Jonathan Smith, Senior Principal Consultant at Expleo
Consumer demands are shaping every industry and the automotive industry is no exception. The emergence of operators offering service-based products (such as Uber or Lyft) combined with a renewed resolve to choose services that are environmentally friendly (like electric vehicle fleets) has resulted in a fundamental change to the automotive business model. The upshot is an unexpected shift in the concept of car ownership, where private financing will be a thing of the past. Instead, people will be buying a mobility solution be it a train, car or bus. Car sharing in an electric future will be the norm, revolutionising the automotive landscape as we know it. Instead the customer will be the product, with various players vying to ‘own’ them. A shift to this type of model will be enabled by improvements in connectivity – namely 5G – and an infrastructure based on Internet of Things (IoT) devices.
Factors shaping change
Before that future is realised and as the service economy unfolds, from an automotive perspective the journey starts with the relationship between the vehicle and the consumer. Modern consumers are choosing options that are cheaper and reliable, and more and more consciously with a lower environmental impact, such as car-sharing alternatives.
As consumers (particularly those in urban areas) pivot from private ownership towards more service-driven options, this has ultimately had a knock-on effect on the type of vehicles used from a fleet perspective. The cost-savings and reduced emissions conferred by electric vehicles make them attractive alternatives to traditional petrol vehicles on a large scale. And looking to the not-so-distant future, the drive towards autonomous vehicles shows no sign of slowing, with companies such as Optimus Ride launching driverless bus services in the US.
An opportunity that pays off
The environmental impact of mobility cannot be understated. The UK government announced last year a £3bn “clean air” initiative to tackle emissions, banning new diesel and petrol vehicles by 2040. These factors have all accelerated moves towards hybrid and electric vehicles. Electric vehicles are subject to different factors compared to that of petrol-powered automobiles. For instance, when marketing these vehicles, they will require expertise across multiple providers, not just the current finance and insurance organisations. For autonomous vehicles, the expertise is even greater. These ‘new mobility’ vehicles require a wealth of infrastructure, including multiple sensors providing data on various factors (for example, weather conditions and traffic patterns) and charging points for electric vehicles.
Offering a service to a customer requires the convergence of several industries. Route planning decisions on different aspects of the journey – whether that’s the best route to take to avoid traffic or to align to an onward journey – relies heavily on data collected from a variety of IoT sensors and analysed.
The opportunity here lies with the operator who owns the customer journey and acts to bring different players together. This convergence is directly enabled by IoT, as the data collected across a smart city will help to inform different aspects. Ultimately, IoT will make it easier to manage the customer journey across different carriers and coordinate assets to ensure that the customer gets from point A to point B as efficiently as possible.
Convergence is key
From both a customer and commercial aspect, convergence will bring many organisations closer together. This shift will necessitate significant operational and process change supported by technology, namely IoT. By successfully achieving this, manufacturers will have a real opportunity to forge a new position within the market that puts them ahead of their competitors.
While IoT will enable this convergence, ensuring that this coordination is seamless and provides a high-quality customer experience presents a significant challenge. Organisations will need to seek expert advice, partnering with technology and software specialists that can help them to converge supply chains and provide them with the revised operating model designs and processes, plus technology roadmap and assurance, to reduce risk.
Only then can a vehicle manufacturer revolutionise the automotive market with a first of its kind, innovative solution, which will expand its reach to new audiences and help establish them as a key frontrunner for driving change.