Connected car technology
More than 100 years ago, the first automobile had a profound impact on the world, changing the way people lived and influencing the economy tremendously. Today, powered by the advancements in connected car technology, the automotive industry is set for another massive shake up.
Since Google’s self-driving cars started roaming the roads of Mountain View seven years ago, the connected car market has seen an explosion of activity. New and innovative players have come onto the scene. Plus, well-established automakers have been enhancing their vehicles with an assortment of connected features. So much so that by 2025, Statista predicts 100% of new cars sold over the world will connect to the Internet.
Smart car technology: A new breed of suppliers
The Internet of Things (IoT) have and will continue to introduce new players to the automotive industry. This will transform the automotive supply chain that is steeped in relationships with first, second and third-tier suppliers. According to a Strategy& report, profits available for traditional automakers and suppliers will drop from 70% to less than 50% by 2030. To make up the balance, we’ll see the rise of suppliers of new technologies, mobility services or digital services.
The advent of new suppliers, which will bring new services inside and outside of the car, will have effects that reach much further than profits. New revenue streams will be identified, and these may not all go to traditional automakers. Today, for example, 70% of consumers purchase connected vehicles from premium brands. By 2022, that number will drop to less than 50%.
With such changes on the horizon, auto companies will be pressed to make overhauls to every aspect of their business from their R&D process to transforming business models, evolving management styles, and approaches to mergers and acquisitions.
A new driving experience
Drivers will also experience the impact of connected car technology. If we look at drivers’ dependence on GPS, as an example, many drivers today don’t begin driving without first checking the optional routes that will help them get to their destinations faster and with less time in traffic.
This dependence on navigation will grow as reliable, real-time and more varied data becomes available. Drivers will use this information, not simply to find the best route to their destination, but the most efficient method to get there. And, the answer may not always be by car, especially as cities become more populous and congested.
The result will put in question the need to personally own a vehicle. One study predicts that by 2030, car ownership will drop by 80% in the US. This will impact the sales from automakers, but it will also open new opportunities within the car-sharing economy as consumers will still need a way to get around. It will also impact the number of cars on roadways that could transform how cities plan the layout of their streets.
We are still a few years away from this reality. Until then, consumers are enjoying more digitized features – from entertainment to health and wellness capabilities to maintenance programs – that will change what we do in our cars, how we manage them and even what elements we insure. All of which can influence and shape the auto industry and the services it offers drivers.