The Future Of Automotive And Mobility

By Judy Cubiss, Global Marketing Director, Automotive, SAP

The automotive industry is shifting gears. Global disruption, technological advances, and changing consumer behaviors are altering the auto industry on many levels all at once.

The traditional business model of designing, manufacturing, selling, servicing, and financing vehicles continues.

Yet at the same time, the automotive industry is racing toward a new world, driven by sustainability and changing consumer behavior, encompassing electric vehicles, connected cars, mobility fleet sharing, onboard sensors, new business models, and always-on connectedness. 

Learning From Continuous Disruption

During the initial pandemic lockdowns, the automotive industry was hit hard, as global supply chains ground to a halt, manufacturers and dealers temporarily closed, and people stayed home and drove less.

Despite that initial slowdown, however, industry experts say the pandemic actually accelerated progress of digitalization in the automotive sector.

This is not the first, or even the last disruption that the auto industry has seen. Some believe that the industry, particularly automotive suppliers, learned a lot from the economic hardships of the past.

The lessons learned from the economic downturn in 2008-2009 ensured that automotive suppliers were better prepared, more resilient, and able to rebound. 

Now, automotive manufacturers are contending with shortages of semiconductor chips, which is impacting vehicle production.

Overall, the continuous disruptions of operations and supply chains have dramatically accelerated several underlying business and technological trends in the automotive industry.

Disrupt or be Disrupted

The availability and adoption of advanced technology solutions is driving the majority of the underlying trends in the auto industry.

Connected cars, sensors, electrification, and new business models (including mobility-as-a-service) all take advantage of advanced technology solutions. That’s where industry experts say the automotive industry needs to focus going forward.

The entire industry, from suppliers to automakers, is challenged to keep existing operations profitable, while simultaneously building out capacity to tackle these new innovations.

Companies must find the right balance between continuity of a stable and profitable business, while at the same time lead the way in disrupting their own business models.

An Innovative Mindset is Key

While many automakers and suppliers learned from the past to help them survive recent disruptions and make their existing operations more efficient, some industry leaders say that flexibility and innovation will be critical when it comes to the unique challenges facing the future direction of the automotive industry.

In a recent webinar, Joachim Skarpil, Head of Automotive Suppliers at Capgemini explained, “The future innovations will be achieved by software components, and each automotive supplier needs to find its own individual answers. So, new products or other products with new services and new business models need to be developed. In the future, automotive suppliers will have to be more flexible and even faster than ever before.”

The Future of Mobility

What will the future of mobility look like in the real world? There is so much collaboration and innovation in this space, that e-mobility innovations are already underway.

Here are a few examples:

  1. Cars that are self-aware and provide a connected platform for new business models.
  2. Vehicles with hundreds of Internet-connected engine control units (ECUs) and sensors, providing data and insights.
  3. The capability to bundle vehicle sales with new subscription-based offerings for parking, electric vehicle (EV) charging, rideshare, and car share services.
  4. Algorithm-based insurance based on data from connected cars.
  5. Fleet services, which are already at an all-time high, will continue to grow and expand to include charge point operations, as more fleets become electrified.

Strategies for Success

There are five key strategic priorities that automotive companies are using to balance the need to run a profitable business while developing disruptive solutions and business models:

  1. Customer centricity: Throughout the pandemic, many car dealers and manufacturers discovered new ways to interact directly with customers, and they plan to expand this connection to the customer.
  2. Mobility services: Customer loyalty will gradually move from brand and dealerships to integrated and convenience-driven services and associated mobility options. New business models of pay-per-use and subscription-based mobility will be the way forward.
  3. Connected cars: Companies must design and manufacture vehicles to meet the changing mobility landscape by becoming even more intelligent and connected.
  4. Digital supply chain and smart manufacturing: Supply chains and manufacturing networks must become more resilient, completely modular, and flexible. How you interact with your suppliers will be crucial to success in the future.
  5. Engaging with a changing workforce: The skills that automotive companies need are significantly changing, so companies must change the way they attract, retain, reskill, and retire workers. The classical skillsets of automotive companies, which were heavily engineering driven, is changing and will require software skills across the whole automotive value chain.

Changing Customer Demands

Automotive companies need to innovate and develop solutions quickly in order to react fast to changing customer demands and market opportunities.

In a digital world, innovation must become an integral part of each department and discipline, so the entire enterprise contributes to generating top-line, bottom-line, and green-line improvements.

To learn more, watch the on-demand webinar now.

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