The Future of Futurism

Listeners to my radio show love to send me stories they’ve found online about the car industry, often written by individuals who know nothing about how it really works. In one case it was not about buying a new car, but obligations new car dealers have under their franchise agreement for remodeling or building a new store. Not one paragraph had a verifiable fact in it, showing the author never read a franchise agreement or any state’s laws governing new car dealerships or even talked to a dealer. It’s one of the great tragedies of modern media; so many people claim they don’t trust it, then go off to websites loaded with nonsense and claim they’ve uncovered the truth.

Other times you know the article was well meaning, but whomever wrote it was divorced from reality. Those tend to evoke my sympathies for the author’s parents. Case in point, “How to Profit from the Death of Car Ownership,” written by Scott Reynolds and published in Oil Price magazine. Scott’s first line, “You may have heard about the Internet of things,” tells you immediately he’s talking down to readers. He goes on to explain how in a few years there will be 64 billion devices attached to it — a $2.4 trillion market by 2027 — and the impact will be more apparent in the automobile industry than anywhere else. Apparently he hasn’t been to most homes.

For the record, this column was written at a computer that is online, as are two iPhones in the house, two iPads, one TV, and three other computers. Also two Ring doorbells, one smart light switch, a security system, an Apple watch and Apple TV, Nest thermostat, and our sprinkler system. Oh, and both of our vehicles. While it is true one can lock and unlock one of the new cars online, the trillion marketplace for online devices is already in place.

But Scott isn’t going to be dissuaded by simply looking at the world around him, because he then pitches us on his fact that one can order a cab with the click of a button. Yes, Scott, we’ve all heard of Uber. He then adds, “You can hop on a bicycle parked on your street corner.” Again, he apparently hasn’t been to Dallas in the last couple of years; all of those rental bikes on street corners disappeared because no one was riding them. But hey, go ahead and jump on that bike on the corner and see if you’re charged with felony theft.

But here comes the big one, his claimed emergence of tech already in development that will change the way we get around. Wow. Scott defaults to telling us about Facedrive, which has “reimagined ride sharing, taking on the giants of the industry, Uber and Lyft.” Scott then claims that’s happening even as we speak, as Facedrive has acquired Steer, a subscription service where you can order an electric Tesla, Porsche or Audi, delivered to your home, and with leases as short as 1 month. Where do you start unpacking that line? First, chasing money-losing companies is only setting you up to become another money-losing company. Second, delivering cars to someone’s home is not new; it’s been done in the auto industry since I first was in it 47 years ago. Third, changing leasing terms from 36 months to one month is not a breakthrough, any more than taking leases from 60 months down to 36 changed anything. Oh, and I downloaded the Steer app to order up my car, but apparently it doesn’t yet work in Fort Worth.

Demonstrating his lack of knowledge of how business is transacted in America, Scott claims this service saves you an outrageous upfront cost for any given car, and that subscription services have taken over most everything, including fashion, hygiene, media consumption, and even housing. Ok, Scott, I haven’t any had anyone at Macy’s suggest renting a shirt instead of purchasing it, but tuxedo stores have been renting suits for decades.

Oh, and the media has always charged subscriptions, and subscribing to housing is called rent. Oh, and just because you didn’t pay that “outrageous upfront cost” doesn’t mean the leasing entity didn’t pay it; it’s just wrapped into your one-month rental price. Further, since you suspected we might not have heard of the “Internet of things,” maybe someone should tell you about rental car companies, where you can rent by the month and they will deliver it to your home. Again, been around for decades.

Then he throws down the big one to prove his point, listing headlines such as, “Millennials Turn Their Back on Car Ownership” and “The Reasons Why Millennials Aren’t as Car Crazed as Baby Boomers.” Now, that last headline was at Forbes on August 4, 2019, but just four months earlier Forbes ran the story, “Millennials Don’t Dislike Cars, New Study Says.” Or the MarketWatch story a few weeks earlier, “Turns Out, Millennials Love Cars as Much as Anyone Else.” Scott uses carefully picked headlines to again justify Facedrive’s business model.

We covered this too, in this column, about misreading the percentages of new cars purchased by age group. Years ago Millennials were purchasing around 14 percent fewer new cars than Boomers did at the same age. But Boomers were buying cars at a much higher rate than their parents had at their age. The fact is, Boomers were still buying their Millennial offspring cars, because the Millennials started coming of age just after the start of the century and the last came of age three years ago. So that generation was hit by both the Financial Meltdown and now a pandemic. Both hurt the financial security needed for many to purchase new cars.

However, as Millennials moved into their second and third jobs, the ones that paid better, they too became car buyers. All of my nieces and nephews have purchased or leased at least six cars on their own over the past nine years. And now the percentage of Millennials buying new cars is nearly as high as that of Boomers at that age.

Nowhere in his article did Scott actually explain how anyone could profit by not owning a vehicle. Then again, headlines are not always written by the column’s author.

For the life of me I’ve never figured out how we could be covered up in stories that hyperbolize the reality of what’s happening. As pointed out numerous times, Uber is nothing more than an Internet taxi company. Instead of pushing 10 buttons on a phone to get a car, now it’s just one on your smartphone. That’s a productivity increase, but nothing new — other than today there are no real rules, regulations or safety demands forced on your livery drivers for your protection.

WiFi is a similarly overblown concept. True, it connects all Internet devices in your home — like a transistor radio connects you to radio waves from stations everywhere, or an antenna can connect your TV to numerous local stations. WiFi just puts the transmitter in your home, but it’s based on an old technology. Just ask Marconi. Or go back to Alexander Graham Bell, the inventor of sending complex communications over a wire, because that’s the basis of everything right down to having cable TV. As for optic fibers, sorry; that’s been known since the 1840s, and images were sent on optic fiber in the early 1950s.

Meanwhile, real progress has been made in modern automobiles. From safety devices, which keep right on coming in ways we didn’t imagine just a few years ago, to being nearly emission free and achieving superior mileage. In fact, leasing prices have fallen like a rock because of the improved quality of cars, rising residuals, and today’s rock bottom interest rates. As an example, 34 years ago you could lease a new 1986 Acura Legend L sedan for $3,500 down, plus TT&L and 60 payments at $550. The list price on that car was only $26,995. Today you can lease a Honda Accord with the same list price for half that amount, no money down, just TT&L.

Therein lies the problem with all these stories on the Future of Futurism. Their claims of change are nothing more than variations on technology that already exists. Meanwhile, writers refuse to see the obvious — that ditching a car and only using Uber would far more than double, triple or quadruple the cost of getting around for most. Not to mention it’s just a taxi business vying for your mobility dollars. Just as renting an electric car by the month is not new either, or home delivery of a vehicle; Enterprise Rent A Car used that pitch in their ad campaigns years ago. Their cars just weren’t electric.

But as cars got smarter, safer, and less expensive because of low interest rate leases, that’s the real competition and value for car owners. So, not one of these pie-in-the-sky stories can match what’s already happening at dealerships across America.

Scott didn’t mention it, but Forbes said that Steer’s short-term lease on an Audi e-Tron is $1,698 a month. GM shut down Cadillac’s subscription program at similar payments because nobody bit.

And yes, Scott, I have heard of the Internet of things.

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: edwallace570@gmail.com

This story was originally published December 18, 2020 at 12:00 AM.