Changes ahead in transportation signal opportunity for CPAs

When John Paul MacDuffie speaks to business leaders about the changes they expect to see as ride-hailing and autonomous vehicles grow in popularity, he tends to get one of two responses.

“They either feel it’s going to happen quickly, and they’re woefully unprepared,” said MacDuffie, professor of management at The Wharton School, “or they don’t see it happening until they’re well into retirement.”

The truth, according to MacDuffie, who has researched and written extensively on the global automotive industry and trends, is likely somewhere in the middle. Changes to our transportation culture are coming, and that means CPAs, as trusted business advisers, need to prepare to help their clients navigate what’s ahead.

What’s down the road

First, what are these technologies? Technopedia describes an autonomous vehicle as “a vehicle that can guide itself without human conduction.” Ride-hailing, sometimes referred to as ride-sharing, as described by this article, is the use of an app to “request a ride for hire from your phone and pay the driver for their services.”

Will the two overlap? The answer is yes, as companies like Ford produce fleets of driverless cars to be used by ride-hailing services like Uber and Lyft.

Also in the mix is Zipcar and similar services that rent cars by the day or by the hour, with gas and insurance included.

But will these technologies and services eclipse the traditional car and driver? That is less certain. Business strategist and global futurist Daniel Burrus believes autonomous vehicles will grow in popularity, but won’t take over. In part, he said, that’s because “people like to drive.” Imagine a Ferrari without a steering wheel, and the fun of driving is gone, he said.

Generational differences exist too. Baby Boomers like to own cars and like to drive, whereas Millennials are more in support of ride-hailing, and many find car ownership to be a “hassle,” Burrus said.

A number of other complex factors should be considered as well, Burrus said. Full autonomy will play well in some places but not others—imagine college campus bus routes, which are routine and predictable and thus easily adaptable for an autonomous vehicle, versus a tractor-trailer hauling hazardous materials down the highway, where one might want a driver on board, he said.

MacDuffie said cars have become more reliable, with the average vehicle age in the United States now at over 11 years. That means the timeline to phase out these traditional vehicles and phase in autonomous vehicles could be lengthy, he said.

When Lyft co-founder and CEO Logan Green spoke at SXSW in 2015, he described a change to the concept of “driving.” He didn’t predict most people would own a self-driving car, but rather envisioned many people riding in them. Imagine hitting a button on an app, and a driverless car arriving to take a person where he or she needs to go, he said.

While the rise of these technologies may not happen all at once or tomorrow, necessarily, change is coming, both Burrus and MacDuffie said, and now is the time to prepare.

Effects beyond the auto industry

In a recent article and accompanying video, Deloitte discussed the future of mobility, pointing out that innovation will create ripples reaching far beyond the automotive industry. Expect to see changes taking place in businesses including oil companies, parking garages, billboard operators, auto and health insurers, auto repair shops, and health care providers, just to name a few.

Take auto insurers as just one example. If the business model is based on the risk of the driver, and there’s no driver, the insurance industry will need to adapt, MacDuffie said.

Autonomous cars are expected to make driving safer—not just in terms of a car letting a driver know it’s about to crash, but in technology preventing a car from crashing at all, MacDuffie said. Consider that nearly 2.3 million “serious injuries” associated with traffic accidents were reported in a six-month period in 2015. With autonomous cars, he said, that could drop sharply. That in turn will change the landscape for insurers, health care providers, and auto repair shops, among others, he said.

Auto dealers will see car sales shifting as well. Roman Kepczyk, CPA/CITP, director of consulting at Xcentric, a firm providing hosted and managed technology platforms for the accounting industry, said he envisions a point where families may not need a car or may downsize to one car versus two, as the cost of ride-hailing becomes less than the cost of owning and maintaining a vehicle.

The delivery industry will change, too, as delivery companies could create caravans starting with a lead driver and a fleet of autonomous vehicles following behind, he said.

Deloitte’s article points out that as ride-hailing becomes increasingly popular, billboards may be less effective if fewer drivers are watching the roads, and cities may need fewer parking spaces as the number of vehicles on the road decreases.

CPAs should anticipate the future

While the timeline of all this change isn’t certain, CPAs can benefit from keeping up on the latest information and watching as hard trends develop, Burrus said. Rather than reacting and responding, CPAs need to start anticipating what will happen, he said.

For a CPA who works with a hospital, for example, there’s a potential impact on the emergency room if the number of accidents decreases, according to Burrus. CPAs should consider becoming an integral part of the strategic planning process, he said.

“CPAs need to become indispensable to their clients,” he said. “They need to share not just insights from the past but insights for the future.”

“Every company is doing some kind of strategic planning,” he added. “They often don’t review this with their CPA firm, but what if they did?”

CPAs can put their knowledge to use across a variety of industries. If the population begins to move toward one-car versus two-car households, for example, Kepczyk said, CPAs will be able to help identify opportunities and costs for local and national ride-hailing companies.

While major urban and suburban areas could be served by national companies, more remote areas would require more customized access, which could carry a higher risk from factors such as snow or off-road conditions and open up competition from community-operated solutions, Kepczyk said.

In the delivery industry, CPAs will need to adjust key performance indicators to keep up with automation. Trucking companies will continue to calculate costs per long-haul and local miles, but the human factors that go into that, such as driver benefits, salary, and expenses, will change. And with automated equipment, of course, will come upgraded technology that will give CPAs more data to work with.

“CPAs can do the cost analysis of different approaches to delivery, and possibly transition to real-time auditing of the logistics companies,” Kepczyk said.

Kepczyk suggested CPAs focus on a service or niche that interests them, saying specialized knowledge will be a requirement in the future.

“CPAs are in the information analysis and monitoring business, which will need to be focused on real-time and predictive analysis versus traditional after-the-fact reporting,” he said. “So they would need to learn to identify key performance indicators for their clients and develop and configure information dashboards to identify and monitor activity.”

Within a specific industry, he said, CPAs can learn the information systems and data that the industry needs, and increase their expertise by analyzing it.

When Lyft’s Green spoke at SXSW, he pointed out that economies shift. New technology creates new jobs to replace those that have become obsolete, he said.

CPAs should think along similar lines in serving their clients, both Burrus and MacDuffie pointed out. The business landscape may not look the same, but it’s possible to adapt.

“To elevate our relevancy, it’s key to learn new things,” Burrus said.

Lea Hart is a freelance writer based in Durham, N.C. To comment on this story, contact Chris Baysden, senior manager of newsletters at the AICPA.