The Five Pillars of Digitisation in the Automotive Industry

Estimated reading time: 3 minutes

The rapid pace of digitisation is transforming the component-driven automotive sector to a software- and solutions-focussed industry, accelerated by consumers’ evolving digital lifestyle expectations and demands for new and innovative services.

By 2020, Internet-connected vehicles will be the number one application, transmitting over 350 KB of data per minute.

This was the premise of a roundtable debate hosted by Frost & Sullivan, in partnership with IBM Watson IoT, on the eve of this year’s Paris Motor Show, featuring the unique perspectives of leading OEMs’ senior executives and digital leaders.

The automotive industry is set for a paradigm shift based on the following five pillars, constituting the next generation of growth opportunities:

• Connected Supply Chain
• Industrial Internet of Things and Industry 4.0
• Connected and Autonomous car
• Digital Retailing and Vehicle Relationship Management
• Mobility as a Service (MaaS)

In a future connected supply chain, the combination of IoT data with analytics provides manufacturers with a common platform to operate with real-time visibility, promoting greater interdependency, collaboration, dynamic responsiveness and the flexibility to integrate disruptive innovations. This is expected to derive savings of up to $1bn for a mainstream volume OEM.

According to Sarwant Singh, Senior Partner at Frost & Sullivan, the auto space is progressing towards mass adoption of 4G LTE and, ultimately, 5G as well as satellite broadband systems.

“The advent of autonomous vehicles will give rise to a plethora of services, and personalisation of the travel experience will be of critical importance.  Connected autonomous technologies will increasingly render the car a platform for drivers and passengers to use their transit time for personal activities, which would include the use of media and other service packages,” Mr Singh continues.

In the future, we will see an increased focus on packaging services like LBS (location based services), consumer OTA (over-the-air), Infotainment with Mobility, insurance, remote upgrades, prognostics and extended warranty-related services, expected to become revenue streams for car owners.

An area where the impact of digital disruption will be particularly prevalent is the unbundling of the automotive retail network. The future of automotive retail will transition from a transactional concept to an experience-based model using digital tools throughout the customer journey.

The roundtable forum also mooted the possibility of the car of the future morphing into a Mobility platform. Transactions will be made based on time and miles covered. Most European OEMs are already progressing towards Car as a Service (CaaS).

"The Internet of Things (IoT) has already transformed the customer experience;  enhanced operations;  and disrupted professions, businesses and even entire industries,” states Sanjay Brahmawar, Global Head & Managing Partner Strategic  Business Development at  IBM Watson Internet of Things, and co-moderator of the debate.

“By bringing together the IoT with IBM Watson™ cognitive computing technologies, we are infusing a new kind of thinking into objects, systems and processes. Watson technology understands, reasons and learns, enabling us to uncover new insights, new pathways and new possibilities,” Mr Brahmawar continues.

“Suddenly, things are talking to other things, learning from other things—and they’re talking to us. And as that happens, there will be virtually no limits on what we can achieve.”

IBM is partnering with the leading automotive companies in the world to combine decades of expertise and apply the power of cognition to bring better outcomes to manufacturers and consumers everywhere.

Mr Brahmawar adds:  “Watson IoT AutoLAB accelerates our client’s cognitive mobility journey by helping them rapidly connect, activate, and co-create new services."

By 2025, advanced technologies such as automated driving, connected mobility, EV charging, and health and wellbeing solutions will play a pivotal role in improving the experience offered by vehicle-sharing operators, according to Frost & Sullivan.

The Future of Mobility consists of technology-enabled, door-to-door, multi-modal travel, encompassing pre-trip, in-trip and post-trip services to improve the user’s journey experience.

The event crystallised that a diverse digital strategy, encompassing several elements right from Business Intelligence analytics, Internet of Things (IoT) to deep learning and Artificial Intelligence (AI), will help improve the bottom line of an automaker.

The OEM thought leaders conceded that the industry is working on “software-based everything”, from  human machine interface tooling, over-the-air and security software, high definition maps to automakers’  increasing diversification into offering their own mobility services. 

Most major OEMs’ roadmap to digitisation is to develop digital services today, in a bid to eventually develop Car and Mobility as a Service business models, ultimately making the car an integrated part of a connected living solution.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community.