Page 4 Page 10 Page 19 Page 16 Automotive has become a digital business Learn how a digital business strategy improves the bottom line. July 2017 Who’s driving the customer experience The customer journey will change with digital smart ecosystems. Interview with Hans Kwaad, Auto BINK Group How to stay ahead of the game as a dealer. INDEX Editorial .................................................................................. 3 Industry data ........................................................................... 4 The importance of the connected car ....................................... 5 Connected warranty management: Cost or opportunity? ........... 8 Automotive has become a digital business ............................... 11 Technology in Motion ............................................................... 14 Who’s driving the customer experience? .................................. 16 Pioneering partnerships at the wheel of smart mobility .................. 19 Dealer profitability: capitalizing on connected car revenues ........ 21 Spotlight USA – automotive leader still king of the road in the age of connected vehicles ......................................................... 24 Contact .................................................................................... 27 Importance of the Connected Car The connected car will change the automotive industry as we know it today. Unlock the potential of CONNECTED CARS
Transcript
Page 4 Page 10 Page 19Page 16
Automotive has become a digital business Learn how a digital business strategy improves the bottom line.
July 2017
Who’s driving the customer experienceThe customer journey will change with digital smart ecosystems.
Interview with Hans Kwaad, Auto BINK GroupHow to stay ahead of the game as a dealer.
Importance of the Connected Car The connected car will change the automotive industry as we know it today.
Unlock the potential of
CONNECTED CARS
How will traditional
automotive companiesearn money
in the future?
Global Edition Benchmarker3 July 2017
The connected car is finally coming of age in the era of digitalization. Many of you are already driving cars equipped with more than 40 microprocessors, and 250 sensors and cameras generating about 300 megabytes of vehicle and personal data per second - related to safety, wear and tear, defects, infotainment and navigation. About 88% of this data is currently unused. Imagine you wanted to cross a street, but only had 12% visibility. Would you cross it? Probably not. But most OEMs are doing just that – making business critical decisions without full access to quality data. Today’s developments in artificial intelligence, machine learning and digitalization require that everyone involved in automotive invest in the knowledge and technology necessary to connect this complex array of data – even those you never see and don’t own – to profit from this valuable information. OEMs will have to provide clarity and education to their customers about how they plan to use their data to win customer trust. Many OEMs will need to revisit their entire business model to master the challenges posed by connected cars and digitalization. The market leaders of tomorrow will be faster, more agile and customer, rather than product, focused. New partnerships will emerge.
Particularly in urban areas, we are witnessing a shift from private car ownership to mobility services. What if OEMs could monitor incoming data from mobility fleets to access insights about the unique condition of each asset? What if OEMs and their dealers take advantage of the many new revenue streams associated with the connected car? This is the future. What if automotive call centers could tap into insights gained by structured or unstructured data like social media and blog posts to better and more quickly answer customer or technician queries? The possibilities for transforming car and customer generated data into valuable products and services are endless. At MSXI, we are actively involved in helping our customers design roadmaps to navigate this quickly changing data-driven landscape. This edition of Benchmarker is therefore dedicated to the connected car and the many ways it impacts our industry. Moving forward will require constant adjustments, vigilance and adaption. We will likely be blown off course from time to time. We will have to adapt our strategies to local markets. But ultimately, the connected car is a win-win proposition for everyone in the automotive space.
CONNECTIVITY IS DRIVING THE FUTURE OF THE CAR
Fred Minturn
Fred MinturnPresident and CEO, MSXI
EDITORIAL
Global Edition Benchmarker4 July 2017
AUTOMOTIVE INDUSTRY SALES DATA
Sales (2017 & 2018 forecast)
20.804.956
20.825.619NORTH AMERICA
SOUTH AMERICA3.759.766
3.882.974
1.163.612
1.231.297AFRICA
364.464
378.084CENTRAL AMERICA
4.261.327
4.596.058EASTERN EUROPE
44.476.515
45.009.766
ASIA-PACIFIC
WESTERN EUROPE16.275.688
16.426.612
MIDDLE EAST3.489.759
3.890.103
300.247≈ 28,07 %
217.011≈ 20,29 %
111.716≈ 10,44 %
217.537≈ 20,34 %
130.755≈ 12,22 %
60.163≈ 5,62 %
32.319≈ 3,02 %
NORTH AMERICA
ASIA PACIFIC
EASTERN EUROPE
WESTERN EUROPE
OTHER (AFRICA, AUSTRALIA,...)
JAPAN
MERCOSUR
Car Parc Top 5 per Market (Sales 2016)
ASIA-PACIFIC
Toyota
Volkswagen
Renault-Nissan
Honda
Hyundai
5.112.924
4.438.200
3.711.842
2.833.695
2.606.055
NORTH AMERICA
General Motors
Ford
Fiat Chrysler
Renault-Nissan
Toyota
3.567.762
2.970.388
2.752.493
2.629.488
2.249.248
WESTERN EUROPE
Volkswagen
Renault-Nissan
Ford
Fiat Chrysler
PSA
3.477.073
2.354.736
1.777.755
1.282.540
1.123.968
EASTERN EUROPE
General Motors
Renault-Nissan
Volkswagen
Hyundai
Fiat Chrysler
949.010
747.696
494.490
349.251
260.841
MIDDLE EAST
Toyota
Iranian Manufacturers
Hyundai
Renault-Nissan
PSA
560.826
548.703
435.312
426.704
412.827
SOUTH AMERICA
General Motors
Renault-Nissan
Volkswagen
Hyundai
Fiat Chrysler
591.269
483.466
474.523
377.087
365.654
AFRICA
General Motors
Ford
Fiat Chrysler
Renault-Nissan
Toyota
236.526
151.442
136.020
105.618
94.110
Source: Data based on LMC Global Automotive Sales Forecast, Quarter 2, 2017
Car Parc Top 5 per Market (Sales 2016)
Sales (2017 & 2018 forecast)
Global Edition Benchmarker5 July 2017
Connectivity is literally reinventing the automotive industry. Within the next two decades autonomous driving will be normal and even today, most vehicles can master a variety of driving situations independently and are seen by drivers as one more mobile device in their digital universe. The next logical step is for OEMs to transform the way they do business to maximize the full potential of the connected car over the next 5 to 10 years in terms of brand differentiation, revenue generation and profits.
The possibilities for leveraging the opportunities presented by connected vehicles will emerge on several fronts.
The first has to do with customer preferences. OEMs will have to accelerate product cycles using dynamic and agile processes in order to get new products to customers faster. Already today, we see many drivers preferring their smartphone’s navigation apps over outdated navigation software in their cars.
THE IMPORTANCE OF THE CONNECTED CAR
Pieter van RosmalenGlobal Vice President
Retail Network SolutionsPieter van Rosmalen has been the vice president of Retail Network Solutions at MSXI since March 2011. In this role,
he is responsible for the operational management, strategic planning, solutions development and profitability of the
business worldwide. He previously served as Vice President Retail Network Solutions for Europe and Asia Pacific. He can be
75% of customers will categorically rejectmodels without connectivity features
INSIGHT
Global Edition Benchmarker6 July 2017
Established connectivity features such as phone capabilities and in-car entertainment will be supplemented by other functions like remote diagnostics, live traffic updates and a range of autonomous and semi-autonomous driving technologies. A majority of consumers today already report that they are willing to pay more for connectivity capabilities as well as pay-as-you-go car sharing models, particularly relevant in urban environments such as Beijing where some people spend 4-5 hours daily in traffic jams. To keep pace with their customers, OEMs need to move away from a simple car sales mentality to being experts at delivering intelligent customer services across a multitude of touch points.
A second front is driven by the massive amount of vehicle and customer data available to OEMs and dealers. Cars today feature approximately 100 ICUs creating telematics data that allows OEMs to track a vehicle over its lifetime. Digital technologies and data analytics will need to become an integral part of the automotive value chain. This requires new corporate structures and employee competencies at all levels of the organization – from leadership through to service and sales. However, the investment in connectivity promises a high ROI since this data has the potential to be worth billions of dollars in revenue over the next few years.
maintenance and parts. It has been estimated that if everyone were to switch to electric vehicles at once, profits across the industry would decrease by 40%. Data generation represents a long-term scalable revenue stream that can be harnessed to offset lost revenue in other areas.
Some OEMs are already selling data to third parties such as insurance companies who can use information such as speed, braking distance and lane movement to determine driver safety and to set appropriate premiums.
More than 75% of the calls received by the MSXI Technical Help Desk are related to electronic issues
Autonomous vehicles will generate
4,000 GB per day... each day
Future automotive trends
Service and maintenance is another area that will be transformed by connected vehicle data. Eventually, data analysis will become more automated, relying on machine learning and artificial intelligence to solve problems before the driver or dealer is even aware of them. In the not too distant future it will be possible for a car to not only detect a malfunction but to schedule a maintenance appointment and order the necessary parts.
In response, OEMs need to digitalize their technical support systems since it is impossible for service technicians to keep up with the increasingly complex technology in cars.
Network systems that enable connection and transmission of data are also susceptible to malfunctions. Suddenly, it is not just the OEM who must troubleshoot and fix the problem. The telecommunication and mobile device companies that enable connectivity will have to be part of the solution as well.
The revenue potential of the connected car, and its data, could not come at a better time. Currently, parts sales represent 50% of margin for most OEMs. Electric cars require significantly less
Note: Connected cars includes systems relying on smartphone connection, Electric cars excluding hybrids; Autonomous car levels: L3: Conditional automation – full autonomy in selected situations (e.g. highway), driver intervention probably needed, L4 : High automation – full autonomy in most situations, no driver intervention; L5 : Full automationSource : SBD (connected car); Morningstar (Electric car); Bain research (Online car sales, autonomous car), Morgan Stanley (Car sharing)
Global Edition Benchmarker7 July 2017
Unfortunately, this data is not only valuable to OEMs, suppliers and third parties. It is also of interest to those who might use it for less than legal purposes. OEMs and technology companies are already aware of the challenges of cybersecurity in connected cars. Using a laptop computer and mobile phone, hackers were able to remotely gain control of a Jeep Wrangler and drive it off the road. Future cyber attacks could even disrupt traffic flow or target an entire fleet of vehicles. Drivers’ personal data is also subject to the same online vulnerabilities of using a laptop or smart phone. And theoretically, hackers could use the car to access the IT systems of the OEM, of suppliers and other service providers. For these reasons, data security must be a key consideration as manufacturers move forward with connected car design. This will be challenging since connected cars are complex machines with a variety of different digital systems built by different companies, making it difficult to decide just who is responsible for developing, testing and maintaining security software.
Finally, as the amount of data transmitted from connected cars increases, there will be a major gap in supply and demand of qualified software developers and IT specialists. OEMs will need to proactively position the industry as offering a stimulating working environment for Generation Y technocrats who are still more likely to look to companies like Google and Apple as the most promising employers and to Silicon Valley rather than Detroit. Global conferences like Technology in Motion, sponsored by MSXI, are working hard to reposition the automotive industry as an exciting and engaging industry.
Closing the gap between the level of technology in cars and the ability of OEMs to react at a retail level requires a new kind of leadership based on novel thinking, decentralized processes and a high affinity for technology. The connected car is not just
Technical competence in the dealer network
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Technical competencein the Dealer Network– Parts and Service –
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MSXI Research
a product. It is a set of technologies that completely disrupt existing business models. Many automotive managers have spent their whole careers in a traditional retail network. They will find it hard to make the leap from a hierarchical leadership model to a more collaborative one that also includes involving their customers in the product design process. However, this is the leap that will have to be made to compete in the fast moving connected business world. At the end of the day, it’s not selling the technologies of the connected car that will make OEMs market leaders, it’s selling a premium driving experience in which digital services are configured to the exact needs of each driver. As one very wise person once said: “If you do what you’ve always done, you’ll get where you’ve always got.” It’s a windy road, but driving into a curve remains one of the best parts of sitting behind the wheel.
Global Edition Benchmarker8 July 2017
CONNECTED WARRANTY MANAGEMENT: COST OR OPPORTUNITY?
Eric Menoret Vice President and Global Accout ExecutiveEric Menoret has been Vice President Retail Network Solutions at MSXI since March 2011. In this role he oversees the P&L of approximately 40% of our Retail Network Solutions, where he
contributes to the growth of global OEM accounts such as Renault, Nissan Europe, PSA Peugeot Citroen, Fiat Auto and CNH. Prior to this role, he set up a European sales and marketing organization at MSXI in 2007 and has been with the company for more than 20 years. He
Connected cars and digitalization are rewriting the manual on warranty to the benefit of OEMs, dealers and customers. The future of warranty management will be driven by artificial intelligence and predictive analytics. Automated warranty processes will help OEMs reduce costs by eliminating warranty waste with safe, effective and compliant strategies. A data driven warranty management solution further ensures dealers can react quicker to warranty claims, resulting in a better customer experience. Dealers also benefit from quicker turnarounds when it comes to receiving reimbursement from the OEM on warranty claims. But the future of warranty is not without challenges.
Inefficencies such as unnesessary or repeated repair represent the potential for a
30% warranty cost reduction
MSX International
INSIGHT
Global Edition Benchmarker9 July 2017
A 360° warranty management approach
Currently, OEMs employ far too many people to classify the phenomenal amount of data spread across their organization. There are many thousands of Project Reference (PR) categories and searching for diagnostic support data manually is time-consuming, inaccurate and costly. Adding to the complexity, data is rarely shared across the organization. Connecting all the data dots will require OEMs to replace traditional hierarchical business models with more agile, flat ones. They will need to eliminate data silos, not only to communicate more efficiently with customers, but also to improve knowledge sharing across divisions in real time. With predictive analytics and robust digital platforms, OEMs can integrate customer, vehicle, technical and financial data to further streamline the warranty process.
Evolution of warranty management
The Past
Today The Future
Tomorrow
Arti�cial Intelligence
The
Fut
ure
Warranty is managed and approved by the OEM field teams and considered a “driver” of dealer satisfaction
Increased tendency to outsource the warranty management process to allow field teams to focus on core service and parts
Data analytics drive: ¾Focus on critical dealers and components¾Efficiency in the warranty management process¾Optimization of claims filtering and continuous improvement
The role of Artificial Intelligence¾Early identification of concserns – prognostic¾Leaner diagnostic process based on natural language
Warranty is an integral part of the customer journey
Connected cars will be able to proactively alert OEMs and dealers to failures in the car so they can be fixed earlier in the process when they are less expensive and time consuming.
MSX International
MSX International
70% of vehicle failures are electronic and
could be avoided by doing regular updates
For example, OEMs will be able to identify a defect and send a software upgrade directly to the vehicle. Tesla is doing this already. When customers complained about a software upgrade in their cars, Tesla offered individual drivers the option to respond digitally with a simple yes or no if they wanted to reset the software. It was then done automatically without the driver having to come in for service. This is the speed of service and level of customer convenience required in the future.
In another scenario, data identifying a malfunction to a system or component will initiate an automated repair process. The driver will be notified and provided with options for a service visit. The dealership and technicians are also notified and the necessary parts ordered so that everything is ready to go when the driver arrives. Finally, thanks to predictive analytics combined with the automatization of diagnosis, customers will benefit from fix-it-right-first-time servicing. A win-win situation for everyone.
95.1% of dealers are satisfied with the MSXI warranty management solution
However, managing and interpreting data requires a different skill set, meaning OEMs will have to hire talent adept at digitalization and further educate existing staff. The collecting and collating of massive amounts of data can also contribute to helping OEMs reduce warranty fraud, an issue that can cost OEMs up to 5% in profits annually. However, the greatest potential for driving efficiency, cost reduction and customer satisfaction will be realized through the connected car itself.
MSX International
Global Edition Benchmarker10 July 2017
Predicting and preventing future warranty challenges
Many of these possibilities are still on the horizon. In the meantime, OEMs and dealers will have to navigate a period of transition as the industry moves from the internal combustion engine towards electrified and, eventually, fully autonomous vehicles. At least for the next 12-15 years, the focus will continue to be on servicing warranties for combustion engines, albeit with increasingly complex technologies and stricter regulations. So even with improving quality, warranty costs are likely to go up. Another issue to be tackled is the shift from private to
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Network Training needsTraining modules contentsTechnical bullettin
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&Real Time
Action Plan
MSX International
shared mobility models. With shared ownership, vehicles are driven more frequently, leading to more wear and tear, earlier in the lifetime of the vehicle. This muddies the waters of liability in the case of an accident. OEMs, tier ones and insurance companies will have to rethink how they partner to managing warranty liability. Finally, OEMs will need to harness the power
of cognitive analytics to access, manage, analyze and, most importantly, to learn from the massive amounts of structured and unstructured data relevant to warranty management.
MSXI has been able to reduce speed of claims payments from
23 to 4.3 days
MSX International
Global Edition Benchmarker11 July 2017
Digitalization is at the heart of connected cars, but also extends far beyond them. Digital disruption is speeding up innovation and changing traditional industry models. From retail strategies to the driving experience itself, the automotive industry will have to become leaner, more agile and more responsive to survive in a rapidly changing, dynamic market. However, putting technology first will open the doors to new products and different ways of generating value. OEMs will be able to customize and improve the driver experience in unprecedented ways. Data will allow them to predict what customers want and to adjust manufacturing to meet those needs. To remain competitive in the age of digitalization, OEMs need to build up their expertise in three main areas: customer experience, operations and digital business models.
AUTOMOTIVE HAS BECOME A DIGITAL BUSINESS
INSIGHT
Brendan Walsh Global Vice President and
Chief Digital OfficerBrendan Walsh was named vice president and chief information
officer at MSXI in April 2013. In this role, he is responsible for global information technology strategy and operations as MSXI continues to identify means by which technology based solutions can differentiate the company in the marketplace, and create value for customers and
Market research indicates that by moving at speed to build new eco-systems, any
automotive brand could boost profitability
by 6.5 percent by 2020 – and by
2025 it could be generating as much
as US $ 2.8 billion in new value
Source: Accenture
Global Edition Benchmarker12 July 2017
Digitalize the customer experience
In the age of digitalization, the value proposition will change as the industry transitions from a model of individual vehicle ownership to one of mobility solutions. Consumers will be less interested in owning a vehicle, choosing instead to pay for mobility that is safe, ecological and digitally integrated with other parts of their life.
For businesses, like Uber and Lyft, who already offer mobility services, uptime will continue to be a key consideration. OEMs are ideally positioned to service these mobility service partners – and their own mobility fleets – with vehicle and driver data that allows them to predict, diagnose and fix vehicles quickly to keep them on the road generating revenue.
Digitalizing the customer experience requires targeted and tailored two-way interactions with each driver – on a large scale. The ability to do this well, however, is contingent on consumer approval. Private and business customers will want to know that their data is safe. The connected car, like any digital device, is susceptible to security breaches which put personal and proprietary data at risk. Ransomware that disables vehicles, identity theft and remote hijacking of vehicles systems are real threats that need to be addressed. Cybersecurity will become as important as vehicle safety.
OEMs and tech companies will therefore have to offer compelling reasons to consumers for sharing their data such as individualization, cost savings and safety. The more data they have at their disposal about driving habits and predictive
maintenance needs, the better OEMs can personalize and streamline customer service – parts can be ordered in advance of a maintenance visit, insurance premiums can be automatically adjusted to reward safe driving and OEMs can suggest upgrades based on customer usage. Knowing more about how or where or when drivers are operating their vehicle can also enable solutions that prevent accidents and collisions. However, it will take more than good data analytics to be successful. It will require a shift in mindset and culture as well. OEMs and tech companies will need to pursue thoughtful, purposeful and responsive applications of technology. They will need to design new roadmaps for ensuring they connect with customers at all touchpoints – online and in digitally enhanced dealerships. And they will have to ensure that these solutions serve business interests in a way that is profitable.
Digital strategy framework
+18.8%+6.5%
+17,5%
1 | Partial digitization
2 | New business models
Internal focus
Digitalenterprise
Digitalbusiness Strategic options
Value areas
1. Partial digitizationRealize EBITDA opportunities throughdigitization of existing value chain
Realize EBITDA opportunities throughdevelopment of new revenue streamsenabled by a new value chain
Apply digital technology to adresscustomers in a more sophisticated wayin increase revenues and profitability
Decrease costs of the existing value chain´sprimary functions (e.g. R&D) as well assupport functions (e.g. HR)
Digitize your current business model ordevelop new business models generatingprofits based on digital technology
2. New business models
Digital customer
Digital enterprise
Digital business
Digitalcustomer
Digitizeoperations
Digitize customerexperience
Disrupt(Sub-) Market(s)
Source: Accenture
Global Edition Benchmarker13 July 2017
New business model strategy – 2020 Market / EBITDA potentials
NEW BUSINESS MODELS +6,5% in EBITDA
TRADITIONAL AUTOMOTIVE+5,2%
CONVERGING MARKETS+1,1%
ENABLING MARKETS+0,2%
Mobility on Demand B2C Car Sharing Peer-to-Peer Car Sharing Intermodal Travel Platform
Car Sales Autonomous Driving
Living Brands Digital Service Platform
Connected Car Connected Car Vehicle-related Services Open car/Mobility App Platform (App Store)
Connected Car Vehicle Data Monetization Vehicle Monetization
Digitalize operations
The way forward will come at a cost. Investment in R&D will expand even as profit margins are squeezed. As OEMs focus on their core business of delivering more fuel-efficient vehicles with a higher degree of automation, they will be forced to find ways to maintain and grow revenue and profit. The future will include streamlined dealer networks and sales channels. This will probably result in less full-time employees due to the increase in digital and data-based services. Processes and services for monetizing the terabytes of data generated by their vehicles and consumers will be optimized to enable fast, data-driven decisions (e.g. predictive analytics). Data will become the new dollar. We will also see new profit opportunities for OEMs as they enter a broader ecosystem of partners and a highly connected digital community. Digitalization will also result in a shift from applications to multifunctional platforms capable of supporting a broader range of uses. As the Internet of Things becomes more mature, data from sensors in cars, in cities and weather data will be consolidated to eliminate rush hour grid lock or to calibrate an autonomous vehicle to the weather conditions in which it is driving.
Digitalize business models
Add-on services, digital service platforms, digital applications and mobility options are all examples of how digitalization will define future business models in automotive. How can OEMs and dealers make the right decisions at a pace that is competitive and profitable to emerge as the market leaders in this new digital mobility space?
Data can be an early indicator of trends and customer expectations. But data is only useful to OEMs if they can collect, analyze and respond to the growing scale, diversity and complexity of data. Digitalization will increasingly bring intelligence into things, systems and processes, offering OEMs invaluable insights into how to design future products, services and experiences. We are already seeing the growth of digital labs in the automotive industry and the integration of IT into other divisions such as sales and strategy. OEMs are also receiving valuable data from warranty, technical helpdesks, parts and service. At MSXI we are actively supporting many OEMs with analytical and transactional digital platforms. However, although many OEMs are partially digitizing key areas of their business, few are moving fast enough to unlock the full value potential of digitalization. What’s more, they need to get up to speed and digitize their business models to protect their established business domain form outside industries, particularly from the technology sector. The trick will be to know where they want to go and to develop a competitive digital strategy. The digital road is bound to be bumpy at first. OEMs will have to find ways to to separate valuable signals from the noise. But if they make digital integral to their business, the rewards will be groundbreaking.
“ You don’t need a digital strategy, you need a business strategy for the digital age.”– Judy Goldberg / Sony Pictures
Source: Accenture
Global Edition Benchmarker14 July 2017
With companies like Apple, Google, Uber and Lyft poised to disrupt the automotive industry, it’s easy to think the future is in Silicon Valley. While it’s true that Silicon Valley will be a major force as connected cars evolve, David Graff, Vice President of Sales at MSX International, champions a different view. He believes the future of automotive technology and innovation is in Detroit, a city we’ve seen go from robust to ruin, from bailout to revival. What’s more, he’s convinced Detroit is the place to be for young engineers and developers looking for an exciting career future, characterized by leading-edge technology, innovation and entrepreneurship.
David recently spoke to us about TIM DETROIT, a three-day summit from Sept. 6-8 at the Cobo Center in Detroit, and why he believes the Motor City is just starting to rev up its engines.
TECHNOLOGY IN MOTION (TIM) STRENGTHENS DETROIT’S REPUTATION AS THE MOBILITY HUB
David GraffVice President of Sales
David Graff was named the vice president of sales, Retail Network Solutions (RNS) at MSXI in October 2013 and is
responsible for the company’s sales strategy and execution for global automotive accounts. He has extensive experience
throughout the manufacturing field including automotive, industrial equipment, aerospace and technology and can be
“70% of the US-based auto-tech research happens within 100 miles of Detroit.”
What is Technology in Motion?
Technology in Motion, or TIM, is the largest mobility tradeshow in North America, sponsored by MSX International and Crain Communications Inc, publisher of Automotive News and Crain’s Detroit Business. It brings together OEMs, suppliers, technology companies and investors actively involved in shaping the future of connected cars, autonomous driving, new forms of mobility and powertrains. It links start-ups with ride sharing companies and Detroit’s traditional strengths in automotive with higher education and R&D.
INTERVIEW
Global Edition Benchmarker15 July 2017
We expect between 300 to 500 industry professionals to participate in our four-track conference focused on the consumer experience, connected vehicles, autonomous/electric vehicles and mobility solutions. We are also highlighting young talent and will be hosting more than 10,000 students from local high schools and universities interested in future careers in the dynamic automotive technology space.
Why the conference?
I came from Microsoft and worked with Crain for years. Ten years ago, we were using a version of Windows to develop the operating system for the head radios in cars. This was the advent of the connected car and vehicle generated data. Since then, the technology has exploded with exciting opportunities and challenges. TIM offers a platform for bringing together the best thought leaders from Silicon Valley and Detroit together as well as putting Detroit back in the driver’s seat when it comes to innovation in automotive technology.
When we think high tech, we think Silicon Valley. Why locate TIM in Detroit?
Media attention has shifted from Detroit to Silicon Valley but the truth is that a lot of the tech that is developed in Califronia is ultimately refined, tested and deployed in Michigan.
In fact, 70% of the US-based autotech happens within 100 miles of Detroit and 61 of the top 100 suppliers have their headquarters in Detroit. Furthermore, Michigan is the number one employer of industrial and mechanical engineers. Unfortunately, not a lot of people know this, especially young engineers and developers.
The young talent is focused on Silicon Valley?
There is a battle for talent. Everyone is going after the best and brightest and what we are trying to say is that if you are a young engineer or developer or finance professional and you want a high tech career, it is right here in the automotive industry in Detroit. You don’t have to move to Silicon Valley. There is a lot of ground-breaking work in the areas of software development, applications, sensors and, green technologies happening here. Detroit has everything that millenials are interested in.
And all of this amazing design, innovation and thought leadership will be on full display at TIM.
Let’s talk more about TIM. Who will be attending?
The conference attracts four different groups: OEMs, suppliers, tech companies and start-ups. It’s a great opportunity to see what’s happening in automotive and to problem solve the challenges of an industry that is growing and transforming at an exponential rate.
There will be exhibitors from across the industry and speakers include Matt Simoncini, CEO of Lear Corp. and Mike Ableson, vice president of strategy at General Motors. Both companies are Technology in Motion exhibitors and sponsors.
But there is more than exhibitions and presentations.
Exactly. There will be a Start-Up Village where companies demonstrate the latest technology and innovation happening in the industry. They will be able to present their solutions in a “Shark Tank” style competition. We will also host a hackathon where engineers and developers can compete to solve some unique technology challenges.
The conference is not just for industry professionals. While this is not a job fair, we have created opportunities for high school and university students to enter into dialog with start-ups and industry professionals. On Wednesday afternoon, Go Mobile will host a STEM (Science, Technology, Engineering & Math) inspired discussion about careers in the automotive industry.
How do you see Technology in Motion evolving?
In the very near future we see TIM taking on more of a South-by-Southwest style experience that integrates music, art, food and hands-on demonstrations. We’ll shut down the streets of Detroit to give participants the chance to experience the latest technologies in the real world.
The ultimate goal is to eventually create a week-long technology fair with Technology in Motion at the center, driving thought leadership in the areas of autonomous vehicles, mobility solutions, electric vehicles and digital consumer engagement.
Anything else you can share at this time?
There will be a few surprises. Some OEMs are reporting that they will make some major announcements at the congress. That should be intriguing to everybody.
Technology In Motion n Detroit Michigan n Cobo Center n September 6-8, 2017The largest mobility tradeshow in North AmericaFind out more at www.timdetroit.com
Global Edition Benchmarker16 July 2017
Find the car. Buy the car. Drive the car. Fix the car. Look for a new car. Repeat.
Forget everything you know about manufacturing, marketing and selling automobiles. It’s all changing right now. Driving this change is the emergence of new technologies, clean energy requirements and consumer experience. OEMs, tier one suppliers, dealers and, of course, car owners will find themselves at the epicenter of this transformation, wondering what the new world of driving will look like and, more importantly, how to navigate the road ahead.
Wherever that road leads, traditional business models will be rendered obsolete as the driving experience evolves. In addition to competing against each other, OEMs will also be in competition with other types of businesses vying for potential customers – many of whom are already established in the digital space.
WHO’S DRIVING THE CUSTOMER EXPERIENCE?
Rob van RijswijkGlobal Director Business Development
Rob van Rijswijk leads the MSXI Global Solutions Team. He is responsible for developing and positioning the full range of
MSXI products and services. Rob has a deep passion for strategic innovation and he works alongside the organization’s global
account executives, helping them add value to a growing global client base. Rob is based in Cologne, Germany and can be
process would motivate them to visit dealerships more often
Source: Car Buyer of the Future, AutoTrader, 2015; The perfect landing: an engaging customer experience EY, 2014
70% of organizations believe that an increasing
emphasis on customer experience is driving business growth strategies
INSIGHT
Global Edition Benchmarker17 July 2017
As this evolution unfolds, consumers will no longer buy just a car. Instead, they will demand a digitally enabled mobile experience profoundly different from anything that has come before. This new driving experience will be a confluence of five major forces – the connected car, integrated sales and service, electrification, shared mobility and, the autonomous automobile. Engaging consumers in this new world and delivering on their expectations in a way that is relevant and profitable will require an epic rethink of the automotive industry.
Recent market research done by McKinsey examined purchasing decisions of almost 20,000 consumers across five industries and five continents. It showed that brands need to find new ways to get themselves included in the initial consideration set that consumers develop during their purchasing decision journey.
Some of these changes are already underway. The industry has moved from a product-centric, mono-channel sales model to a customer-centric smart ecosystem that integrates the dealer-based purchase of a car with other elements that are central to the consumer’s life: digital apps, services and brand engagements that enhance and personalize the driving experience. The good news is that almost all OEMs already have an ever expanding database of customer and vehicle data at hand.
A good example is Mercedes Digital One, a new internal structure that merges IT, marketing, service and sales into one division. Another is Lynk & Co., who is designing vehicles with an open API, shared services and a dedicated app store for cars. These services are synced to the connected lives of millennials. They have essentially turned automotive design on its head by building the car around the tech instead of layering tech on top of the car.
To meet the demand for more personalized, brand-oriented offerings, OEMs and dealers will also need to streamline the buying experience, integrating more products and services into the process. The Brand and Business Delivery Centre will emerge as a place where consumers can buy a vehicle and the myriad of new offerings that will be associated with a new vehicle purchase. The digital and physical aspects of researching, buying and servicing vehicles will be more fully integrated in a way that satisfies all consumer wants and needs. It’s currently unrealistic to think that the dealership network concept as we know it will succeed in being available to customers 24 hours a day, seven days a week, 365 days a year. However, there are six ways they can close the availability gap:
n Consolidate inbound call centers for informational requests with outbound call centers into one customer engagement service center focused on speed of response
n Integrate artificial intelligence tools to quickly and accurately identify and analyze the right data to keep pace with the increase and diversity of service requests
n Change the distribution strategy by adopting a dual system with both traditional dealer networks and a digital, direct-to-consumer retail model driven by vehicle and customer data
n Strengthen collaboration with external vendors to expand customer service help with digital applications within vehicles
n Develop a seamless payment system as part of in-car connectivity to speed up service transactions
n Reduce model variations and concentrating value on a limited number of high quality, thoroughly tested options
Dream, discuss,consider, evaluate
Personal research
Digital billboard
Viral email
Online adds 3rd party sites
Web site
Smartphone AppTablet App
Chat
Instant messagingEmail Email
NewsletterBlog
Web site
TV, radio
Outdoor
Word of mouth
Dealer
Dealer
Call centreCall centre
Call centreGenius live chat
Genius live chat
Dealer
Direct mail Direct mail
Genius live chat
Call centre
Awareness Consideration Purchase Service Loyalty
Physical and digital customer journey
MSX International
Global Edition Benchmarker18 July 2017
How will OEMs and dealers profit in this dynamic retail environment?
With the mobile digital experience, where cars, smart phones and sensors in smart cities are fully integrated, an abundance of data will be generated. This wealth of information can be used to further customize and monetize products or services such as maintenance or entertainment packages. Data can also be sold to third party vendors. Further down the road, dealers may not sell cars to individuals at all. Instead, they may offer mobility packages where vehicles are shared between individuals to use at different times for different purposes.
Fleet sales and maintaining mobility parks in urban areas will be potential revenue drivers. Service will remain critical, with vehicle and customer data generated by connected vehicles opening the door to predictive and prepaid maintenance.
And what about the design and manufacture of the vehicles themselves? Electrification and autonomous will change cars as we know them. Fossil fuels will become history and we will need more efficient batteries and a fast, reliable charging network broadly available for long-range travel. And the autonomous car will eliminate the need for a driver, thus creating the opportunity for an in-car experience that engages passengers. As we relinquish the wheel, the grip of the mobile digital experience will only tighten.
To stay at the forefront of this new driving experience, OEMs will no longer view engineering as its leading core competency. They will have to expand their philosophy to include a sales and marketing mindset, one that sees the world from the user’s perspective and is able to design a machine that more offers comfort, engagement, efficiency and safety.
As OEMs and dealers navigate the road ahead, they will have to see the new vehicle owner or user in new ways. They will have to ask important questions if they are to survive in this changing world.
Four customer experience challenges for connected cars
1 Accessibility
2 Touch-points 3 Analytics
4 IntegrationWhen a driver wants to buy or service their vehicle,how do we make it possible for them to do so anytime of day, anytime of year?
The road will always be there. How we drive it is changing like never before.
How do we integrate all touch-points, both digital and physical, into a seamless, 360° experience and how do we ensure that every touch point is relevant?
How do we utilize the data comingfrom vehicles and drivers to improve the brand experience for the customer, to the point where we are addressing customer needs before they are even aware of them?
How do we integrate traditional practices like engineering, IT, sales and marketing into a new design and manufacturing paradigm that is able to deliver the driving experience of tomorrow?
MSX International
Global Edition Benchmarker19 July 2017
PIONEERING PARTNERSHIPS AT THE WHEEL OF SMART MOBILITY
Hans KwaadChief Business Development Officer,
AutoBinck Group NVHans Kwaad is a true pioneer in smart mobility business, responsible for
strategy, innovation and business development at the Netherlands-based AutoBinck. He established and heads a new division within the AutoBinck
Group called Smart Mobility which invests in start-ups and scale-ups active in new areas of the mobility industry. Under his leadership, AutoBinck has
also started several start-ups of their own, which are also part of the Smart Mobility Division. He can be reached at [email protected].
Hans Kwaad, Chief Business Development Officer, AutoBinck Group NV, spoke with us about his company’s new Smart Mobility Division and their pioneering investment strategy in start-ups and scale-ups active in new areas of the mobility industry.
What impact will connected cars have on dealerships?
For dealerships, it is all about getting a grip on the customer to increase retention. To engage with customers when they need a new car or get them in for maintenance and repairs before someone tries to steal that customer. Access to data about where the car is, how it is driven and when it requires maintenance can help dealers vastly improve customer relationships. For dealers, this will be the main opportunity from connected vehicles.
What is the recipe for dealers to achieve this?
Vehicle data and new business models offer enormous possibilities for generating revenue from connected cars. However, dealers won’t benefit directly from this. They will have to find ways to access the data. OEMs, of course, are now trying to design connected cars in a way that ensures they have sole access to the data, giving them ultimate control over the customer for as long as they are the original owners. However, in the future, more and more cars will be sold to mobility providers and leasing companies, raising the question: Who has access to the data and can use that data to steer customer behavior?
“ The next 10 years will see a massive shift from buying cars to using mobility services.”
INTERVIEW
Global Edition Benchmarker20 July 2017
AutoBinck has a unique smart mobility business model based on partnerships and investing in start-ups. What key learnings would you share with OEMs?
We followed major trends in the mobility industry. We were uncertain at what pace these trends would develop but we were sure that car sharing models would heavily pressure our 110-year-old traditional business consisting of dealerships, distributors, parts, etc. However, we recognized that it made little sense for us to start a mobility business ourselves but rather to invest in a minority share in innovative start-ups in the mobility field. This allowed us to link our traditional business to these new companies to learn a lot and to develop new business models. We bundled these investments into our Smart Mobility Division. As a result, I believe we are more future-proof as a company.
Is this approach scalable to OEMs or is this the advantage of a more agile company like yours?
The latter. OEMs are used to run the show, to have the power in the industry. It was all push driven to ensure that the factory was running at maximum capacity to maintain highest level profits. Now we are moving into a world where mobility will be driven by mass, mobility as a service. New players will be directing the show and OEMs will start to lose control of their business. They have seen this coming and are now trying to position themselves as hardware providers to mobility service providers such as Uber or Lyft. The problem is that these providers don’t care if they drive a Volvo or a BMW. They see a car as a commodity that takes people from A to B at an affordable price and level of comfort. Then the OEM is no longer in the driver’s seat – they become one supplier among many. Rather the mobility providers will be buying huge volumes of cars – say 10,000 at a time – and negotiating price, what data they want, what platform they want, maintenance contracts, etc. To be fair, some OEMs are also trying to reposition themselves as mobility providers but we will have to see where that goes in the future.
Does this create a wider gap between dealers and OEMs?
This dilemma will bring them closer together because they are in the same boat, battling for customers against mobility providers. For example, in the Netherlands, it is becoming increasingly popular to buy mobility subscriptions rather than buying a car from a dealer. Mobility service providers will still buy cars, but at larger volumes and manufacturer direct – skipping dealerships altogether – to get a bigger discount without any loyalty to a brand.
You have embraced this technology topic instead of competing against technology companies. Can you talk about the criteria for choosing the partners you are working with?
We researched mobility and looked for partners who were market leaders or a company close to being a leader in one of the mobility domain trends that we researched. One trend is the move from owning a car to having access to mobility. We wanted to invest in car sharing, but investing in asset based car sharing is not interesting enough since usage is still too low to make money.
It had to be a peer-to-peer company. So we invested in SnappCar which is the number two platform in Europe and number three in the world – well positioned to become one of the major players in the industry.
What kind of mindset do you need as a company to make this happen? How is your mindset different than that of OEMs?
OEMs have a legacy based on huge investments in factories. They can’t just become mobility providers. As a trading company, we are much more flexible. We also strongly believe that the next 10 years will see a massive shift from buying cars to using mobility services. We see the need for change in strategy during a time when technology is making new business models possible. We spend a lot of time in the car – if we can provide in-car entertainment people will consume content and vehicles and their drivers will produce data. These are only two of the many ways you can make money from mobility rather than just from the car itself. This is a new way of thinking about mobility. The Rethinkx Report which came out in May 2017 predicted that in 13 years, 95% of every mile that will be driven, will be driven in an electric, fully autonomous shared pod. This will turn the industry upside down. It sounds extremely disruptive. Nobody knows if this will happen within that time frame, but for sure we will move in that direction so it is better to start your learning curve now and make radical choices today. Otherwise you can’t bring a company into the new generation.
How has mixing automotive with technology people together affecting your own corporate culture?
It’s more the digital opportunity that opens people’s eyes if you are willing to think outside the box. Than you come up with new business models based on things like alternative energy sources or lower maintenance and fuel costs with shared cars being used 44% rather than 4% of the time. This represents a huge shift in the cost of mobility. It’s a big ecosystem coming together to speed up innovation. You have to connect the dots to come up with a new possible future. And you have to invest the profit you make in traditional business into these new areas to explore rapidly growing trends. In five years, it will be too late.
Established in 1907
50 subsidary companies
2,700 employees worldwide
Active in 8 countries
€ 1.2 billion annual turnover
€ 800 million assets
28% solvency
About AutoBinck Group
www.autobinck.com
Global Edition Benchmarker21 July 2017
Despite significant changes in the automotive retail landscape, dealerships remain at the heart of the operating model. Customers rely on dealers to help them weigh their options, for test driving, for fulfillment, and for quality vehicle servicing. However, to remain profitable and competitive in the long term, dealers need to rethink their current business model. For many traditional dealership networks, this requires a radical shift in mindset.
DEALER PROFITABILITY: CAPITALIZING ON CONNECTED CAR REVENUES
Greg Strydom, PhDHead - Solutions and Innovation
Greg Strydom leads a global team of subject matter experts developing solutions, approaches and technology to address
the opportunities and challenges in the auto retail domain. Greg also leads the Performance Consulting Practice and
works closely with the company’s strategic clients. Greg is based in Melbourne, Australia and can be reached
Source: McKinsey and Company – Innovating Automotive Retail
In China, the number of car dealerships has more than doubled in the last 5 years,
while in the U.S. and Europe it has fallen by15%
INSIGHT
Global Edition Benchmarker22 July 2017
» Intelligent business mix
Dealers need to rethink their current business mix, taking action to proactively shift the balance of their operations to capitalize on the larger margins resulting from parts and service. A tell-tale sign of a healthy mix would be an overall gross profit to Sales percentage between 15-18%.
» Disciplined investment
In the short term, forward thinking dealers should be seeking to retain around 20% of their gross profit. This is not easy and will require discipline and a concerted drive to off-set expenses with productive sales efforts. They should also be looking to invest in new facilities, technologies and staff training to make the shift from pure bricks-and-mortar to a 360° omnichannel, customer-centric environment.
» Healthy sales activity to investment ratio
To remain profitable and grow their business, dealers must actively monitor the relationship between their operating investment and their annual turnover. The goal should be to generate six to eight turns per annum.
» Increased staff productivity
Personnel costs remain one of the largest expenses faced by dealers. Ensuring that the investment in manpower pays off is critical. A recent MSXI benchmarking analysis of mature market dealerships found that profitable dealers produced monthly Gross Profit per employee of over $10,000.
The four key drivers of dealer network profitability
For the most part, dealers around the world are engaged as independent franchise investors. Profitable dealers tend to focus their efforts on looking after customers and employees, while at the same time gearing themselves up to invest in any opportunities that the business landscape may present. Unprofitable dealers, by contrast, represent a major risk to everyone. As profits spiral downward so does their loyalty to the brand. They stop following processes, stop investing in infrastructure and employees, and become unable to address customer needs at the level required. In our experience, there are four key drivers of dealer profitability which serve as signposts for healthy returns.
Connected vehicles open up new revenue streams
Cars are fast becoming an important part of the Internet of Things, opening up significant possibilities as connected data platforms. As such, they represent a financial opportunity for the broader auto industry. However, the question will be about how (and if) dealers themselves stand to benefit.
Vendors who design new digital applications for connected cars will realize added revenue. Dealers, on the other hand, will only realize revenue from the connected car when they learn how to capitalize on the steady, predictable stream of data being generated. For example, the real-time feedback loop regarding service needs and vehicle driving habits, has the potential to make resource planning and skill matching more effective.
Other possibilities lie in the area of up-sell and vehicle replacement. Cars will generate significant information relating to usage, driving experience and safety, providing drivers
with a nonpartisan perspective relating to product upgrades, enhancements and even replacement. This takes the pressure off dealership sales teams but increases the pressure for dealerships to provide the quick, accurate service the connected consumer expects. This includes leveraging the increased efficiency offered by the connected car for in-car service booking and credit card payment processing.
Finally, dealers will have to set their sights higher up the value chain to take advantage of the revenue streams from data application support, or even application creation.
OEMs play an important role in supporting dealer profitability
Unlike franchisees in other industries, automotive franchisees value their independence and sometimes follow different processes that can lead to an adversarial relationship with their OEM.
As connected cars make the business more complex, OEMs and dealers will have to standardize and streamline decision-making and resource allocation as well as newly defining roles and responsibilities within the dealer network structure. OEMs will also have a key role to play in providing dealers with actionable data intelligence such as benchmarks and performance data on which they can build their business models, set incentives and drive performance. Finally, dealers will require OEM support for investment in connected infrastructure and skills.
At MSXI we work with OEMs and dealers, helping them actively address network profitability challenges by collecting, analyzing and benchmarking data, and then showing them ways in which they can act on that data to achieve improved performance outcomes. Whether the answer is mapping out a network-wide plan to address dealer viability or simply sharing best practices relating to connected vehicle revenue generation, we always look forward to adding value.
Source: MSXI Dealer Benchmark (based on top quartile of reporting dealers)
Retail automotive dealers should be striving to achieve 2 or 3 times the cost of funds as
a minimum return on their operating investment
Global Edition Benchmarker23 July 2017
Opportunities and challenges moving forward
In mature markets, the willingness to embrace and invest in new technologies related to connected cars and autonomous driving is there but legacy technologies are slowing dealers down. Emerging markets have the advantage of investing in the right technologies from the onset, but often face the challenge of a customer base that lacks access and financial means.
Shifting consumer behaviour
Shiftingretail
models
Shiftinglegislation
Shifting OEM
incentives
Shifting vehicle
technology
Shifting Consumer Behavior
Information has become democratized, and consumers are very comfortable doing their own research through different channels. This culture of autonomy and choice has resulted in a shift in power and the emergence of new customer loyalty drivers. In just one of many examples, MSXI recently interviewed a Toyota dealership that is selling vehicles with free servicing, but whose new vehicle customers are still not returning to their workshop. This has much to do with the fact that switching costs are low and that competitive offers related to vehicle ownership, trade-in values and financing arrangements, are being aggressively presented as compelling alternatives.
Shifting Retail Models
Traditional franchise dealer models are under attack from alternative car buying experiences and business frameworks such as Rockar – a multichannel used vehicle superstore that has also opened pop-up digital experience stores – the Rockar store in the Bluewater Shopping Centre in Kent in the U.K. reported more than 100,000 customers over their first six months of operation.
Shifting Legislation
Dealers have been extremely reliant on supplementary income sources such as finance and insurance, extended warranties and aftermarket applications. These back-end income models are now under threat as legislative bodies investigate the impact on consumers and explore ways in which to protect them, potentially limiting profit making opportunities.
Shifting OEM incentives
OEMS are starting to actively explore and implement variable margin programs whereby dealer profit margins are linked to processes, customer feedback and compliance-type outcomes. Dealers are being rewarded not just for how many vehicles they sell, but for how effectively they position the brand.
Shifting Vehicle Technology
Vehicles are changing in significant ways through autonomous driving technology, electric powertrains, hybrid power sources and connected driving ecosystems. This impacts employee recruitment and training and results in longer service intervals.
Five disruptors shape the way forward
MSX International
Global Edition Benchmarker24 July 2017
No other country in the world has as intimate a relationship with the automobile as the United States. To say that they have had a ‘love affair with the automobile’ is an understatement. The pick-up truck, the muscle car, the station wagon and the minivan were all products of a love between the spirit of adventure and the pursuit of the American dream. The auto industry captured the country’s hearts and minds, and created a new lifestyle and a way to connect. It also created and solidified America’s reputation for innovation and market dominance. Now internet technology provides the industry new ways to innovate and transform the way we love our vehicles.
By 2020, 75% of new vehicles sold will be shipped with Internet connectivity (Source: BI Intelligence), making the connected vehicle mainstream. Looking forward, what
SPOTLIGHT USA AUTOMOTIVE LEADER STILL KING OF THE ROAD IN THE AGE OF CONNECTED VEHICLES
will the arrival of the connected car mean to the U.S. marketplace? What must OEMs and tier one suppliers do to thrive and prosper, and continue to capture the hearts and minds of current and future consumers?
Andrea Sorrenti Vice President North America
Andrea Sorrenti has been Vice President of Retail Network Solutions in North America since October 2010. In this role, he is responsible
for managing operations and customer relationships. In the first quarter of 2015, Andrea was also named Global Account Executive,
coordinating worldwide sales and operations for one of MSXI’s major customers. He can be reached at [email protected]
BY 2020, 75% of new vehicles sold will be shipped with Internet connectivity (Source: BI Intelligence), making the
connected vehicle mainstream
INSIGHT
Global Edition Benchmarker25 July 2017
USA Germany Japan China
coun
try
per
form
ance
(inn
ova
tion
ind
ex p
oin
ts II
P)
South Korea France India Italy
100%
90%
80%
70%
60%
50%
40%
20%
10%
0%
30%
12
3 4
56 7 8
69%
59%
49%45%
24%19% 15% 14%
Maximize the use of data to reach consumers
The adoption of this technology will pave the way for companies that collect vehicle data to reach consumers, better understand their needs and capture new revenue streams generated through mobility, personalized services, and advertising.
As they face this transformation, in addition to revenues from the traditional transaction on the sale of the vehicle, parts and F&I, the industry players will have to find ways to monetize every mile driven. Companies will be competing for a share of the consumer’s wallet and will have to act quickly enough to meet the needs of the connected mobility consumer.
Improve the customer experience during sales and service
The competitive advantage of the OEMs will continue to lie in the relationship with their existing customers and the footprint of their dealer networks. Cars need to be delivered and serviced and this may represent a significant barrier to entry for new players. Furthermore, if the current relationship can be strengthened through an outstanding customer experience, enhanced by access to data, the competition will have to fight harder to win.
Today, dealers collect and own most of the consumer’s data, but as they gain access to connected vehicle information, OEMs will be able to establish and sustain a more direct connection with the consumer. Although the dealer will continue to manage the face-to-face interaction, the OEM will be able to provide insights into consumer needs and behaviors, offering more customized experiences and services throughout the vehicle lifecycle. In order to accomplish this, OEMs will need to learn to better leverage data to their advantage.
The competitive landscape will change dramatically with mobility players like Uber and Lyft growing, but also with new competitors in the market such as Google and Apple that have been dominating the playing field of personalized consumer experiences through their devices, apps, and digital services.
As the vehicle becomes a platform for the delivery of services, the risk for the automotive OEMs and tier ones is becoming commoditized and confined to the role of the hardware manufacturer. To counter this trend OEMs are investing heavily in mobility and exploring new business models and partnerships: GM’s investment in Maven and Lyft, Ford’s investment in Chariot and the partnership between FCA and Google are a few examples. Tier one suppliers such as Continental, Lear, and Delphi are just as active as they venture into the connectivity space.
LTE is forecast to reach 452 million connections in the USA at the end of 2021
Source: 5GAmericas.org
Source: CAM
Ranking Connected Car Index based on overall country performance 2015/2016
Global Edition Benchmarker26 July 2017
How can OEMs and their dealers leverage connected vehicle data to offer an outstanding Customer Experience?
The experience starts with stocking the right vehicle at the store. U.S. customers buy from the dealer’s lot, because they like to drive away the with their new car. Thanks to customer data, OEMs can more accurately allocate their production to the correct dealer. The sales process itself can also be improved. Currently, the typical US consumer spends an average of 2 to 3 hours in the showroom prior to driving away with their new vehicle. The slow sales process is a major source of dissatisfaction, and some of the largest dealer groups, like AutoNation, are trying to take the problem head-on. By identifying the customer and their needs in advance and taking care of some of the paperwork online, waiting times at the dealership are strongly reduced.
The evolution of the connected car
The U.S. is spearheading vehicle-to-infrastructure connectivity
1966-1995
Examples: GM Onstar
Examples: Ford SYNC, Kia UVO,GM MyLink
1995-2002 2007-2012 2012-ongoing 2020-ongoing
1 2 3 4 5
Examples: GM‘s DAIR system
The R&D era The embedded era The infotainment eraExamples:
Tesla app, Nissan Nismo,Progressive Snapshot
The V2X eraExamples:
Tesla Autopilot, self-driving initiatives
by Google, Audi, Daimler
The new mobility era
Connected vehicle data will also make it possible to streamline service and maintenance. Monitoring mileage, oil levels and system health, OEMs can predict service needs and more conveniently schedule service appointments and pre-order parts before the vehicles arrives at the shop. This may help position dealers ahead of the quick oil change shops, as well as on-location vehicle servicing such as those provided by Yourmechanic.com. The same vehicle data will also be fed back to engineering to ensure early identification of quality concerns and continuous improvement in manufacturing.
Overcome data security issues
As more connected vehicles are placed on the road, an increasing volume of proprietary and personal information
will be exchanged across systems and networks. Recently a group of hackers demonstrated how easy it is to take control of a vehicle through its connectivity systems. The industry will need to increase its focus on the protection of consumer data and on making vehicles hacker-proof. The challenge is also an opportunity for new entrants in the cybersecurity space which is attracting significant investment in the U.S.
Continue to spearhead vehicle-to-infrastructure connectivity
Connected vehicle technologies are becoming some of the most heavily researched and tested. There are currently 18 states in the U.S. that have passed legislation related to connected/autonomous vehicles; and the U.S. DOT chose 10 pilot sites across the U.S. to encourage testing and information sharing around automated vehicle technologies.
In the fall of 2017, the students at the University of Michigan will be able to get around campus in a completely autonomous shuttle bus that is being deployed in partnership with Mcity, the university’s 32-acre testing facility.
Additionally, ITS International reports that the Michigan Department of Transportation has begun work on a vehicle-to-infrastructure (V2I) communications project in which 3M will provide lane markings, smart sign technology and dedicated short-range communication devices for a three-mile stretch of I-75. Once these items are installed, the Oakland County stretch of highway will allow the testing of advanced V2I communications, and continue to propel Detroit into the forefront of this exciting revolution.
These examples show that, even though companies from all over the world are making unique and valuable contributions to the connected car, the U.S., with its large standardized market, the absence of language barriers and a more flexible regulatory framework can be expected to lead the pack in the successful roll out of connected vehicle technology.
MSX International
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Editorial Team
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