How technology is moving the automotive industry from products to relationships
The automotive industry is facing a sea of changes in how people think about mobility. Technology is fundamentally changing the relationship between businesses and consumers. How can OEMs position themselves to succeed in a rapidly shifting transportation landscape?
Gearing up for change
We talked with John Hagel of Deloitte’s Center for the Edge and Joe Vitale, global Automotive industry leader, Deloitte Touche Tohmatsu Limited, to explore the impact technology is having on the automotive industry. Below are excerpts from that discussion. Download the PDF to read the full interview.
You can also read the full supplement "Examining the evolving mobility ecosystem" here.
Q&A with Deloitte’s John Hagel and Joe Vitale
What are the most significant changes you see emerging in the automotive industry?
Joe Vitale: For a long time, competition in the automotive industry has been around the product, specifically product quality, performance, and safety. But as cars get better and better, we’re seeing diminishing returns on improvements in those areas. Instead, our research shows that consumers today value their experience with the brand as more important than vehicle design. At the same time, there's a massive shift toward usage over ownership. Consumers are becoming more interested in mobility on demand, lower cost, and higher convenience. That's creating unique opportunities—and tremendous challenges for traditional business models.
You’ve said that the industry is going to have to shift from a product-driven business model to one based on relationships. How might a brand extend its relationship with customers using mobility data?
John Hagel: The winner is whoever captures the most integrated, holistic view of individual mobility patterns. Who can deliver value in terms of helping people increase the value generated from, and the efficiency of, their mobility?
We’re just cracking the surface of how brands evolve to satisfy different consumers, in part because consumer preferences are evolving so rapidly. Where people are in their life cycles affects lifestyle. Gen Y, Gen X, and baby boomers all have different expectations for transportation.
How brands see their business will need to evolve from selling vehicles to providing mobility on demand for specific segments. They’ll have to serve the consumer not only in the vehicle also but in public transportation, taxi services, car-sharing, bicycles. Brands that can do that across modes, with a focus on the broader customer experience, will have a unique opportunity.
What’s the best way for a large automotive manufacturer to go after new business opportunities? What advantages do OEMs have?
Joe Vitale: The biggest advantage OEMs have is access to markets. They’re truly global, with a huge entrenched capability to serve markets and consumers around the world.
If the shift to new business models is incremental, OEMs can begin to embed capabilities incrementally into the vehicle. They can provide highly assisted vehicles that increase vehicle safety and convenience. They can collect customer data and create new service offerings, leveraging their relationships with customers.
If we move quickly to autonomous vehicles—and OEMs don’t own the operating systems for that or they aren’t able to create new business models like Uber did—they risk losing their advantage.
Another advantage: OEMs understand how to operate in a fully regulated environment, which will continue to be a requirement and a brake on the speed of transformation.
It’s going to be a challenging ride. If OEMs can continue to invest in and improve their core business while adopting new business models and partnering with companies that offer the right capabilities, they can certainly emerge as winners. But that means having the right strategy, placing the right bets, and having the right partners to move quickly as the market continues to change.