by Noriyuki Morimoto
In many areas, what stimulates consumption is not the technological sophistication of a product’s features, but something else entirely. Whatever it is, it is not something measurable in terms of economic rationality or practicality. It can be something cultural, something that leads to the creation of non-economic value that cannot be converted into monetary value, such as the pleasure of driving rather than the improvement of a car’s fuel economy or other driving performance.
As it is no longer possible to change the direction towards automated driving and away from gas-powered vehicles, the structure of the automobile industry has to undergo a fundamental change. In this context, fundamental innovation in functionalities through structural transformation will create significant new demand. Perhaps the auto industry will be reborn as an entirely different mobility systems industry, growing on an entirely different trajectory.
Of course, gasoline-powered vehicles will not be eliminated immediately and completely, but they will not survive through technological development for functional sophistication. Therefore, they must be able to embody inherent value that cannot be realized through automated driving or electric vehicles. For example, a fundamental shift in mindset might lead to the development of technology that gives the driver the illusion of being one with the machine, bringing a sense of dynamism as if they themselves are a running vehicle, and giving the driver the joy of driving.
Within this technological development, engine noise and vibration are appreciated from a completely different perspective, since they may be a critical element of the pleasure of driving. Engine noise and vibration have no functional value in terms of driving performance, but they do have non-economic value to those who enjoy driving. Moreover, this non-economic value can be turned into significant economic value by creating new demand and enabling non-competitive pricing.
Nowadays, there are probably fewer people who enjoy driving for the sake of driving. However, since the key to a successful business is to identify a clear market segment, if the mainstream auto industry identifies the mobility system created by functional innovation as the major future market to invest in, on the other hand, it makes sense that there would be companies that identify and stick to the market of driving as a source of pleasure.
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.