Networked cars open opportunities for the automotive value chain

Networked cars open opportunities for the automotive value chain

Business news |
By eeNews Europe

Already in the mean term, more or less all new vehicles will drive along with an always-con connection to the internet. The consultants from Roland Berger believe, that the connectivity trend for vehicles has just begun. In the years ahead, it will evolve into a core trend across the entire automotive industry.

Enablers of the connectivity trend are, according to the study, the availability of mobile broadband connections, in particular LTE, as well as cloud computing. On the non-technical side, governmental regulations such as the European eCall will foster automobile connectivity. Plus, the generation of digital natives increasingly wish to be connected, even during the time when they use the car as driver or passenger. "Probably the most powerful driver of in-car networking, however, is the fact that the data itself today has an intrinsic value," notes Wolfgang Bernhart, Partner at Roland Berger Strategy Consultants, who spearheaded the study in collaboration with Thomas Schlick, also Partner at the Munich-based strategy consultancy. "Companies like Google and Facebook are proving the point in the IT world. New business models will be based on gathering the data and information that derives from driving and mobility behavior. Companies that succeed in tapping these reserves of user data will be able to supply car drivers with new services and apps."

For the automakers and automotive engineering companies, this development has consequences: It is forcing them to rethink their business model, the study states. It gives non-automotive players the chance to enter this market and compete against incumbent players. Factory-installed ITC components – including software – will encounter fierce competition in the form of products that can be retrofitted. "This is perhaps the greatest danger to companies in the automotive industry", warns Bernhart. In order to get a piece of the action, automotive OEMs and tier ones need to defend their exclusive access to vehicles and drivers. They however will only be able to do so by aligning their still relatively slow innovation cycles with the speed of the IT industry and by demonstrating their ability to manage a large numbers of technology, development and business partnerships in parallel. The consequences if the traditional automotive industry will fail to catch up with their new competitors in the IT industry might be very serious, the study warns: "They will be left behind as business passes them by".

Value chains in the automotive industry will also need to be adapted, because the incumbent players will not be able to develop the necessary components on their own. "The industry is going to need more than just new suppliers. Existing organizational structures and procurement processes too must be brought into line with new market requirements," Schlick explains. It is therefore up to OEMs and suppliers to redefine their core competencies, learn to deal with lots of partnerships with companies from other industries and reposition themselves accordingly.

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