What defines the winners of the automotive revolution?

ag analytics
May 28, 2019 · 3 min read
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The traditional automotive industry is changing. Four accelerating and mutually reinforcing trends pose a significant threat to the traditional automotive business model, as they seek to solve challenges in a market where technology drives changes in consumer behavior. Delivering on key customer expectations, however, may slow down the transformation and enable traditional automotive manufacturers to prepare for the transition.

For example, the emergence of electric vehicles (EVs) and plug-in hybrids has already shown clear signs of disruption in China, whereas the trend seems inevitable in Norway. Mobility-sharing solutions, like DriveNow and Uber, have demonstrated growth and profitability in several European capitals. Autonomous vehicles have been introduced in urban areas around the world, with more extensive projects in the pipeline. Car connectivity to the Internet of Things offers significant potential to increase consumer convenience and generate supplier revenue.

To be able to prepare for the future automotive industry, it is important to deliver on key customer expectations every single time.

These four disruptive trends — autonomous driving, connectivity, shared mobility and electrification — pose a very relevant threat to the established automotive market, as McKinsey (2017) predicts shared mobility and connectivity alone will most likely account for 25% of the total revenue in the automotive industry by 2030.

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Although the speed at which the trends will transform the automotive industry is still uncertain, it seems inevitable that these disruptive forces will have a significant impact.

Our on-going evaluation and research indicate which pain points influence customer satisfaction and loyalty the most. Having excellent appointment availability, conducting thorough walk-throughs of invoices, and avoiding returns to workshop affect customer satisfaction and loyalty significantly. Delivering on these pain points every single time makes the difference between good satisfaction scores and great satisfaction scores.

When failing to deliver on customers’ expectations for these key pain points and thus failing to achieve great satisfaction scores, traditional manufacturers will find that new solutions will dominate the competitive landscape and speed up the transformation. When succeeding, however, customers are less likely to adopt new solutions and mobility services. This means managing and monitoring processes linked to customer satisfaction will ultimately constitute a very important competitive resource for traditional automotive manufacturers. Meeting customer expectations will, to a greater extent, be a defining criterion for success in the long run. At the core of this thought is reaping the profits of heavy capital investment in the traditional business model before the transformation disallows.

What is the root cause of the transformation? Suppliers and consumers are seeking to solve several challenges in the traditional mobility business model caused by technology-driven changes in consumer behavior. Technological advancements have led to new mobility options, which ultimately result in a fragmentation of transportation needs and thus solutions.

An excellent demonstration of this is that individual consumers have previously owned an all-purpose vehicle. Whether driving to work or taking a weekend trip, a single vehicle has been the solution. Connectivity and shared mobility, however, have enabled consumers to use on-demand mobility services — especially in dense urban areas — which are more customized for a specific purpose. In the same way, purpose-customized solutions for shopping, vacations, business and so on are emerging and becoming increasingly convenient. In other words, we expect mobility to become an array of diversified services that target an increasingly fragmented market in terms of customer needs, rather than the traditional ownership business model. When exactly it will happen remains a question with a highly uncertain answer.

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