News & Views

Stay up to date with your industry


Top 3 Business Benefits Of Autonomous Vehicles For Commercial Fleets

Australian motorists have moved one step closer to getting behind the wheel of a driverless car with the first on road trial of this ground breaking technology taking place in Adelaide on 7th November. Much of the debate has focused on whether consumers are ready to embrace the technology, but in this post we take a look at these issues through the lens of Australian fleet managers.

Saturday 7th November 2015 marked a hugely significant date in the history of Australia’s automotive industry. In collaboration with Volvo, and as part of the Australian Driverless Vehicle Initiative, the ARRB Group brought together a group of leading experts to participate in Australia’s first on-road demonstration of automated vehicles on the Southern Expressway, Adelaide.


 Image source: CarAdvice

The tests, using a Volvo XC90s, demonstrated automatic lane keeping, adaptive cruise control, and queue assist, which manages the car's position in a line of other cars. The conclusion drawn from this and many other on-road tests in other parts of the world is that the technical feasibility of self-driving vehicles is largely proven. So the question to ask is not if, but when.

Volvo expects to introduce a range of autonomous vehicles to the Australian market by 2020. That might seem somewhat ambitious given there are a number of barriers to be overcome before automated vehicles are widely adopted. These include: high vehicle purchase costs; public safety and privacy data concerns; unresolved regulatory and legal liability issues; and safety and security issues.

Several factors, however, support Volvo’s expectations.

The first is we often underestimate the power of Moore’s Law, which states the exponential rate of technological development. We have reached a critical point of inflection. This is the bend in the curve where many technologies that used to be found only in science fiction are becoming everyday reality. Those innovations that we think are in the far future are often much closer than they appear. To illustrate this point, Chris Urmson, who heads up Google’s driverless car program gave a fascinating TED talk earlier this year on the progress Google has made testing their driverless vehicles in highly demanding urban environments. He revealed how the car sees the road and makes autonomous decisions about what to do next, including some of the unusual traffic situations the Google cars had encountered, such as a child driving a toy car in the road and a woman in an electric wheelchair chasing a duck. While there is no manual about how to deal with these situations, the car slowed down and reacted appropriately in each case.

These represent major leaps forward in terms of the AI capabilities of these vehicles, and are way beyond the reach of the earlier prototypes being tested two to three years ago. It is reasonable to assume future models will effortlessly navigate their way around some of the unusual challenges found on Australian roads such as roos and motorised eskies. Click here to keep tabs on how Google’s driverless car project is progressing.

Second there appears to be a growing commitment from politicians and public transport bodies to address the regulatory hurdles that need to be cleared. Their motivations are to significantly reduce the number deaths that occur on roads each year and the level of vehicle emissions, as well as to harness the broader economic benefits that autonomous vehicles can bring to the consumer and business sectors.

Speaking at the November driverless vehicles conference in Adelaide, South Australian Premier, Jay Weatherill, said: “We are encouraging the development of a new technology which not only promises to improve safety and lower emissions, but also offers countless opportunities for the South Australian economy. This industry has the potential to revolutionise transport in Australia. “We want to be at the forefront of this paradigm shift towards an industry which is anticipated to be worth more than $90 billion globally by 2030.”

The third factor at play is that while fully autonomous vehicles are still in the testing phase, we are already seeing semi-autonomous product vehicles. OEMs like Mercedes Benz, Infiniti and Tesla already offer Level 2 autonomous features in their vehicles, allowing hands off driving on highways or specific other circumstances. Looking to the future, both Volvo and Toyota have announced plans to progress beyond this, with Level 3 vehicles that allow full autonomy across more diverse driving situations expected to be in production within the next five years.


Benefits of Autonomous Vehicles for Commercial Fleets

The widespread adoption of autonomous vehicles would undoubtedly have a transformative effect on nearly all aspects of transportation in Australia. Entire business models and professions would be created, transformed, or eliminated as robotic taxis and driverless freight become possible. The potential benefits to businesses operating commercial fleets are also significant and include increased driver safety, productivity improvements, reduced fuel and vehicle maintenance costs and higher vehicle utilisation.

In anticipation of driverless vehicles being with us sooner than we think, we recently spoke to 220 fleet managers, who represent a significant segment of the potential market, about their understanding of these technological developments, and their views on the potential business benefits.

Around half of the fleets we interviewed said they are not very familiar with the debate about driverless vehicles with the other half more informed, either reading media articles or actively tracking developments. Accordingly, the more informed fleet managers are much more likely to think driverless vehicles will definitely become a reality in Australian fleets whereas the less informed are more likely to think this will not happen anytime soon.


Turning to the business impacts of driverless vehicles, the top 3 expected benefits are improved safety, enhanced driver productivity and lower fleet repair costs. The more informed fleet managers are more likely to regard these as the potential business benefits of driverless cars. At an overall level, customer experience improvements are ranked as the lowest business benefit.


The economic value of these benefits should not be underestimated. In particular the productivity gains valued in terms of time savings are potentially significant. Assuming the average Australian car driver travels 15,000 kilometres a year at an average speed of 60kph, each vehicle holds one person and there are 13 million registered vehicles on the road. This translate to 195 billion kilometres a year, equivalent to 3.25 billion hours. Let’s conservatively assume that the value of time spent doing what you want in the car instead of driving is $2 per hour, this would imply $6.5 billion of time savings every single year. That’s before we value the cost of fatal and non-fatal crashes, so the sums quickly add up. It’s therefore not surprising to see political leaders getting excited about the future prospects of driverless cars.

While we keep our eyes on the road ahead, it’s also a good to keep a strong grasp on the here and now and trends affecting the current market. For example, take a look at ACA Research’s latest research report on the Australian automotive market, as well as the use of automotive finance in purchasing vehicles.

The full 164-page report is now available for purchase for $5,950 AUD, but if you would like to download a free snapshot of the report then please click here.




Topics: Market Research Automotive Research