Over the last few decades, automotive technology has advanced along with manufacturing and communication technologies to realise some of the most sophisticated and complex machines on the planet. Technology has also changed how people view, purchase, and use automobiles.
To capitalise on the opportunities these new technologies make possible, OEMs must understand how they are changing both markets and consumer experience and how businesses are evolving to meet customer needs.
Delivering Content and Messaging
First, let’s take a look at connectivity. Connectivity is the foundation for almost all experiences delivered by OEMs into their product ecosystems. OEMs are commoditising the ability to pair phones, utilise mapping applications, and search for route and other information, generating new revenue opportunities.
As connected devices, automobiles can provide customers with valuable information and serve as a medium for accessing services and offers in real time. These services include notifications around car maintenance needs, real-time traffic and routing suggestions, and on-demand recommendations for services along the route. According to a KPMG Automotive Study, while 57 percent of car buyers have concerns related to use of their data, 82 percent would be willing to exchange their data for benefits. This mindset is a clear call to action for OEMs to create real value for their consumers. What’s more, OEMs are able to measure those engagements to further tailor the customer experience based on the success of the messaging and offers.
Freeing Consumers to Browse
Autonomous vehicles are another emerging technology driving change in the automotive industry. Technology advances are just beginning to make these vehicles possible, especially within the confines of traffic laws and other hurdles associated with driverless cars becoming an accepted norm.
However, by 2030 the business opportunity for businesses involved in autonomous vehicles is expected to be around US$60 billion. That’s quite an expansion in a relatively short time and should be incentive enough for OEMs to explore autonomy.
What’s even more interesting is that this technology is changing how consumers think about vehicles and vehicle ownership. Whereas upward of 40 percent of consumers say they would not purchase a fully autonomous car for themselves, most of those surveyed would be willing to use autonomous vehicles as a transportation option in the future. Thus, it’s likely that autonomous technologies will soon power industries such as taxis and public transportation.
What’s great for OEMs is that while autonomous cars take care of the driving, customers will have plenty of time and freedom to browse services or other product collateral that are delivered to them in transit. Yet, consumers are unlikely to engage with this messaging unless OEMs use the data they collect to gain insights into their customers’ desires and needs and exploit automobile connectivity to deliver customised content, services, and enhanced experiences to entertain and educate users. Only if OEMs deliver real value to customers will they be able to occupy this role with them. From there, they can build comprehensive new revenue streams beyond simple car sales and service fees.
Creating New Service Needs
Propulsion is a third technological area moving the automotive industry forward. Whereas today’s combustion engines are set to dominate the industry for the coming decades, new propulsion technologies will continue to gain influence as they become cheaper and more efficient than combustion.
Over time, markets will see large shifts in this regard. For example, automotive forecasts show that Tesla will gain higher market capitalisation than both Ford and General Motors, even though it produces only a fraction of the cars these larger players do. This is due to the company’s commitment to leveraging new technologies to power both its cars and its customer experiences, as shown by the Group XP Experience Report.
The increase in the number of cars using propulsion engines will drive new demands from users that will evolve into new business models and revenue streams. For example, if I want to drive my Tesla from Munich to Hamburg, the battery load will not be enough to drive in one leg. The car will need to know this beforehand (by way of technology built in at the OEM), and can identify car-charging stations along the route or even suggest restaurants, cinemas, or other entertainment activities for me to do along the route or while the car is charging.
OEMs will be able to create and capitalise on a completely new ecosystem focused on these customer engagements. Look for more in my next blog on what new businesses are breaking into the markets and how they are changing the way people buy their cars.