Report Says Auto Industry Requires Transformation

WFSB.com

The Con­nect­ed Car Indus­try 2013 report says the auto indus­try must remod­el its busi­ness mod­el to accom­mo­date what is com­ing in the “con­nect­ed future.”

Find out more about what the report reveals for automak­ers and deal­ers.

The Con­nect­ed Car mar­ket will achieve mass-mar­ket pen­e­tra­tion in the next few years, see­ing the num­ber of vehi­cles with built-in con­nec­tiv­i­ty increase from 10 per cent of the over­all mar­ket today to 90 per cent by 2020. As this change takes place, the report iden­ti­fied four strate­gic themes: the trans­for­ma­tion of the present-day deal­er­ship mod­el, how these new ser­vices and con­nec­tiv­i­ty will be paid for, con­cern over open­ing the car to third par­ty providers, and the role of the mobile oper­a­tor in pow­er­ing this seis­mic change with­in the indus­try.

Con­sumer demands around Con­nect­ed Car ser­vices will require trans­form­ing a busi­ness mod­el which has remained large­ly unchanged for over a cen­tu­ry accord­ing to the report. With prod­uct life­cy­cles, pay­ment inter­ac­tions and cus­tomer ser­vice being tra­di­tion­al­ly mea­sured in years, the Con­nect­ed Car con­sumer will require a new ser­vice dynam­ic, more akin to the tele­coms indus­try where such cycles are mea­sured in months.

Ser­vice bun­dles, deliv­ery chan­nels, prod­uct pipelines, pric­ing and cus­tomer sup­port will be heav­i­ly impact­ed, and in some cas­es new busi­ness mod­els will need to be cre­at­ed from scratch as the dynam­ic between man­u­fac­tur­er, deal­er and cus­tomer evolves.

Deal­ers have his­tor­i­cal­ly been able to get a car from sale agree­ment to deliv­ery time in just 20 min­utes.  Accord­ing to the report, the com­plex­i­ty of ‘extras’ and per­son­al­i­sa­tion has increased this to an aver­age of 1.5 hours and is only set to go up fur­ther as more con­nect­ed ser­vices become avail­able.  This has impli­ca­tions on the deal­ers cost of sale per vehi­cle, as well as the type of sales and tech­ni­cal skills required.

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