We are currently witnessing an on-going plethora of new products in the small, task-oriented vehicle (STOV) industry. As we at Small Vehicle Resource, LLC define it, this industry and its marketplace includes PTVs, fleet golf cars, light duty utility vehicles, as well as the off-road utility and recreational vehicle market.
We are seeing many innovations, upgrades, and potentially game-changing technologies entering the market. Three factors have had a major impact in transforming the small vehicle market from two essentially separate market domains—golf-related and off-road—to one of personal mobility and neighborhood logistics services:
- Mainstreaming lithium batteries—essentially maintenance-free and much better performance compared to lead acid batteries in numerous measurable dimensions;
- Automotive upgrades and overall product improvements;
- Significant demographic changes, as facilitated by, among other things, the remote office workplace.
These important factors have led to significant market growth, with the promise of mass market economies of scale.
A market researcher analyzes why
With over 30 years of market research projects, this researcher, the author of this article, can summarize the gap between expectations and reality by boiling it down to two major causes:
- Vision, but lacking nuts and bolts (i.e., implementation); and
- Nuts and bolts, lacking vision.
It goes without saying, successful new product introductions have both a vision and a solid plan for implementation (the nuts and bolts).
Vision, but no nuts and bolts
In this category we have a great idea where technology and product attributes appear to fill a significant market need. The vision experts invariably are entrepreneurial leaders, the design engineers, production managers, and product development types, who in the course of developing the new product become true believers in its ultimate success, its superiority over all competitors, and its market growth potential catching fire like a viral contagion.
In other words, this group believes the product is so good it will sell itself. The sales force is encouraged to go out and sell a self-evident star.
An example of high hopes and a grimmer reality was the Swedish designed Uniti electric vehicle.
The Uniti from Sweden
In July 2018, Uniti announced that both the 2-seater Uniti One and a later 4/5-seat model will be in the M1 class, meaning the vehicles would be permitted on all public roads, including highways. It was to include modern safety features such as advanced driver assistance systems (ADAS) It was designed to be fleet ready, that is, prepared for the needs of businesses and car-sharing services.
The target specifications, as of April 2019, include 240 km (150 mile) range, 130 km/h top speed, rear-wheel-drive dual motors with an output of 120 kW (163 hp). The 26 kWh battery pack can be charged by DC fast charging in 25 minutes from 20-80% state of charge. (Thanks to Wikipedia for much of this information).
Obviously, this vehicle is a quantum leap beyond even the most advanced PTVs, which move about our communities and do short distance drives on some public roads. That being said, there is nothing lacking in the environment of current technology that would constitute a barrier to building a similar vehicle in the U.S. The design ingredients of the Uniti would significantly extend the versatility of current-day PTVs.
But, the Uniti runs out of gas
Unfortunately, despite its technological promise, the April issue of AutoVista24 reports:
“Swedish electric vehicle (EV) startup Uniti has filed for bankruptcy after failing to acquire sufficient capital, the company announced in a LinkedIn post. The business said it started insolvency proceedings out of necessity…Alternative revenue streams and partnerships the company pursued were not enough to keep the business afloat.”
Were one to speculate on the reasons for this unfortunate business failure, it would probably come to focus on one significant drawback, which is that the company did not have an effective distribution system that was actively engaged in market development and sales. The company’s technology and even production capability was far ahead of market revenues. Distribution and sales were the nuts and bolts that was lacking. Great on vision, but lacking the nuts and bolts.
The lessons for all startups, especially in the automotive field
Vision and technological excellence cannot get ahead of sales and distribution. The early adapter phase of market development is essentially a low volume market in which production scale economies are not yet in play. Scale economies have to do with per unit costs, so the early adapter is going to have to be willing to pay a higher price than those who come into the market later. To make a judgement about this requires some solid market research and media outreach to make known the new product and its capabilities.
Doing market research and gauging the trend of market take-off and trends takes an investment. Unfortunately, this is an investment that start-ups often fail to consider that important, if not critical to their solvency and ultimate success.
Nuts and bolts, but lacking vision
The contrasting scenario is where a company has all the nubs and bolts of manufacturing, distribution, and sales, but falls short in a vision for its product. An example of this would be E-Z-GO’s 2Five LSV, introduced in 2010. While still available on the used market, the company is no longer producing this model—at least it does not appear on the current list of models on its website.
Here was a vehicle that anticipated the growth in the PTV market, and, in addition, met all standards for LSV certification. Were E-Z-GO a start-up with little resources to work with, and given the relatively niche market dimensions for LSVs at the time, a decade ago, it is easy to see that the project might be abandoned.
E-Z-GO, however, is not a start-up and based on its other golf car products has an impressive network of dealers for sales and service, a great technical staff, and a well-oiled manufacturing base.
To carry the 2Five along in its inventory of current models would probably have been a small incremental cost, which the company could afford, while waiting for the market to develop further. In any event in subsequent years, the PTV market and LSV market continued to grow slowly. Then came the breakout in the 2020-2022 period.
Our forecasts at SVR see the market for PTVs continue to grow in the high single digit level over the next five years. Moreover, the distinction between PTV and LSV has virtually disappeared, as the former, even if not officially certified as an LSV and with a VIN, has all the elements and components of an LSV. It should be noted that E-Z-GO now has a whole line of PTVs, although the pioneer 2Five model is not among them.
Getting the right balance
Getting the right balance between vision and nuts and bolts is what executive management is all about. It’s certainly not easy to achieve. One thing I have noticed, however, over my many years of market research experience across a number of product areas, is that gathering market intelligence and making good forecasts is so often second fiddle to “the product will sell itself” mentality.
If budgets are tight—aren’t they always?—the first activity that gets trimmed is research on the market. Consumer sovereignty and the invisible hand remain invisible, until reality hits and the sales numbers start coming in.
Market research for the start-up, as well as the mainstream
For the start-up, market research is even more important than for an established company. The former has fewer resources to work with, not the least of which is the necessary lack of brand identity. Yet, in recent experience, two start-up companies came to SVR for market research help, they could not see their way clear to fund this really vital activity. Part of raising venture capital itself should be a thorough market research effort, but invariably the mechanical vision and the prototype take precedence. Market development and growth prospects? Well, let’s hope for the best.
The mainstream brands need market research as a means to allocate production capacities, as well as dealer focus, to assess long term trends on the demand side and potential technology breakthroughs, such as improved battery performance, hub wheel electric motors, and carbon fiber bodies.
Critical aspects of dealers and the dealer network
In most cases, dealers remain the key factor in whether a product sells or doesn’t. This is especially true in the case of new product introductions. Here corporate vision must be matched with a sales and distribution network that also embraces what entails a change in focus. This can be accomplished with education via webinars and in-person visits involving demonstrations.
In addition, systematically collecting and analyzing feedback from the dealer network is also critical, because it ensures on-going dealer-OEM dialogue and allows both dealer and manufacturer to address issues and questions, as they arise—and before obstacles occur, which put the success of project in question.
