Transformation of industry, roadblocks, and strategy in 2021

Transformation of industry, roadblocks and strategy:

With intelligent automation enabling new entrants to seize opportunities and quickly move towards reaching potential, a new future is being written for the industry.

Competition in the Indian auto industry has long worked on purchase and maintenance costs, fuel economy, and engine power. With the growing commercialization of hardware and the increasing quality of software-based services, traditional competition rules are changing.

Technological advancement and innovation, driven primarily by tech giants like Amazon, Apple, and Google, are driving this change. New competitive dimensions, such as related functionality and services, vehicle design, and interior user interface and experience, are influencing consumers’ perceptions of cars. Furthermore, the growth of electric vehicles and the development of space for autonomous vehicles are accelerating this competition.

Indeed, automobiles and related services will make an important distinction in our time.

Connecting cars: the transformation of the automotive industry

According to Capgemini’s global research, Connected Vehicle Trend Radar 2: The Road to Connected Automotive Services Profitability, more than 350 million connected cars are expected to be in circulation by 2023, nearly 24% of all cars nationwide. up 8% in 2018. First launched in the late 1990s, with General Motors offering its OnStar services to customers, paired cars have grown exponentially as technology advances.

The Indian coupled car market is expected to grow by more than 20% in the coming years. All luxury and premium car OEMs in India provide follow-up services for all models, but the services offered by OEMs depend on the mass market. Fixed service availability ranges from 20 to 70% (as a percentage of vehicles sold with TCU / dongle services as an option) between various non-luxury and non-premium OEMs. As the Indian market is very price-conscious, many OEMs offer free connectivity services for up to three years.

Connected cars have created tremendous potential for automotive companies to tap into new values   that exist through six touchpoints: infrastructure, service providers, drivers/passengers, other vehicles, homes, and OEMs / dealers. There are opportunities to increase revenues, reduce costs, and reduce working capital throughout the value chain. Many of these new opportunities require the creation of new business models.

Linked services also lead to a significant shift of value pools in the value chain. And this shift is attracting new entrants to specific and, in many cases, narrower parts of the car’s value chain. These new entrants are driven by advances in areas such as mobile, cloud, analytics, and computing. It is no wonder that technologically powerful players like Apple, Google, Amazon, and Otonomo recognize and exploit such opportunities … and threaten their positions.

Obstacles along the connected journey

While there are huge revenue-generating opportunities associated with bundled services, research shows that customers are not yet ready to pay for fixed services offered by OEMs. For example, Capgemini’s research shows that 44% of customers do not have connected services in their vehicles. And of those who use it, only 51% use it.

An analysis of customer feedback from India indicates that the perceived value and quality of related services differ among OEMs: the more expensive the OEM, the better the related services; but the more it reaches the mass market, the worse its value and quality.

Customer complaints about poor UI / UX, complicated and non-intuitive applications, network connectivity, and lack of real-time vehicle information are good examples. Automotive is a centuries-old industry that focuses on metal, hardware, and operational efficiency. Soon, the industry will have to pay equal attention to software-based innovation.

Many OEMs still regard software-based services as “twins” to their hardware products, and the intermediate OEM is the sole provider of such services. This attitude is likely to change due to the huge differences between car-related development and services. The lack of new ways of working is driving the development of connected services that do not yet meet the expectations of a large customer base.

Translate »