Automotive industry:
technology vs. customer value
Achal Raghavan
Strategy & Business Excellence Consultant
Bangalore, India
achalraghavan@yahoo.co.in
www.achalraghavan.com
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Achal Raghavan: introduction
 IIT Madras (1973); IIM Ahmedabad (1977)
 30+ years of work experience
 10+ years at Board level
 Companies: L & T, Anand Group, Sundram
Fasteners, Delphi Automotive, Ingersoll-
Rand
 Now: Teach, consult, write
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Contents
 Automotive technology: current status &
trends
 Aerospace to automotive: technology
osmosis
 The tipping point
 Customer needs in developing markets
 The way forward
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Automotive technology:
current status & trends
 25% of cost of modern car (Europe/US) is
electronics and software; projected to
grow to 40% by 2020
 Electronics expected to drive 90% of
future innovations
 Industry focus shifting to need for
“dependable electronics”
 Software defects costs rising at 17%
CAGR
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Automotive technology:
current status & trends (contd.)
 Car prices constant between 1990 and
2004 (adjusted for inflation)
 Customers increasingly rate “safety” as
most desirable feature of vehicles (JD
Powers)
 Models proliferating: 20 models/brand in
1994; grown to 34 in 2004
 Beginnings of backlash against complex
technology –”computer rage”
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Aerospace to automotive:
technology “osmosis”
Technology “osmosis”
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ABS – from aerospace to auto
Originally developed to assist in landing heavy aircraft
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Heads-up display
F/A-18C
jet fighter
Wikipedia
8

Heads-up display
Chevrolet Corvette
Wikipedia
9

GPS / HUD – aerospace
Integrated Primary
Flight Display
Honeywell
Honeywell
Runway Awareness
and Advisory
System
10

GPS: automotive navigation
Stand-alone
Navigation
Systems
(for cars)
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US DoT
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US DoT
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24X7 connectivity
GM OnStar
• Safety, security,
convenience
• Vehicle
diagnostics
• 24X7 connection
to Advisor
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Airbags – from auto to aero!
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Aerospace vs. auto: comparison
Aerospace Automotive
 Highly trained and  User is an average
expert pilot citizen
 State of the art  Service backup still
service backup “iffy”
 Techno-savvy  Highly competitive
buyers  Communicating
 Limited competition “value” difficult
 Less sensitive to  Highly price-
price sensitive
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The tipping point ?
“Tipping
point” ?
Customer
enthusiasm
Fascination Frustration
Technology
17

Class discussions
 What are the pros and cons of this
technology trend?
 What does the “emerging market”
customer really need? What is “value”?
 What is the way forward?
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Customer needs in emerging
markets – finding the balance
COST
LIFESTYLE SAFETY
CONVENIENCE
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The way forward: some ideas
 Offer basic platform which is a cost-
effective amalgam of technology and
value
 Empower the customer with “build your
own car” menu:
 Customer chooses add-ons
 Incremental costs for technology clearly
known
 Replace “tech transfer / localization”
with “design for local”
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Thank you!
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