Tuesday 17th September 2019

The future automotive industry is not all about speed

Published on March 6th, 2019

Angus Ward, CEO, Digital Platform Solutions at BearingPoint believes Automotive companies must start the race for mobility services and compete for new commercial sector deals to reap the returns and thrive.

From mobility services to connected cars, and self-driving vehicles: technology is changing the world of automotive. In today’s digital world, traditional carmakers are being beaten to the punch by the likes of Waymo and Uber which are able to offer their customers exactly what they want, when they want it.

The last set of quarterly results for the automotive industry is testament to that. With declines in sales, automotive manufacturers are faced with a challenge. By 2030 manufacturers like Ford believe that half of their revenues will potentially come from new car sales and the other half from other services, which could include financial and mobility services.

Yet 2030 is still over a decade away and in 2019 there will be no single compelling event to force their collective hand. So, what can we expect automotive manufacturers to do in the coming months?

An industry divided

Last year saw some of the first transitions in the market to mobility services – in November, Ford announced it would collaborate to design automated-vehicle delivery with Walmart for its home delivery service. Now that Ford has taken these first steps, the rest of the industry needs to follow suit. Automotive companies must start the race for mobility services and compete for new commercial sector deals in order to reap the returns and thrive.

Angus Ward

Establishing an early lead like Ford is incredibly valuable – it enables the manufacturer to create a business model and core competencies with its partner that can drive future revenues. Car manufacturers, fleet owners and digital players alike will need to become more aggressive by establishing new partnerships, platforms and business models.

Nevertheless, while the choice seems simple – with the exception of a handful of automotive manufacturers – most volume-focused manufacturers have given insufficient executive time and energy, or capital, to future business models. Instead, these manufacturers continue to operate business as usual and if they continue to do so, there will be a widening gap that will be increasingly impossible to close.

While others accelerate down the path towards adding adjacent revenue streams and new business models, most continue with their traditional business model that has not changed since its creation by Henry Ford with the Model-T.

The battle of the dashboard is lost

Recent research has shown that a slim majority of the automotive industry believe that they can win the ‘battle of the dashboard’ against the tech giants all alone – despite slow innovation to date. The issue is the current mindset of legacy inertia that seemingly infects half of the automotive sector.

The harsh reality is, automotive manufacturers can’t deliver mobility services or win the new commercial sector deals unless they understand the problems that their customers are facing. By understanding this, they can incorporate necessary changes to their ecosystems to cater to their customers at their moment of need. At its core, this means owning customers, leveraging data and broader ecosystem partnerships.

To achieve this, carmakers must adopt new business models and an open ecosystem of partners that allow them to move into the whitespace between traditional automotive and other industry verticals like transport and to co-innovate. They could, for instance, start in a simple way by bridging internal silos to better serve their customers and develop simple use cases such as data monetisation.

If they rely on the ‘old’ way of doing things, their new services will surely fail. And this can take place across multiple industries, the choice is simple: innovate or die.

The author of this blog is Angus Ward, CEO, Digital Platform Solutions at BearingPoint

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