Back in the ‘60s and ‘70s, powerful muscle cars with oversized engines were what consumers’ automotive dreams were made of. Fast-forward to the late ‘90s and early 2000’s, and we entered the gas-guzzling phase of American consumerism, where large SUVs like Escalades and Hummers were the most sought after vehicles on the road.
Today, we’re moving towards a new era where traditional car features will take a back seat to software powered services such as advanced driver assistance systems (ADAS), shared mobility services and, eventually, autonomous vehicles. These technology-based advancements are forecasted to significantly impact automotive business results, with analysts predicting 30 percent revenue increases by 2030, amounting to $1.5 trillion.
Clearly, any automaker dismissing technology disruption as a fleeting trend risks rendering themselves obsolete in the minds of comsumers and lacking relative to competitors. As the car transforms from a tool to move from point A to point B into a digital lifestyle device, prepare to see a mindset shift impact the automotive industry of the future.
Related: Why I Refuse to Own a Car
Sparking a revolution.
Instead of being tied down by monthly car payments, dealing with high insurance costs, or simply having to worry about finding affordable parking, Millennials and Generation Z’ers are rapidly turning to public transportation, car-sharing services and ride-sharing services as their primary means of transportation. There has been over 30 percent annual growth in car-sharing members in North America and Germany over the last five years, and a correlating drop in young people applying for driver’s licenses. As these services become more widespread and commonplace, overall car ownership will continually decline and new transportation services and autonomous vehicles will take permanent hold.
The benefits from this new phase are multiple and highly-tangible, including adding personal hours to consumers’ day (up 95 hours a year per driver), and most importantly, saving lives by eliminating human error on the road (by 2025 connected car advanced driver-assistance systems (ADAS) is predicted to save 11,000 lives, 4,000 of them in the U.S. alone).
To remain relevant and successful, automakers must fully understand the impact of technology on automotive and smart mobility innovations. Automakers must prepare for such game changing evolutions as the "internet of cars" which will include vehicle-to-vehicle, vehicle-to-infrastructure and even vehicle-to-people connectivity and communications. All this vehicle connectivity will also elevate another crucial element to the future of the automotive industry -- data. Automakers and their suppliers will increasingly use data to assess and improve vehicle quality, increase operational efficiencies, power and introduce new services, and create new revenue streams via data monetization for themselves and managed ecosystems.
Technology is riding shotgun.
Digitization, customization and automation have already revolutionized previously archaic industries such as insurance, banking and telecommunications. Automotive will be no exception. Imagine sitting in traffic, but instead of focusing on driving like a traditional vehicle, you’re productively checking email or editing a document. Maybe you're adding items to your grocery list because the car is autonomous and equipped with artificial intelligence (AI) connected to your “smart” refrigerator.
Envision a morning when upon entering your car, the in-vehicle system notifies you to use a different route because of an accident. Or on an unexpectedly warm day you can remotely turn on your lawn sprinkler and house HVAC system during the evening commute home. These scenarios are quickly becoming a reality. In fact, we’ve already seen the early phases, and they’re only the beginning.
Innovate or deteriorate: automakers choose wisely.
In a world where consumers are obsessed with connectivity and accessing timely, relevant services throughout the day -- including when driving -- the writing is on the wall: automakers must be “all in” when it comes to technology.
To get ahead, traditional automakers need to double down now on technology integration or risk becoming irrelevant in the face of new competitors like Tesla, Uber, Apple and Google whose focus is on technology first followed by the nuts and bolts.