Automotive OEMs at the crossroads
Obviously, since the golden age of “Tin Lizzie”, Ford’s famous Model T, there is no other industry which has developed as exorbitantly as the automotive industry. In every decade, ground-breaking product innovations have appeared which have gone on to become absolute standards for modern vehicles. This process is always connected with fundamental paradigm shifts.
One example: airbags have been regarded as exploding boxing gloves which will injure the driver, and the safety belt was a symbol for deprivation of liberty. Nowadays, law requires safety belts and it is hard to find a car with less than six airbags. What happened? Before the 1960s, people simply did not think about car accidents. You can’t really blame them for not doing so. Why should they? The whole industry took almost 20 years to simply understand that vehicles are not solely obstacles which transfer persons and goods from A to B. By its very nature, driving a car is connected with risks.
Today, digital services dominate modern life. It is not surprising that Connected Car services have already appeared in our cockpits. Steel and sheets of iron no longer represent the limits of vehicles. These have extended to include smartphones, backends and content providers. This development is irreversible. Obviously, the automotive industry is already faced with another paradigm shift. But this time, compared to airbags and safety belts, the automotive industry has to handle the involvement of an extremely powerful new player: the digital industry. The following thoughts aim at facilitating the discussion as to how the automotive industry should position itself and act in the context of new pure digital players.
Companies like Amazon and Apple built up their whole organisation in order to offer cutting-edge digital services. It is their core competency to collect, process and distribute virtually all kinds of information. To succeed in this business, it is essential to offer a strong usability along with digital services. Irrespective of the complexity of digital services, customers expect to use them as easy as switching on a TV.
It is here that especially traditional OEMs struggle to fulfil the requirements. Such companies have to finally understand what digitalisation or digital transformation really means. It is not enough to launch digital services in addition to the classic vehicle portfolio. Only if traditional OEMs manage to increase the efficiency of service consumption will it be possible to meet the customers’ expectations.
Quo vadis automotive industry? We do not know. Anyway, simplicity most definitely is the new excellence.
Pure digital players as game changers in daily life
Ever since the smartphone’s triumph in the late 2000s, mobile services and connectivity became an important cornerstone of modern life. This device can definitely be regarded as the main portal to the digital world. Digitalisation of our daily lives is everywhere: for the next four years, the German online food delivery market is expected to grow by 18.5%, while offline channels will decline significantly (Statista 2016). Another perfect example can be found within the entertainment industry. 10 years ago, video streaming was almost not existent. 2017’s global market volume reached US$ 11 billion. It is set to skyrocket to US$ 15.7 billion by 2021 (Statista 2017).
Today, customers simply expect information and digital services to be available at anytime and anywhere. What a wonderful and comfortable world – as long as everything works well. But what was the password for your LinkedIn account? Which of the three offered music streaming providers is the best – Spotify, Deezer or Amazon Music? And why is the vehicle not displayed in the BMW ConnectedDrive app like it was yesterday?
Taking these thoughts further, the following hypotheses summarise the key challenges for automotive OEMs:
- Particularly in the digital world, the service offering is vast. Providers have to focus on services which are really demanded by the customer.
- Regardless of the functionality, digital services have to be as convenient as possible. To fulfil this requirement, the usage must be easy and hassle free.
- Digital services require a considerable information flow and a lot of interactions. The required infrastructure and backends must be as lean as possible.