Report Says Auto Industry Requires Transformation


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.