By Debra Levy
Leah Beauvan, age 31
Leah Beauvan is a 31-year engineer for one of the largest tech companies in the world. Recruited right out of Stanford, Leah was enticed by the Palo Alto giant, but wanted to live in a city environment. “I was pursued by the most desirable employers in New York, Austin and Seattle, so I had a lot of choices. Still,” she continues looking up from her smart phone, “I’d always wanted to live in San Francisco and, as long as companies like Google help me accomplish that, I am happy to work there.”
A traditional commute from her rented Alamo Square condo to Palo Alto would have taken more than an hour each way in rush hour traffic, except that Beauvan doesn’t drive to work. Each weekday morning, she boards a plush—and free—bus with the name of her employer on the side. She, along with about 40 coworkers, make the 35-mile trip to their office while taking advantage of lightning-fast Internet connections, free drinks and snacks and access to their desktops. “I can work or not work, so the time is still mine,” she says, “but they’ve made it easy for me to live where I want and work where they want.”
Kevin Kofferman, age 20
Kevin Kofferman is a 20-year old senior at Notre Dame University in Terre Haute, Indiana. Kevin grew up in a Chicago suburb, loves covering sports for his student newspaper and serving as an officer in his fraternity. He is always on the move. Yet when his parents offered him a car for his senior year, Kevin said ‘no thanks.’ Though he has his license, Kevin doesn’t drive all that much. His own father Fred counted the days until he could get his driver’s license and doesn’t understand his son’s attitude at all. Have you ever heard of a 20-year old guy who didn’t want a car?” he asks in-credulously. Well apparently the answer is yes, because most of Kevin’s friends feel the same way.
“The car’s a bit of a pain,” Kevin responds emphatically. “I have to fill up the tank, paying for gas it might take me weeks to use, I have to have insurance, and find a place to park it. “Uber,” he continues, “is so much easier. I pay as I go, literally, there’s always a ride available when I need it—and I never have to worry about parking.”
Riley Peterson, age 43
Riley Petersen is 43-years old and lives in downtown Boston. He works for a major clothing manufacturer whose headquarters in Maine he must visit each month. It’s a two-hour ride each way into the Pine Tree state but Riley doesn’t mind. When he moved into his Back Bay home two years ago he had a car, which he sold about a year after moving in. “It became superfluous,” he said. “If the weather’s nice I might rent one of the scooters on the street to get to work,” says Riley. “Sometimes I grab a bike to ride home. “If the weather’s bad, then I’ll find a Pink Moustache and grab a ride,” he says, referring to the ride share service Lyft whose cars used to sport big pink moustaches on their front grilles.And what does Riley do on his twice monthly so-journ into exurbia? “If I can’t carpool with somebody, I rent a Zipcar,” he says shrugging. “I pick it up on the street and leave it there when I get back. I had a car when I first moved downtown, but with all the options available to me, there’s no advantage to owning one anymore.”
In normal times, auto glass companies would covet young professionals as potential customers for life. Auto glass repair and replacement (AGRR) companies would begin marketing to them in their teens to build brand awareness and name recognition in the hopes of eliciting a lifetime of loyalty from them. Since AGRR magazine estimates the average car requires glass replacement services every eight years or so, a good local auto glass shop would expect to see each of them seven or eight times in their driving lifetimes. And though Leah, Kevin and Riley are composites (see profiles above), in traditional times, they would represent great customers—except that today, they are not; nor are they likely to ever be.
In fact, they may never or rarely ever own cars and, even worse, their potential to deliver seven jobs to auto glass service providers over their driving lifetimes could actually be zero.
The Killer Pink Mustache
The auto glass industry is undergoing profound and systemic change as a consequence of both generational and technological shifts. For AGRR businesses, survival and growth will require an understanding of these changes as well as an ability to exploit them and capitalize on them.
There are a number of factors that affect how much auto glass is replaced in a year. These include every-thing from weather, road conditions and gas prices to whether or not a state prohibits insurance deductibles for auto glass work. The single most significant predictor of auto glass demand though, remains the number of miles driven by the public. This special report is a look at the trends most likely to impact that number and, as a consequence, your business.
Chances are, your desire for a driver’s license was more akin to Fred Kofferman than his offspring. His son Kevin, though, is part of a growing trend.
After a generation of steady growth, the number of new licensees has started to shrink. The U.S. Department of Transportation reports that in 1996, 85.3 percent of high school seniors had their driver’s license. By 2018, that number had dropped to 71 percent, the lowest percentage in decades. In 1983, a full 92 percent of 20-24 year-olds had their license; by 2017 only 80 percent of the same age group had theirs.
What’s driving this downward trend? According to a January 22, 2016 article in the Atlantic magazine, 37% of those ages 18-39 who do not have a license cite not having enough time to get one as their top reason. This is followed closely by 32% who cite the cost of owning and maintaining a vehicle as too ex-pensive. Nearly a third say that the ease of getting transportation from others (31%) is also a factor.
The number of teens under 18 seeking driver’s licenses or learner’s permits has also shrunk. Non-driving minors cited in the Atlantic article say that overall cost and the ability to communicate online rather than in person are the main reasons they don’t have licenses. Add to that the fact that state subsidies for driver education programs are declining and it’s not hard to understand the change.
Cars are moving from an urgent necessity to a luxury for most teens and parents are contributing to that change. In fact, only 14 percent of the parents of teenagers received their first car as a gift. Not true for their children however, as a full 41 percent of teens today are driving a car that was a gift.
“I think the trend or hype of owning cool cars is less of a thing than it was for earlier generations,” said insurance expert Adam Johnson in Forbes magazine. “Many young people today have other priorities, like traveling or paying off debt … millennials prefer to spend their money on experiences over items.”
Car Ownership Optional Too
A new study called Rethinking Transportation 2020-2030 portends the change. The study, by RethinkX (RTX), a tech think tank founded by Tony Seba of Stanford and tech investor James Arbil, predicts that private car ownership in the United States will drop an astonishing 80 percent by 2030—a reduction from 247 million to 44 million cars.
“Owning a car will soon be like owning a horse—a quaint hobby, an interesting rarity and a cool thing to take out for a spin on the weekend,” says Kara Swisher, a 56-year old technology writer in a re-cent New York Times article. “I will drive in cars until I die,” she says. “But the concept of actually purchasing, maintaining, insuring and garaging an automobile in the next few decades? Finished.”
Swisher’s predictions are borne out by facts. In a 2017 study, Reuters reported roughly 9 percent of those who sold or traded their cars in a 12 month period did not replace them and have no plans to do so. Since nearly one-quarter of cars are replaced every year, the number of cars on the road is shrinking by roughly 2.5% every year.
This rapid and radical change will be the result of three main trends: 1) the rise of ride-sourcing and other new economic models; 2) the use of alternative transportation such as bicycles, scooters etc. and of private transportation networks; and 3) the increased reliance on autonomous vehicles.
Uber, Lyft and the Gang
Pre-arranged and on-demand services that exchange a ride, usually in a private car and for compensation are known as ride-sourcing services. These services typically are booked using digital applications.
Consider how the most famous ride-sourcing apps, Uber and Lyft, have rapidly destabilized existing markets.
Uber reports it has more than 3.9 million registered drivers and adds approximately 40,000 drivers a month. It operates in 700 cities across 63 countries worldwide. Its biggest markets are Houston, Miami, Chicago and New York. The website expandedramblings.com estimates Lyft has approximately 1.5 million drivers and dominates on the West Coast. Its largest markets are in Portland, Ore., Oakland, Calif., Seattle, Denver and Austin.
Ride-sourcing has already gutted the taxi cab industry in most major metro areas. In New York City alone, the taxi cab market share of purchased rides decreased 40 per-cent during the same period Uber’s market share increased by more than 400 percent. As early as June of 2018, the website nycurbed.com reported that the value of a city cab medallion, a prized possession that used to guarantee certain wealth, has dropped from a high of $1.3 mil-lion in 2013 to $160,000 in 2018–an 88% reduction in five years.
Further, the RTX study says that within the next two years using electric ride share will be 4-10 times cheaper than buying a new car.
The Rental Market Changes Too
People aren’t sharing just their rides, they are sharing their vehicles as well. New auto rental models have developed, all designed to get people from Point A to Point B more efficiently and consequently, more economically.
Three million people a year are using peer-to-peer car (P2PCS) sharing services such as Turo, Car-2go, Maven and Getaround. The most well-known ones, Zipcar and Turo, operate like Uber, only for cars. “Book unforgettable cars from local hosts,” reads the Turo web-site. Renters get a code that will unlock their rental and are told where it can be picked up or where it will be delivered.
More than 350,000 cars were registered with Turo in 2018; Zipcar has 12,000 cars available in 500 cities and 600+ college campuses. Turo attracts car owners with a pitch that its program allows the car that pays for itself. “On aver-age, Turo hosts can cover their [car] payments by sharing their cars just nine days a month,” says its website as enticement.
There are a number of variations on this theme. One San-Francisco-based company buys only older and dinged cars and rents its fleet by the mile, plus a small initial fee.
Convenience, on-demand service, lower cost and ease of booking are all factors in the success of P2PCS. But there is another important one—insurance.
Most of these services court drivers both with and without their own insurance. In many cases, insurance quotes are offered by the mile. Zip-car’s website, for example, says its fees include access to drive nearby cars by the hour or day—gas, insurance and maintenance included.
The two industries most affected by P2P car and ride-sourcing and sharing—car rentals and insurance—have already begun to adapt. Avis purchased Zipcar in 2013 and it continues to expand. Hertz experimented with a car-sharing program called Hertz 24/7 but shut it down last year. A return to this market is expected in the future.
Many major insurers now offer optional insurance for owners who drive for companies like Uber and Lyft. The P2P car sharing services all offer insurance to drivers and many have teamed up in partner-ships with individual insurers.
In September of 2017, the venture capital arm of Liberty Mutual became an investor in a $92 million round of funding for Turo. “The sharing economy has been a focal point for the fund, and Liberty Mutual is eager to engage with Turo to explore how we can provide innovative insurance solutions for their customers and our policy-holders,” Dan Robinson managing director of Liberty Mutual Strategic Ventures, told Insurance Journal at the time.
Sharing Isn’t Just for Cars
For urban-dwellers, P2P sharing reaches far beyond cars. Bikes, scooters, some Segways and even other alternative transport devices all continue to gain in popularity.
The National Association of City Transportation Officials (NACTO) estimates that bike-share systems exist in 119 of the largest U.S cities with nearly 5,000 stations for bikes. Saint Louis and Detroit are the only ones among that top 20 urban areas in the country that do not offer such programs. New York, Chicago and Washington have the largest networks where station (dock)-based companies such as Bike NYC, Divvy, Capital Bikeshare and Hubway dominate.
Older bike-sharing systems require the bicycle be “docked” at a pre-determined station; the newer “dockless” companies do not. Some companies rent helmets to cyclists for a nominal fee; others include helmet rental with the bike.
NACTO also estimates that as recently as 18 months ago, the number of bike-share bikes had reached more than 100,000. The majority of that increase comes from newer, dockless bike programs that offer even greater mobility as the cycles can be parked and left anywhere.
P2P bike-sharing accounted for 35 million bike rides in 2017. Until 2016, most service was provided by three companies—B-Cycle, Motivate and Social Bicycles. Since 2017, however, a number of new dockless companies have started up, with names like Limebike, Mo-Bike, Spin and Ofo.
This has proven so popular that P2P ride-sourcing companies have taken notice. In June, Uber purchased the bike share company Jump for an undisclosed sum. “We see the Uber app as moving from just being about car sharing and car hailing to really helping the consumer get from A to B in the most affordable, most dependable, most convenient way,” Uber president Dara Khosrowshahi had said in an interview with the tech site techcrunch.com.
Scooter or Scoot
Far less plentiful, yet far more controversial, are P2P scooter-sharing programs in urban areas. Following a model similar to bike-sharing, customers check out electric scooters for rides, then park them when they are done. Companies include Bird (which Inc. reported was valued at $2 billion a year go) Lime, RazorUSA and Scoot Networks. Uber’s Jump and Lyft itself also offer P2P scoot-er-sharing. Bike- and Scooter-sharing company Spin was bought in November 2018 by Ford Motor Company for $100 million.
Where scooters go, controversy does follow. Many of the companies have started doing business in and deposited scooters in metro areas without asking permission, leaving local jurisdictions to play catch-up with regulation. And the scooters are a bit more labor intense, as they must be re-charged, requiring workers known as “chargers” to move around the city doing so.
But by far the biggest outcry is over safety. Whereas everyone who thinks they can ride a bike generally can and has years of experience doing so, not so with a scooter. “Everyone thinks they can ride a scooter,” said one identified interviewee in a recent network report on the subject, “but they can’t.”
Critics cite lack of good riding and safety instruction, lack of helmet enforcement and lack of inspection as reasons for concern. In March, the Center for Disease Control and Prevention announced it was investigating the increase in injuries related to electric scooters. One death and thousands of injuries have been attributed to scooters.
When visitors descended upon Auto Glass Week in San Antonio in 2018, P2P scooters were plentiful around the convention center and attendees took advantage of them. “I personally know of two people who ended up in the hospital emergency room as a result of scooter injuries while there,” said Casey Flores, account executive. “One of the injuries was quite serious and included bruised ribs and a broken jaw.” Thus far, ten cities have regulated scooters and only one (Austin) has tightened regulations with the effect of banning them outright.
With an anticipated combined bicycle-scooter market size of $6 billion next year, it’s not likely such P2P sharing services will be banned or going away.
The App for That
Remember your first Global Positioning System (GPS) navigation tracking device? Didn’t it come in a box and, with luck and good adhesive, sit on your dashboard? Today, a majority of new cars come off the line with some type of available navigation system on board. And if you prefer not to use nor pay for the one the carmaker provides, there’s the proverbial free app for that.
The two most popular are Google Maps and Waze. Google Maps provides directions according to mode—walking, driving, biking or using public transportation. The maps also show points of interest and businesses along the way. A re-cent study by manifest.com showed that more than three-fourths of smart phone owners regularly use navigation apps with Google Maps being more popular.
Waze uses vehicle occupant feedback to assess road and traffic conditions, accidents, police and other conditions that can slow or effect traffic. It will automatically adjust routes based on those conditions. Drivers can also use Waze to arrange carpools and ride-sharing.
The two dominate the direction app field, and Google purchased Waze in 2013.
Any technology that reduces the number of miles driven affects the auto glass industry. Increased efficiency, shorter commutes, even less time spent lost, all contribute to less miles driven on the road.
Private Mass Transit Systems-Microtransit
In a practice that first began in Silicon Valley, employers provide private mass transit options that bring employees like Leah Beauvan to work.
How? Every morning thousands of Google workers board private buses at predetermined locations in the City by the Bay to make the 45-min-ute trek to Mountain View. The bus-es are well-appointed, often offer coffee, juice and free snacks and sport some of the fastest WiFi in the country. There is no cost and riders are free to sleep, recreate or work.
Google is not alone in its efforts. A 2014 survey by the Bay Area Council said that private shuttles were the seventh largest transit system in the Bay Area.
As far back as 2012, Google was carrying 5,000 riders a day, and approximately 43% of Facebook employees were using such shuttles, and the trend is still growing. Apple, Genentech, Amazon, eBay, Yahoo and Microsoft all offer private transportation systems for their customers, thus reducing the number of vehicles on the road and miles driven. And employers who can’t privatize employee transportation subsidize it with incentives for car pools. The Society of Human Resource Management reports that eight states, five major cities and nine counties in California require companies with 20 or more employees to offer some sort of mass transportation/commuter benefits.
The ridership on private shuttles and micro-transit vehicles is also expected to increase.
Magleves, Musk and Macros
New methods of moving people are in development in the United States and could also account for major shifts in transportation pat-terns. These methods are not mass transit systems designed for intra-city movement; rather they are designed for travel across large expanses of miles and between major cities. These macro-transit systems continue to be conceived, proposed developed and tested. Some will surely become popular in the future.
Two of the best known are the Maglev train, used in Europe for more than 40 years, and entrepreneur Elon Musk’s proposed tunnels from O’Hare to downtown Chicago, also now in development.
Magnetic levitation (Maglev) trains are electromagnetic trains that use magnets to raise the train and propel it forward. Because the trains move suspended by a magnetic field, they can do so at speeds of 250 miles per hour and higher. The Maglev “bullet train” line under construction between Osaka and Tokyo, for example, will travel at speeds of 500 mph when it is fully completed in 2045. The absence of friction in Maglev technology greatly reduces the sound generated, meaning the ride is acoustically-pleasing as well.
Efforts to introduce Maglev transportation in the United States have started and stalled over the years, with critics generally comparing as exorbitant the cost of Maglev trains to the cost of new roads.
Should the technology premiere in the United States, it will most likely be used in two highly-traveled corridors: the Boston-Washington D.C. corridor, which includes New York, Philadelphia and Baltimore in its path. With a distance of 441 miles from Beantown to the Nation’s Capital, the maglev train would take less time than even the current fastest method of travel—the Delta Air Shuttle.
Maglev technology is also being touted for the Las Vegas-Los Angeles corridor, which does not currently have nonstop train service. In fact, Amtrak currently offers only one train a day between the two cities and it is not direct; passengers must change trains.
Maglev proponents say the popu-lar LA-Vegas trip is ripe for its service and would offer an easy and fast alternative to driving and/or flying. The 265 mile trip could be made in 35 minutes.
As Maglev technology works for trains, can cars be far behind? When carmaker Renault teamed up with Saint Mauritius Art and Design College in London, the result was the “Renault Float 2020” concept car, which features Maglev technology, a pod-like exterior of three trans-parent glass bubbles connected in much the same way three children’s toy bubbles would be; sliding glass doors and the ability to move in any direction without turning.
The Float can seat one or two people, though more passengers can be added by belting Float pods together magnetically. The Float is designed to work with ride-sourcing and sharing apps such as Uber, rather than having conventional owners and drivers.
Though the recent Chicago May-oral election may have decreased its chance of coming to fruition, the Boring Company’s plan to dig tunnels and fill them with moving pods between O’Hare Airport and down-town Chicago certainly garnered tons of attention. Much of that interest was the result of the company’s founder—Elon Musk—and his vision of mass- and macro-transit in the future.
Musk’s company wants to mitigate traffic through a series of boring tunnels that utilize fully electric autonomous cars such as, not coincidentally, Teslas, to move beneath the earth on tracking wheels that can be attached for vehicles. Not only would the pods be used for people, but for freight as well. They would move at speeds well over 100 mph and cut the trip from O’Hare downtown (which can take up to 90 minutes in rush hour) to 12 minutes.
One thing’s for sure. Millennials are not going to put up with the same commutes and traffic times that boomers do. In fact, the announcement of the Chicago project on the Boring Company’s website says that it “has been selected by the Chicago Infrastructure Trust (CIT), on behalf of the City of Chicago, to enter into exclusive negotiations to design, build, finance, operate and maintain an O’Hare Express service. The Chicago Ex-press Loop will provide fast and convenient transportation … to alleviate soul-destroying traffic by constructing safe, affordable, and environmentally-friendly public transportation systems.”
The project, though, is now considered on life support as Musk has changed its basic premise and one of its greatest advocates, Chicago Mayor Rahm Emanuel, has been replaced. New Mayor Lori Lightfoot has said she does not support public funding for the project nor can she see a way the project can be achieved without such funding.
In a joint press conference with Emanuel on June 14, Musk said construction of the first tunnel would start in 3-4 months.
It remains to be seen whether magnetized trains and underground Teslas will ever carry populations throughout the United States. But as such enveloping-pushing technology continues to advance, so does the likelihood that some of it will take hold and be widely adapted.
So What Does It Mean?
The advancements in autonomous vehicles, as well as the market and technological changes detailed here will lead to a very different auto glass industry. Is it going to die?
Hardly. Technology was expected to slay many industries—movies and TVs, trains and buses, but it didn’t. Nor will it kill the auto and glass service businesses, but they will be different in the near future and AGRR companies will need to adapt.
There are also pockets of traditional opportunity, even in the face of the new reality. The RTX study predicts that five percent of car owners will not adopt the new technology models. That five percent will consist of three groups: “technology laggards” who will not switch for personal reasons or reasons of dis-trust; the “very rich: who will still want the freedom and flexibility that private car ownership brings; and “rural consumers,” who make up the largest percentage of non-adopters. “Smaller rural communities may not have the population density to have high enough demand to attract a critical mass of Transportation-as-a-Service (TaaS) vehicles and maintain a sufficient level of service…” according to the report.
Larger Expanses of Expensive Glasses
The same number of people will move, but they will move in vehicles they do not own. In cases of autonomous vehicles and technology such as the Renault Float, the amount of glass used in that vehicle will increase greatly. There may be less miles driven, but they will be driven in cars with large expanses of expensive glass. Service providers already are beginning to adapt. Many insurers and other service providers are al-ready beginning to adapt and many now offer “ride-share” insurance. The claims administration arm of the country’s largest auto glass retailer has already expanded from auto glass claims into residential work as well.How will an average glass shop succeed in the new reality? AGRRmagazine talked to many experts, in and outside the industry, about the future path for most shops. A number of common themes were reflected in their advice. The successful AGRR company of the future will need to:
1. Service autonomous and semi-autonomous vehicles.
Aftermarket auto glass installation companies that do not have a mechanism to check that all systems impacted by glass are working properly will not be able to compete. Whether the company provides calibration services itself, or uses a third party or dealer to do so, calibration will be an important part of the future.
2. Handle more sophisticated pieces of auto glass.
“Windshields will soon be better information providers than PCs and smartphones,” says Michael Robinson, CEO and design director of ED Design Srl, and former head designer for Fiat and Lancia. AGRR companies that succeed in the future will be able to service multiple aspects of the glass intelligence interface.
3. Handle large pieces of glass.
As more and more miles are ridden in private shuttles, glass bubbles and mini-buses, glass companies will need the tools, equipment and manpower to install large pieces of glass. Handling tools will be necessary and specialized bays a possibility. In Europe, the market leader Belron works to utilize only certain of its locations to replace glass in trucks and bus-es. These locations are equipped with specialized equipment and depressed bays allowing easier installations.
4. Keep downtime to a minimum.
Uber drivers can’t make money when their cars are off the road. The whole movement to a TaaS economy makes a car more efficient by increasing the amount of time the car is on the road. Customers will continue to pressure glass companies and their adhesive sup-pliers for shorter and shorter cure times. Mobile service can no longer be predicated on the idea that a car will be idle in a parking lot all day, because it won’t. The ability to hold to schedule will become even more important. Warranties may not be just for workmanship but for how quickly service will be provided, in much the same way you pay for computer support by how quickly you demand to receive it.
5. Offer new products and programs.
Discounts for ride-share and ride-sourcing drivers are already appearing online (special for Uber drivers, etc.) and insurers are developing new products as well. Glass companies could well offer a fee-for-guarantee that provides service with a set number of hours for a set fee when glass breaks. They could also provide loaner cars or pick up the cost of a ride-share for their customers.
6. Expand services.
Glass companies may well offer other services that complement the new economy. Services such as electric charging stations, scooter and bicycle repair, emergency van rental, GPS repair, smart screen repair and more are all part of this new economy and can all be monetized.
7. Create opportunities through non-adopters.
This new alternative economy does not thrive in rural settings, nor is it for the very wealthy. Companies that can service exurban and rural areas quickly should maintain or increase market share. These areas will also quickly become less profitable for larger, or less nimble, chains. Companies that focus on white glove service for luxury cars should also thrive.
8. Realize the insurance dynamic will change.
Traditional auto insurance will become a smaller piece of the insurance market and glass may eventually not be insured at all, in much the way tires are not. Awareness of your brand and consumer choice becomes even more important.
9. Know that safety matters more than ever.
The idea that riders will get into a car of unknown safety with a driver they do not know will eventually lead to a movement toward independent, verifiable proof of safe products and procedure. Be prepared for this emphasis on safety.
10. Stay informed.
Change has never come at a quicker pace than it does today. Survival depends on recognizing change before it becomes a trend and capitalizing on it.
Debra Levy is the publisher of AGRR magazine. Researcher Brigid O’Leary also contributed to this report.
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