What defines the winners of the automotive revolution?

 
The traditional automotive industry is changing. Four accelerating and mutually reinforcing trends pose a significant threat to the traditional automotive business model, as they seek to solve challenges in a market where technology drives changes in consumer behavior. Delivering on key customer expectations, however, may slow down the transformation and enable traditional automotive manufacturers to prepare for the transition.
 
The automotive industry is facing transformation. The emergence of electric vehicles (EVs) and plug-in hybrids has already shown clear signs of disruption, for example, in China, whereas the trend seems inevitable in Norway. Mobility-sharing solutions, like DriveNow and Uber, have demonstrated growth and profitability in several European capitals. Autonomous vehicles have been introduced in urban areas around the world, with more extensive projects in the pipeline. Car connectivity to the Internet of Things offers significant potential to increase consumer convenience and generate supplier revenue.
 
To be able to prepare for the future automotive industry, it is important to deliver on key customer expectations every single time in order to slow down the disruptive forces.
 
These four disruptive trends – electrification, shared mobility, autonomous driving, and connectivity – pose a very relevant threat to the established automotive market, as McKinsey (2017) predicts shared mobility and connectivity alone will most likely account for 25% of the total revenue in the automotive industry by 2030.

 

Mobility trends facts:


  • Autonomous driving. Currently, partially autonomous technology, such as adaptive cruise control and emergency brake systems, are widespread. More advanced autonomous technologies, however, are emerging. Tesla has implemented self-driving cars, several capitals around the world have introduced self-driving busses, and the number of patents filed for autonomous driving technology has almost doubled since 2012. Although fully automated driving without any form of human involvement is not expected to be implemented within the next decade, partially autonomous technology already shows clear signs of advancement and profitability.

  • Connectivity. As cars become more connected, data generation will intensify. More data offers great opportunities for marketing efforts, reselling of big data, several cost reduction initiatives, and analytics, such as consumer behavior and customer satisfaction.

  • Shared mobility. Huge investments have already been made in ride-hailing and car-sharing solutions like Uber and DriveNow. The lack of an affordable one-solution-fits-all drives the demand for service-based solutions rather than the traditional ownership model. Shared mobility is expected to account for approximately 20% of total automotive industry revenue by 2030.

  • Electrification. EVs accounted for approximately 5% of total global vehicle sales in 2016. Traditional manufacturers plan to introduce ten or more EVs to their portfolio within five years, which attests to a market on the rise. The speed of this trend, however, depends greatly on, for example, battery cost, drivetrain performance, regulatory initiatives, and charging infrastructure.
Source: McKinsey&Company, Center for Future Mobility

 

Although the speed at which the trends will transform the automotive industry is still uncertain, it seems inevitable that these disruptive forces will have a significant impact. To be able to prepare for the future of the automotive industry, it is therefore important to deliver on key customer expectations in order to slow the disruptive forces.

 
When failing to deliver according to customer expectations on these key pain points, new solutions will dominate the competitive landscape and speed up the transformation.
 

Our on-going evaluation and research indicate which pain points influence customer satisfaction and loyalty the most. Having excellent appointment availability, conducting thorough walk-throughs of invoices, and avoiding returns to workshop affect customer satisfaction and loyalty significantly. Delivering on these pain points every single time makes the difference between good satisfaction scores and great satisfaction scores.

 
Meeting customer expectations will, to a greater extent, be a defining criterion for success in the long run. At the core of this thought is reaping the profits of heavy capital investment in the traditional business model before the transformation disallows.
 

When failing to deliver on customer expectations about these key pain points and having great satisfaction scores, new solutions will dominate the competitive landscape and speed up the transformation. When succeeding, customers are less likely to adopt new solutions and mobility services. This means managing and monitoring processes linked to customer satisfaction will ultimately constitute a very important competitive resource for traditional automotive manufacturers. Meeting customer expectations will, to a great extent, be a defining criterion for success in the long run. At the core of this thought is reaping the profits of heavy capital investment in the traditional business model before the transformation disallows.

 
Technological advancements have led to new mobility options and will ultimately result in a fragmentation of transportation needs and thus solutions.
 

When looking at the root cause of the transformation, the suppliers and consumers are seeking to solve several challenges in the traditional mobility business model caused by technology-driven changes in consumer behavior. Technological advancements have led to new mobility options, which ultimately result in a fragmentation of transportation needs and thus solutions.
 

An excellent demonstration of this is that individual consumers have previously owned an all-purpose-served vehicle. Whether driving to work or taking a weekend trip, a single vehicle has been the solution. Connectivity and shared mobility, however, have enabled consumers to use on-demand mobility services – especially in dense urban areas – which are more customized for the specific purpose. In the same way, purpose-customized solutions for shopping, vacations, business, and so on are emerging and becoming increasingly convenient. In other words, we expect mobility to become an array of diversified services, which target an increasingly fragmented market in terms of customer needs, rather than the traditional ownership business model. When exactly it will happen remains a question with a highly uncertain answer.





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