Oxford defines the word “disruption” as “disturbance or problems that interrupt an event, activity or process.” As we are quickly learning, nothing is more disrupting to entire industries than a consumer’s ever-rising expectations of how products and services integrate with their connected lifestyle.
A recently released study from IBM explains how external forces are directly affecting consumers and will have a greater impact on the auto industry than those forces that primarily affect the industry itself. The study, Automotive 2025: Industry without borders, is a follow up to IBM’s 2008 auto industry perspective in which the management of global resources, sustainability concerns, corporate responsibility and the use of technology to build better cars were key points.
In the new study, the top external forces impacting the auto industry are heightened consumer expectations, the progress of technology, advanced personal mobility and government regulations. Of all the rapid changes expressed in both studies, consumer expectations were cited as the most dramatic external force shift due to digitally-enabled consumers’ intensified demands that products and services engage with them on their terms. It is for this reason that industry growth, according to the study, will come from automakers delivering additional value rather than just selling more vehicles.
This is an important point that we have discussed. The growing popularity of on-demand mobility, particularly in urban areas with car- and ride-sharing, is making a vehicle purchase an unwise investment. Automakers need to update their economic models and include revenue gained through connected services and strategic alliances with service providers to offset lower vehicle sales volumes.
In an interview with Doug Newcomb, Ford CEO Mark Fields said “We’re thinking of ourselves as not only a car and truck company … but also as a mobility company.” During his keynote address at the 2015 Consumer Electronics Show, Fields explained Ford’s broad vision of “Smart Mobility” and how the company intends on delivering value well beyond their vehicles.
Knowing what consumers want tomorrow is also a key finding of the Auto 2015 study. By 2025, consumers will expect to participate in the creation of new mobility products and services, perhaps even influencing business strategy. This is why we strongly believe in automakers doing all they can to capture and analyze telematics data generated by their vehicles in an effort to better know their customers. Tesla seems to have taken the lead here, and we expect other automakers to follow suit.
The study provides some practical advice to automakers that aim to meet consumer expectations in the coming decade:
- Develop new ownership and usage models that meet consumer expectations and create alternative revenue streams.
- Use partnerships and technologies to acquire enabling capabilities as needed.
- Learn from great consumer experiences in other industries.
- Examine similar processes and technologies associated with consumers to incorporate and optimize for automotive.
We believe that delivering value across the entire mobility value chain will be critical to winning the business in the near future – particularly as more industries discover they are without borders in the connected world of tomorrow.
Source: Automotive 2025: Industry without borders – IBM