and cybersecurity capabilities.

The challenge presented to those incumbents however is learning as quickly as those “mobility-native” software providers about what is needed and what scales when the sector is foreign to you and you have other business priorities that demand your intention.

Without the upfront capital investment that was once attached, software is attainable for anyone and everyone looking to ride the wave of mobility and its adoption globally.

Though in stating the above, there is still a lot of work to be done. Many automakers and respective stakeholders simply do not have the infrastructure necessary to adapt to such disruption.

McKinsey (2020) reported the blemishes of automotive software development, where “OEMs or their tier-one suppliers try to stitch the modules together into a proprietary platform”. Here, we see the example of active suspension on new luxury vehicles requiring real-time interaction among ADAS cameras, powertrain sensors, and chassis actuators. Such absence of  interface control and integration poses major challenges in both performance and security. More alarmingly, it is predicted that OEM’s and suppliers are facing a talent shortage and huge increase in development costs - ultimately widening the gap between complexity and productivity.

In essence, improved functionality and reduced complexity should be at the forefront for automotive and future mobility software.

At Loopit, we are striving for just that.

From integrating identity verification with CRM systems to ensuring credit reporting is as seamless as possible; Loopit is committed to powering the future mobility movement. All through a robust yet flexible platform that enables our users to access all their end-to-end solutions.

We are seeing businesses unlock value in days, not weeks or months with zero spent upfront and are subsequently moving to customer-centricity. The Internet has enabled the ability to reach a broad audience quickly and self-signup and information readily available about the offering is table-stakes for an increasingly mobility and subscription-aware cohort of potential customers.

If you are in the mobility space or interested in knowing more about what it looks like to run a mobility company, Loopit has the working knowledge, software and expertise. Take your idea or existing business and turn it into a lucrative revenue channel. Be sure to stay in touch to get the latest insights from the team @ Loopit!

About the author
George is the Head of Marketing and Customer Experience at Loopit. Having originally started his career as a motoring journalist and founding team member for one of Australia's top automotive startups, George has a strong passion for automotive, business and growth marketing.

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