Lorenzo Introna, principal consultant, Forrester, says the established automotive industry is struggling to maintain its position as the sector morphs into ecosystem-based mobility and customers’ expectations shift.
The challenges car makers face, given their size and structures, often inhibit the business agility needed to provide lasting customer value in an age of digital disruption. The focus was skewed toward the product experience and features, and defining greatness by “number of cars.”
Mobility as a driver for change has existed for more than ten years, but the increased competitiveness from new players has created new challenges for vehicle manufacturers and forced them to rethink their role. It has produced more service-orientated ideas such as car-sharing schemes, partnerships with ride-hailing services, and closer collaboration with urban planners.
Yet the focus is still on the “number of cars.” The recent merger of Mercedes-Benz car2go and BMW DriveNow highlights the need to increase fleet size to compete with new players: the main message I took away from the MQ! The Mobility Quotient 2018 Innovation Summit was that autonomous cars, smarter service offerings around cars, and better working together with urban planners would somehow manage the mobility expectations of the future. Considering that the physical format of mobility remains unchallenged — it still looks like a car — the future seems secure for manufacturers.
Shaping urban mobility
Dr Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz Cars, is quoted as saying the following after the merger of car2go and BMW DriveNow, “As pioneers in automotive engineering, we will not leave the task of shaping future urban mobility to others. There will be more people than ever before without a car who will still want to be extremely mobile.”
The desire of the OEMs to still define the terms of what mobility will be may make business sense, but mobility is more than just the car. Mobility is about convenience and empowerment, and it is a commodity to be used rather than something to be owned. Making mobility convenient will depend on how well companies work together and manage and share data within mobility ecosystems.
In February 2018, 15 technology companies (BlaBlaCar, Citymapper, Didi, Keolis, LimeBike, Lyft, Mobike, Motivate, Ofo, Ola, Scoot Networks, Transit, Uber, Via, and Zipcar) signed the Shared Mobility Principles for Livable Cities. Some of the objectives are to place people before technology, work together, move toward zero emissions and share data. Is it a coincidence that there are no automotive brands in this list? It seems the pioneers are not alone.
Data and the capability to manage and share it will be the differentiators in the future of mobility; managing the data from the first mile to the last mile will provide incredible insight and power. It will be the car manufacturers’ most significant challenge, and it will also challenge their position and influence in an industry that will probably become known as the “mobility industry.”
To remain relevant, vehicle makers must learn how to share and participate more proactively rather than building walls to protect itself, which will only isolate the manufacturers from the mobility industry, its data and customers. For vehicle makers, the following three areas are crucial.
Sustainability, the commoditisation of mobility, hyper-adoption, and more choice are changing the perception of and need for car ownership. More solutions for the first and last mile are connecting people to transport networks that make their commute more productive. Deloitte’s report on the future of mobility estimates that as much as 66% of new vehicle sales in urban areas will be shared by 2030.
The manufacturers may still build cars, but the reduction in ownership will have a massive impact on its distribution network, the car dealerships. They must transform to become less dependent on the car makers and more connected to the mobility ecosystem through platforms that enable the exchange of data using application programming interfaces (APIs) and microservices. Given the state of technology and technology capabilities at dealerships, few will survive if nothing is done.
The impact for the vehicle manufacturer is he loss of data. No more ownership means no more data and no more managing of a customer relationship in the ownership lifespan. For car makers, car-sharing services have shorter relationships and greater difficulty maintaining customers’ loyalty, and the data silos of car-sharing services continue to frustrate customers. Consolidating data and providing easier management of mobility should be a priority.
Future mobile and digital landscape
The transformation of mobile and digital is causing a shift in managing experiences with customers. The possibility of isolating brand experiences is changing because digital devices, whether they be mobile phones, consoles, home electronics, or cars, become smarter and can orchestrate content more intelligently. Customers also expect seamless experiences across channels and devices.
A manufacturer must transform the way content is produced and managed to be able to communicate in an environment of intelligent device orchestration. It also needs to make content available for orchestration through ecosystem platforms and APIs. Self-defining the rules for content delivery disappears, and remaining relevant depends on the capability to manage content in a more agile and dynamic manner.
The changes in mobile and digital, together with customer choices and access to services, redefine the way customers solve the jobs that need to be done to fulfill their needs. Customers do not rely on the linear journeys provided by brands so much, but orchestrate their customer value and experience ecosystems by themselves.
The manufacturers and dealerships alike need to expand their understanding of customer journeys beyond the brand and incorporate the whole customer ecosystem. Understanding the value a vehicle manufacturer has in the ecosystems allows for more personal experiences and also identifies further opportunities to remain relevant in customer value and experience ecosystems.
Ecosystems are different for individual customers, and it is not possible to manage ecosystem journeys the same way as today. The implication is that an vehicle makers needs to access more data and use technologies such as artificial intelligence and machine learning to analyse and dynamically adjust to changes in the customer ecosystems.
Sharing is the only real choice
The thread that links all the areas above is data. Accessing, managing, and sharing data will define the role a manufacturer has in the mobile transport industry. Digital disruptors that build services on data are becoming bigger players in a mobility industry determined by data, and they provide experiences that a vehicle company has not provided previously.
This is also where the opportunity exists, however. Manufacturers and dealerships have infrastructure that complements the offerings of digital players. The combination of established infrastructure, data exchange, and dynamic digital services enable the promise of future mobility. Sharing and working together will have the most significant benefit for customers, and hopefully, that is the same objective the vehicle makers have, too.
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The author of this blog is Lorenzo Introna, principal consultant, Forrester