Automotive 2025: A New Relationship between People and Cars

Automotive 2025: A new relationship – people and cars

Kal Gyimesi | Automotive Marketing Leader | IBM Watson IoT2016 OESA Communications Council | February 3, 2016

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To better understand consumer expectations for 2025, we surveyed over 16,000 consumers around the world to get their perspectiveContrasting their views to what we heard from industry executives

These two studies compliment each other in giving a comprehensive point-of-view of both industry and consumer expectations for the next 10 years

175 Executives

21 Countries

16,469 Consumers

16 Countries

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Shifts in external forces impacting the industryTechnology leads the way with consumer expectations close behind

What are the most important external forces that will impact the industry today and in 2025?

Technology progress

Globalization

Economies/markets

Sustainability

Government regulations

Consumer expectations

Corporate social responsibility

Global labor force

Personal mobility

66%

55%

68%

47% 50%

41%37%35%

27%20%

10%

46%45%

13%11%10%

3% 9%

2014 2025

Presenter

Presentation Notes

Technology Progress: advancements in digital, vehicle and enterprise technologies will continue with a great amount of innovation coming from outside the industry Consumer Expectations: the only one of the nine influencers to change directions from our Auto 2020 study. Digitally enabled consumers are driving significant change in products, services and how companies engage with them Government Regulations: Significant increase in government involvement from Auto 2020 to handle requirements of automated/ autonomous vehicles, driver distraction with in-vehicle technologies, and disruption of traditional process models such as retail Personal Mobility: increased expectations for 2025 as urbanization, lifestyle changes and cost effective alternatives are effecting how people want to move from one place to another Sustainability: significant decrease in expectations from Auto 2020 study as focus on how to provide energy efficient vehicles as subsided and is being replace with the concern of the impact of vehicles on the environment Economies/Markets: Little change as excitement over growth markets such as China has stabilized. Continued push into new markets will occur but will decrease in volume as markets become saturated Globalization: as the industry is already extremely globalized now, much of the focus is to continue to optimize the global footprint based on sales and operational needs Global Labor Force: skilled, available resources continue to be an issue – especially knowledge of technology from other industries. Complexity of systems will require additional skills in manufacturing and service. Unclear why this influencer isn’t rated higher – maybe just business as usual Corporate Social Responsibility: step change from the Auto 2020 study. Focus on corporate ethics and irresponsibility of 6 years ago as subsided and companies feel they are addressing the issues

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The Automotive 2025: Industry without borders study suggested three disruptors to the industry over the next 10 years

• 62% felt consumers would be expecting new ownership models

• 73% of OEMs said that consumers would be involved in co-creation of mobility services

• 80% said comprehensive connected vehicle services will be a key differentiator

• 75% said non-traditional industry participants will have a key role in the consumer-driven mobility ecosystem

• 71% of Industry executives feel there will be significant disruption in retail channels

• 54% agree that consumers will want to buy cars directly thru the internet

Source: Automotive 2025: industries without borders

©2015 IBM Corporation

Consumers in growth markets rated their interest in mobility solutions 20 – 25 percentage points higher than their mature market counterparts

BrazilIndia

Russia

S. Korea

Indonesia

ThailandChina

MexicoUSA

Canada

UK

France

Germany

Japan

Australia

Italy

Growth markets Mature markets

When can I have it? Why do I need it?

Technology

Legacy

Technology adoption rate based on perceived value

Leapfrog to new mobility solutions – not tied to past

Comfortable with current mobility solutions – not as ready to change

Mindset

Technology adoption rate based on proven value


Digital mobility interest is a relevant way to understand how consumers may view mobility experiences in the future

Provides an understanding of the interest, attitudes and expectations consumers will have for future mobility solutions


Although markets are similar in their assessment of being tech savvy, mature markets are much slower in adopting the latest technology

I own or use personal devices

I use social media regularly

I consider myself tech savvy

I am an early adopter of the latest technology

Growth Markets

Mature Markets

98%60%38%50%

95%49%40%34%

United States

92%51%42%35%

With digital vehicle technologies still being complicated to use, consumers will be less attracted to these if they do not see themselves as tech savvy and an early adopter


Digital consumersPersonalized devices, information, personas and events

Integrated devicesincluding the vehicle

Aggregated informationavailable based on personal preference

Digital personas with personal preferences that are transferrable between vehicles

Lifestyle events based on their purpose

Devices• Smart phones

• Tablets• Laptops

• Wearables• Vehicles Information

• Personal• Usage• Derived• External

Personas• Mobility• Commerce• Communications• Health

Events• Commuting• Traveling• Shopping• Socializing

Devices• Smart phones• Tablets• Laptops• Wearables• Vehicles

Presenter

Presentation Notes

Devices: integration of all devices, including the vehicle, with the ability to seamlessly access information and applications from any Information: personal information collected, analyzed, and presented in a dashboard form so people can make decisions with the understanding of the impact in other areas Personas: collections of personal digital information used to personalize devices and experiences Events: activities in a person’s daily life that are carried out through the use of devices and personally enriched with the use of information and personas


Cluster analysis shows four distinct consumer groups based on their degree of digital mobility interest

21%

41%

23%

14%

United States consumers


Greater personalized in-vehicle experiences Moving from intelligent and intuitive to self-enabling


What vehicle innovations will become commonplace by 2025?

Vehicle digital persona interchange

Within a brand – 78%Within an automaker – 62%Between automakers – 26%

In-vehicle cognitive learning

74%

Self-configuring

Partially – 84% Highly – 55%

Fully – 19%

Limited – 38%Fully – 8%

Automated Autonomous

Self-drivingSelf-learning

Social networks for vehicles

57%

Self-socializing

Presenter

Presentation Notes

We asked industry executives what innovations would be commonplace by 2025 and we received some interesting results. Three out of four executives felt that digital personas would be interchangeable within an automakers brand and two thirds felt they would be interchangeable across brands in an automaker. There was still my doubt with digital personas being interchangeable across multiple automakers as this is still see as a differentiator. Fifty seven percent thought vehicle “social networks” would be in place where vehicles would communicate with each other and share information, not only about traffic weather conditions but also about information specific to a given automaker. For instance, if a vehicle was experience some type of problem it hadn’t recognized before, it could communication with other vehicles of the same brand to seek help on what the issue might be. Three fourths of the executives we talked to felt in-vehicle cognitive technologies will be a key component of how vehicles learn and reason to provide a better experience for the occupants and to optimize its own performance In terms of “automated” and “autonomous” driving, 84% felt partially automated driving would be commonplace and 55% said highly automated would be in place. Surprisingly, more executives – 38% - felt limited autonomous driving would be in place before fully automated which was only 19%. Finally, there is still much skeptism about fully autonomous vehicles being commonplace by 2025 with only 8% of the executives we talked to agreeing with this. Q14: What vehicle innovations will become commonplace by 2025? (n=158-167)


Automated driving is likely to be widespread by 2025, while autonomous may still be limited to select areas

30

42

46

58

59

74

97

105

145

Rio Tinto

Volvo

BMW

Apple

Nissan

Audi

Mercedes

GM

Intel

Google 2,243

The 10 Most Influential Autonomous Cars Companies

Appinion InfluencersPlus Researchers

All 175 Interviews

Other OEMs

Other Suppliers

Appinion InfluencersPlus Researchers

All

Other OEMs

Other Suppliers

75% 35%

40% 10%

55% 19%

37% 7%

Highly Fully

Limited Fully

….however these leaders did not see a greater likelihood for Autonomous vehicles than the overall population

Those closest to the development of Automated driving saw a much higher likelihood for their adoption by 2025…


Consumers show a high level of interest for the self-enabling vehicle with self-healing rating the highest

Self-healing

Self-socializing

Self-driving

Self-learning

Self-configuring

Self-integrating

What self-enabling vehicle capabilities would interest you in the future?

Extremely/Very interested

80% of industry executives felt comprehensive connected vehicle services will be a key differentiator by 2025

55%

44%

44%

48%

48%

44%

59%

55%

54%

54%

51%

49%

Global USA


Priorities are different by country and need to be recognized for readiness and adoption

Rank Mex

ico

Bra

zil

Indi

a

Thai

land

Indo

nesi

a

Chi

na

Rus

sia

S.K

orea

Italy

USA

Can

ada

UK

Aust

ralia

Ger

man

y

Fran

ce

Japa

n

1

2

3

4

5

6

% Avg 77 77 76 70 67 64 64 61 49 47 47 45 43 43 34 20

Integrating

Configuring

LearningHealing

Driving Socializing

Note: %Avg is the average of the 6 categories based on responses of “extremely/very interested” per country

Self-enabling vehicle capability - ranked by countryGrowth markets

Mature markets


Consumer-driven mobilityTremendous opportunity for new technology innovators and business models

Consumer driven

• Intermodal travel solutions

• Availability alerts

• Health monitoring• Learning services• Office on wheels• Entertainment• Events• Lifestyle

• Public services• Service scheduling• Vehicle tracking

• Weather• Smart navigation• Real-time traffic• Parking

• Digital personas• Location services• Digital commerce• Concierge• Car renting• Car sharing• Ride sharing

• Pay-as-you-go• Automatic toll pay

Auto industry driven

Vehicle Multi-modal Ancillary

Vehicle Centric

Driver Convenience

Occupant Experience

• Safety/security• Vehicle performance• Vehicle diagnostics• Intelligent driving• Vehicle networks


Information services had the highest consumer interest while location-based services were the least desired

Information

Entertainment

Commerce

Health

Concierge

Education

Location-based

What mobility services would interest you in the future - things you can do from the car?

69% of industry executives listed “creating of new services based offerings” as a top growth strategy in the next 10 years

Extremely/very interested

53%

45%

41%

34%

41%

30%

55%

47%

46%

46%

44%

38%

Global USA

31%35%


Alternative mobility optionsConsumers will explore as they look for the most cost effective and efficient ways to get around

Public transportation integration

Multi-model integration

Car SharingOn-demand ride

sharing

Peer-to-peer rental

What mobility modes would interest you in the future - ways to get around?

Alternative methods of transportation are increasing in importance as consumers reduce their dependence on the personal car

Extremely/very interested

71%Personal Vehicle Ownership

33%

27%

32%

29%

29%

45%

40%

39%

36%

34%

Global

USA


Comparing the three types of mobility solutions across all countries shows a fairly consistent order of importance

01020304050607080

SEV Services Modes

IndiaBrazil

Mexico

Thailand

Indonesia

China

Russia

South KoreaItaly

USA

Canada

Germany

UK

Australia

France

Japan

Note: Responses of “extremely/very interested”

Growth markets

Mature markets

Mobility


33%

48%

52%

54%

56%

60%

71%

Significant

Retail channels

Marketing & sales

Product development

Research

Aftermarket

Supply chain

Manufacturing

OEMs Suppliers

73% 65%

65% 55%

44% 63%

61% 47%

40% 59%

38% 60%

16% 44%

Ecosystem disruptionOEMs and suppliers disagree on where the significant disruption will occur

Presenter

Presentation Notes

When we asked where the biggest disruption will be in the industry ecosystem over the next 10 years, retail channels was predicted to have the most disruption with changing dealer roles, the use of online intermediaries and buying directly through the internet as top contributors. Beyond that, there is a clear difference of opinion between OEMs and suppliers where the most significant disruption will occur. OEMs feel greater disruption will occur in process areas that are closer to the consumer while suppliers see greater change that are further away. One areas that sticks out is disruption in the supply chain. Only one third of the OEM executives see significant disruption in the supply chain while almost two thirds of supplier executives see this. Q8: Where do you see the biggest disruption (both from within and outside of Auto) occurring in the traditional industry value-net by 2025? (n=166-171)


Significant

Collaborating with other industries

Creating new services-based offerings

Leveraging disruptive technologies outside the vehicle

Investing in new business models

Creating new product categories

Forming new JV/alliances/partnerships

Entering new markets

Targeting new customer segments

Percentage change

from Auto 2020

34%

13%

20%

-12%

-6%

-37%

7%

-13%

A significant shift in where industry growth will come fromBringing more value by extending beyond traditional boundaries

Presenter

Presentation Notes

One of the biggest surprises we saw from this study compared to our Auto 2020 study was the shift in growth strategies from six years ago. In our Auto 2020 study, the industry growth strategies were clearly focused on expanding into new markets and creating new products and customer segments. And while these are still important, the results of this study clearly show a different focus of working with others to enrich the value of using the vehicle through digital technologies, new mobility services and personalized experiences Collaborating with other industries was the #1 growth strategy with 73% of the executives agreeing with this. This is a significant shift in thinking in what has been a traditionally closed industry. Close behind was the focus on creating new services-based offerings with 69% seeing this as a growth strategy. This is being driven by the recognition that auto companies need to have a key role in the emerging consumer-driven mobility ecosystem and that the competition is not only other automakers but also new mobility innovators, such as car sharing and taxi services, who are capitalizing on revenue generating opportunities. Leveraging disruptive technologies from outside the vehicle is also seen an important growth strategy with 62% supporting this – also a significant shift in thinking from six years ago. When we looked at the differences in thinking between the OEMs and suppliers, investing in new business models clearly stood out as a growth strategy for suppliers. Seventy two percent of suppliers, compared to 51% of OEMs felt this was an important strategy. Suppliers truly see an opportunity in the future to expand beyond their traditional role in the automotive ecosystem through collaborating and partnering with other industries, expansion in autonomous �driving and mobility services and the ability to explore new business models for new revenue streams Q3: Where do you see the best opportunities for industry growth looking toward the year 2025? (n=167-171)


While one third of the companies overall feel they will adapt to the challenges of 2025, less than one in five feel they are prepared now

Companies who feel they are prepared for 2025

Prepared

Suppliers (14%)

OEM (23%)

Dealers (33%)

The pace of change is no longer controlled by this industry

Presenter

Presentation Notes

Hopefully, the results of this study have given you the feeling there is still much change ahead as we progress to 2025. Disruptions with the consumer, mobility and the ecosystem will not only create new opportunities for automotive companies but will also create many challenges – some the industry has never had to face before as the borders come down. We asked how prepared industry executives felt their companies were for the challenges ahead. Only one out of five said they thought their companies were prepared for the challenges of the future. But one third felt confident their companies could adapt in time to be successful. In either case, the time to start is now and the pace of change is not controlled by the industry anymore. - 2025 will be here sooner than you expect! Q22a: Based on everything we have covered today, how prepared is your company to face the challenges on the way to 2025? . (n=156) Q22b: How adaptable is your company to face the challenges on the way to 2025? (n=151)

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Kal GyimesiAutomotive Marketing LeaderIBM Watson [email protected]@kalgyimesi

Also follow, @IBMAutomotive

Find the IBM Institute for Business Value studies discussed today:https://ibm.biz/Auto2025https://ibm.biz/AutoConsumer

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https://ibm.biz/Auto2025

https://ibm.biz/AutoConsumer