news.cuna.org/articles/111064-self-driving-cars-what-are-the-cu-implications
auto lending

Self-driving cars: What are the CU implications?

CU must determine how these vehicles could affect their ability to grow and protect their loan portfolios.

October 13, 2016

Autonomous vehicles (AVs) are speeding your way.

While auto manufacturers might not sell AVs until the next decade, August 2016 saw the launch of Uber’s driverless car service in Pittsburgh (with “co-pilots” on hand for initial trips) and the world’s first self-driving taxies in Singapore.

And Ford has promised to roll AVs off of its assembly lines by 2021.

AVs will impact our way of life, and credit unions need to start adapting now.

Lending implications

While America’s love affair with cars isn’t likely to end anytime soon, it could certainly change.

Uber, the ride-sharing giant, envisions consumers accessing a fleet of Uber-owned self-driving cars through partnerships established directly with auto manufacturers, Bloomberg reports.

Groups may collectively finance and share an autonomous car. These loan scenarios may resemble cooperative personal aircraft financing, where the aircraft is co-owned.

Tesla CEO Elon Musk has suggested that owners may deploy their AVs as ride share vehicles to profit (or reduce net cost) when they aren’t using them.

A more likely outcome is consumers retaining a primary vehicle. But they will likely stretch out their vehicle’s lifespan and rely upon AV services instead of buying an additional vehicle.

Insurance implications

As liability moves from the driver to the vehicle, underwriting will, too. Insurance ratings and pricing will shift from the owner to the vehicle.

AVs’ high-tech features could draw in niche players focused on cyber software and computer intelligence, thereby raising the cost of premiums to insure advanced technology.

And, a drop in accidents, personal injuries, and repair costs might mean fewer owners maintain insurance, unless required by law, opening the door to lower-cost disruptors.

A host of unknowns

Other big questions include speed of adoption, safety and liability, and data privacy.

AVs may be equipped with airplane-style black boxes, enabling crash investigators to uncover vehicle and passenger data: mechanical failure, destination, speed, and trip duration, and whether driver override was engaged.

Access to this data, how it would be used, and how privacy would be protected are major concerns.

These changes won’t happen overnight, but smart planning now could help credit unions avoid roadblocks ahead.

Credit unions need to determine how these changes could affect their ability to grow, finance, and protect their loan portfolios.

THERAN COLWELL is vice president of loan growth for CUNA Mutual Group.