TORONTO — Auto dealers — particularly those serving urban centers — face an existential threat in a future driven by autonomous vehicles and growing calls for reducing vehicle ownership as a way to combat congestion.
Less car ownership: That's Google's recommendation for its ‘smart city’ in Toronto
"The discussions we've had with our dealers is to say: 'Prepare yourself. Prepare to be part of the solution.' Dealerships need to be connected," said John White, CEO of the Canadian Automobile Dealers Association.
The latest call to discourage vehicle ownership comes from Google affiliate Sidewalk Labs, which wants to build a "city within a city" in Toronto, powered by fleets of autonomous vehicles.
Sidewalk acknowledges that self-driving vehicles could worsen urban traffic congestion if there isn't a corresponding effort to discourage private vehicle ownership. That raises long-term questions for dealers as automated driving technology develops and cities worldwide try to address crippling traffic in their cores.
"Clearly, you are going to see different forms of shared mobility, which can have some impact on the traditional, direct-retail business in urban settings and maybe more of a shift away from that direct ownership in certain cases," White said.
Some of the world's biggest cities have already enacted measures aimed at discouraging motorists from driving into city centers, and more are expected to do so as congestion increases and governments look to reduce carbon emissions. London, for example, charges a congestion fee for vehicles in a designated zone during weekdays.
The future of vehicle ownership was a key topic of discussion at a recent high-tech conference here.
"There's a huge demographic that has a family, that has kids, that has car seats and all the things you need to put in the car. These things are going to push you into the convenience of owning a vehicle," said Andre Haddad, CEO of car-sharing service Turo.
"But we definitely see the younger demographics and the older demographics having the possibility of being freed up from car ownership because of all the transportation networks that are going to be out there."
Michael DeFreitas, general manager of Lockwood Kia in Oakville, Ontario, near Toronto, said he largely anticipates most Canadians will continue to want to own their own vehicles.
"I don't think the business is going to change to that kind of model. People still want to own their own vehicle, and people still need to have transportation outside of the city," he said. "Owning a vehicle is still a point of pride for people."
Sidewalk, owned by Google parent Alphabet Inc., in June revealed its $995 million plan for a nearly 12-acre district on Toronto's waterfront near the downtown core. Part of the plan focuses on how mobility, transit, ride-hailing services and self-driving vehicles can be used to make cities more pedestrian-friendly.
Sidewalk sees reducing vehicle ownership rates as critical to that goal.
"If self-driving vehicles are individually owned and free to roam the streets without a driver, then car ownership — and congestion — might soar," the plan reads. "But if self-driving vehicles are integrated into the urban environment and public transit network with thoughtful policies that encourage fleets of shared trips and people-first street designs, they can become part of a next-generation mobility system."
Sidewalk's warning about traffic congestion is notable coming from a company that sees self-driving vehicles as crucial to achieving its long-term goal of creating a smart city.
"Self-driving vehicles could become both widely available and demonstrably safer than today's drivers over the next 15 years," the master plan reads. "Their ability to operate as fleets or shared services could enable cities to recapture most of the street space once devoted to parking and to repurpose this space for bike lanes, wider sidewalks, transit services, or pickups and dropoffs that would make it easier to live comfortably in the city without owning a car."
In its report, Sidewalk acknowledged that personal vehicle ownership "will persist" in the coming years even if self-driving tech "radically lowers the cost of hailed rides." That's because "owning a car in a major city is not a decision based on a detailed cost-benefit calculation," the plan reads. "Thus, policy will need to shape car ownership patterns."