The next 10 years
During the next 10 years, credit unions won’t see a critical mass of drivers rushing to dealerships to buy driverless cars, says Alicandri.
“Whether it’s the [lack of] affordability of these high-tech vehicles, regulatory impediments, or technology limitations, there won’t be a mass exodus of traditional car ownership in the next decade,” he says.
But that doesn’t mean the technology won’t advance.
“These new models are more likely to disrupt certain segments of public transportation, like bus routes, before disrupting traditional ownership,” Alicandri says.
For example, consumers will likely see certain routes in major cities and other controlled environments with driverless taxis or other autonomous fleets, he says. And in 10 years, consumers will “absolutely” be purchasing “self-driving” vehicles—even though these vehicles might not constitute a majority of sales, and even if those vehicles still rely on the human driver for contingencies.
When self-driving technology becomes available to consumers, Alicandri says credit union leaders should expect two realities:
1. Vehicles will depreciate faster than ever, with technology obsolescence increasing vehicle costs and, conversely, driving down resale values as the technology becomes obsolete. Thus, collateral values will become a growing issue.
2. Vehicle transaction costs and loan amounts will increase. Even though self-driving technology will become more affordable, it will still be expensive. This might mean more interest income—and more risk—for lenders.
Widespread use of autonomous vehicles—either as owned vehicles, rentals, or a mix of the two— “might be a generation away,” Block says. But thinking through the potential impact of the technology on credit unions is a worthwhile exercise.
For his money, Block doesn’t think auto loans will fall off a cliff anytime soon.
“I’m not sticking my head in the sand, but I think the notion that car ownership will completely go the way of the dinosaur is exaggerated,” Block says. “Auto lending will be a core part of what we do for many years.”
Still, he thinks autonomous vehicles eventually will become the standard on roads in the same way that automobiles replaced horses: “It’s only a matter of time.”