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Impact of Technology on the Automotive Industry

2018-06-27 09:40:25

Impact of Technology on the Automotive Industry

Digital Economy Handbook Infographic: Impact of Data Factories on the Automotive Industry

Nowadays cars are mainly sold/ leased through distributors and dealers who collect data on customer experience and the vehicles themselves. Distributors and dealers are the main intermediaries between the car manufacturers and the customers. Cars have come a long way since their creation, many automotive manufacturers have adopted new technologies to improve vehicles of all kinds by making them more efficient. Still, the concept of cars itself has not changed much. This is about to change soon, however. Currently, two main developments are in the making: growing Internet of Things (IoT), and new mobility business models are appearing.

Growing IoT

Nowadays, the majority of our devices are connected to the internet. The same goes for cars. Inbuilt software in the vehicle itself provides real-time data (user data, movement data, vehicle data, etc.) to the manufacturer. This way, manufacturers can remotely update software systems, monitor engine performance, and powertrain performance. As a consequence, the role of dealers and distributors is reduced considerably since manufacturers are now able to directly receive vehicle and customer data from the car software itself. Manufacturers will no longer need dealer and distributors to communicate with their customer and figure out their needs and wants. This would impact the margins to be made by the distributors and dealers. It will also impact the role of repair and service entities within automobile groups as most repairs and enhancements can be made from remote locations.

New mobility business models

The sharing economy is gaining popularity nowadays, and people begin to see the utility in not owning their own cars. Didi Chuxing, a Chinese ride-sharing giant with 20 million cars, and 300 million registered users, is an excellent example of the success of the new mobility business models. Once again, the role of dealers and distributors diminishes, since the automotive market will be led by digital companies, and individual car owners will become a very small percentage of the total users.

The future

These two trends, along with autonomous and electric vehicle developments, will lead to a new future in the automotive industry. Imagine a future where you are able to order a car instantaneously through your mobile device at an agreed-upon price. A fully electric and autonomous vehicle arrives within a minute from the closest shared parking. The vehicle drops you off at your desired destination and your bank account is billed automatically. Would you like a future like that? Let us know what you think in the comments below!

References: 

  1. https://www.datameer.com/blog/connected-car-big-data-automotive-industry-future/
  2. https://www.forbes.com/sites/russellflannery/2018/01/21/in-a-shared-economy-who-will-own-autos/#4fceecc02219

Impact of Technology on the Automotive Industry

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