The Impact of Digital Transformation in the Automotive Sector

digital transformation in automotive

Ever since the first Ford Model T, cars have been a thing of love and pride for their owners. With time, the adoration has increased by leaps and bounds. The cars of today are not just means of transportation, but a bundle of physical and virtual experiences.

Digital Transformation with its social, Mobile, Analytics and Cloud technologies combined with Augmented Reality, IoT and Industry 4.0, etc. has turned the automotive industry into a platter of unending services and conveniences.

A car is no longer just a metal cage that takes you from Point A to Point B. Instead, it is a digital experience that has the convenience of physical mobility bundled into it.

These experiences can be classified into three themes:

1. Connected Traveler:

Car owners who are able to use mobile apps, cloud and the Internet to connect and control their car.

For example, the My BMW Remote Mobile App. The app enables car owners to remote lock or unlock the car, remote horn on/off, trace vehicle location using GPS, run a Google Local Search and do much more from a mobile app interface. This is true Digital Transformation which is way ahead than keyless vehicle access.

2. Autonomous vehicles:

Self-driven vehicles that collect and disseminate information from their immediate surroundings and cloud servers for intelligent route navigation and collision-free driving.

A classic example is California based electric car maker Tesla. Tesla is perhaps the first and foremost car making company that has leveraged Digital Transformation in car manufacturing on a massive scale. Among many other digital innovations in them, Tesla cars come enabled with a technology called the Tesla Radar that predicts a collision and starts braking before it happens.

Tesla claims that the collision avoidance system work based on sensors is safer than human drivers. Secondly, Tesla car owners receive software upgrades via “over the air”, using wireless carrier networks or WiFi, another proven Digital Transformation concept at play.

3. Digital Automotive Ecosystem

This theme is where your car literally becomes a digital wallet. Ericsson demonstrated the unlimited possibilities of a connected car doubling up as a digital wallet and also as a moving shopping cart system with its Connected Vehicle Cloud concept.

Ericsson has demonstrated how your car can be made smart enough to download apps from app stores like on your smartphone, find nearest available parking spots, pay for parking tickets, reroute in case of traffic congestion and much more on its own.

All these three themes and many other related concepts are soon becoming mainstream in the automotive industry with Digital Transformation as the launchpad.

And, this transformation comes with a host of societal benefits too. An analysis by the World Economic Forum estimates that Digital Transformation will accrue $3.1 trillion of societal benefits to the industry by 2025.

The societal benefits include a reduction in fatal accidents, proactive navigation that reduce traffic congestion, predictive maintenance that prolongs the useful life of the car, usage-based insurance and much more.

Future of Automotives: Driven by People, Powered by Digital

In the words of Mary Barra, CEO, General Motors, “We are moving from an industry that, for 100 years,  has relied on vehicles that are stand-alone, mechanically controlled and petroleum-fueled to ones that will soon be interconnected, electronically controlled, and fueled by a range of energy sources. 

Customers and manufacturers are embracing technology as an inevitable ingredient in their choices and preferences about cars of the future. Digitally empowered consumers want their cars to be as smart and powerful as their computers back home. In addition to engine power and mileage, digital capabilities like vehicle diagnostics, smart navigation, in-car connected infotainment, mobile app control, etc. are also in demand.

Manufacturers, on the other hand, are banking on customer data from connected cars to better streamline future models, estimate replacement parts inventory, plan maintenance schedule and also include a charge for repairs and maintenance based on driving behavior.

The whole automotive industry is now rethinking how digital experiences can be used to improve customer service before and after buying a car as well as during the entire customer lifetime.

Hakan Samuelsson, CEO of Volvo says, “The automotive industry is changing rapidly, which means that Volvo must also change rapidly. Part of this involves rethinking how customers buy Volvo’s cars and then how they interact with them once they have bought them.” 

Digital Transformation trends that are steering the Automotive Industry forward

Digital Transformation will enable the automotive industry to introduce several tech-enabled features in automobiles that will elevate driver/passenger experience to a whole new orbit.

Here are some trends that can be seen in the coming years:

Synced Experiences

Users can sync their devices as well as custom interior settings like air conditioning, music playlist, driving route, etc. from their wearables, mobile devices, smart home appliances, personal assistant devices like Alexa, etc.

Immersive Dashboards

Analog dashboards will give way for augmented digital displays that show dynamic and real-time information like navigation, distance, routes, hazard alerts, and similar driver related information.

Vehicle Diagnostics & Telematics

Digitally accurate vehicle metrics like tire pressure, engine oil life, braking efficiency, mileage, engine health, replacement alerts, service schedule, etc. can be obtained through a dashboard or through mobile apps. Manufacturers can also use the same information to schedule and alert owners for preventive maintenance.

Situational Responsiveness

IoT sensor enabled cars will be able to predict possible collisions, road conditions, traffic, weather and similar information that will help improve the passenger experience.

Digital Showrooms

Car showrooms equipped with digital screens and apps will replace showrooms with too many cars on display. Audi has opened a digital showroom in London where customers can get an immersive experience of cars through Virtual Reality. Customers can also use an iPad to select every exterior and interior component of the car to look at a final model they would be interested in buying.

Even Tesla uses a digital design screen in its showrooms where prospective customers can customize cars based on their preferences virtually before making a buying decision.

Usage-based Insurance

The UBI, also known as pay as you drive (PAYD)  or pay how you drive (PHYD) will become mainstream in the automotive insurance industry, thanks to the accurate information available from cars. Insurance companies can mine genuine vehicle data directly from cloud servers that will help them estimate accurate insurance premiums that best suits the vehicle’s remaining life.

The Road Ahead

Digital Transformation in the automotive industry gives manufacturers a competitive edge. It leads to better operational optimization as well as cost savings thanks to accurate information of customer behavior and preferences.

For customers, cars and automobiles will become an extension of their digital experiences in their physical world. Their time spent on road driving will become both immersive and a lot safer than ever before.

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Author : Ganesh Date : 27 Nov 2017