Technologists, auto industry experts, and futurists’ opinions about the impact of autonomous—or driverless—vehicles are all over the map.
Some say they will widely be speeding down the road in only a few years. Others think they won’t be here for decades. Some say they could dramatically alter American’s love affair with their vehicles, while others believe a decline in vehicle ownership is overstated.
Regardless of who’s right, credit union leaders are paying attention. New- and used-auto loans comprise nearly 35% of credit unions’ loan portfolios, according to CUNA’s research and policy analysis department.
Baxter Credit Union’s board of directors challenged staff to think through various scenarios about how the evolving technology could affect the $2.8 billion asset credit union in the foreseeable future.
“It’s clearly an important part of our financials, and some people out there believe car loans will go away,” says Jim Block, senior vice president/chief lending officer for the Vernon Hills, Ill., credit union. “The board just wants to make sure we’re looking at the future with our eyes wide open. We don’t want to be blindsided by a big shift in technology.”
Will ownership decline?
Autonomous vehicles could accelerate societal trends that could mean fewer auto loans for credit unions down the road, says Andrew Downin, Filene Research Institute’s managing director of research.
Fewer people are getting driver’s licenses, more people use rideshare services for their transportation needs, and younger consumers have less of a desire to own things such as cars, he notes.
“As a society, we’re slowly becoming comfortable with consuming as a group versus consuming as individuals,” Downin says.
Jeremy Alicandri, managing director of the automotive strategy consultancy Maryann Keller & Associates LLC, also sees an eventual decline in American vehicle ownership. “More people will likely live in urban settings and use public or shared transportation,” he says. “More people will use companies like Lyft for transportation, perhaps even driverless taxis. And more people will explore alternative car-ownership models. These changes are inevitable.”
A world where driverless taxis are ubiquitous could convince people they no longer need to purchase an automobile that they generally use only a few hours a day. “The new model might be renting a car by the minute or by the hour,” says Downin.
Yet, the changes might not be as dramatic as some expect, Alicandri notes. Some people might still prefer to own a car for specific uses.
“Imagine the proverbial soccer mom with a minivan full of children, soccer balls, and baby seats. She won’t be able to load and unload her baby seats and soccer balls in a different ‘autonomous taxi’ after each stop,” Alicandri says. “It’s just not practical.” Ultimately, affordability of autonomous vehicles could have a big impact too, he says.
NEXT: Solve the need