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Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
Pfa ow vehserviciel
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Pfa ow vehserviciel

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  • 1. © Oliver Wyman | Connected Cars Battle Fields.pptx AUTOMOTIVE CONNECTED CARS & ITS NEW BIZ MODELS An opportunity for the French Automotive Industry ! Prepared for PFA – Les RDV de la Filière Automobile Rémi CORNUBERT
  • 2. 11© Oliver Wyman | Connected Cars Battle Fields.pptx Evolution of a connected world Driven by the rapid technology development, connectivity within different ecosystems is accelerated, forming a connected world in the near future Source: Oliver Wyman Connected products Connected systems Connected life Past Future Today
  • 3. 2© Oliver Wyman | Connected Cars Battle Fields.pptx 2 Driving forces for in-vehicle connectivity OEMs & dealers, authorities, private & commercial customers and finance & insurance companies have different interests in driving in-vehicle connectivity Driving in-vehicle connectivity 1 Fleet operators & cargo owners Source: Oliver Wyman Drivers/consumers Safety & security Ubiquitous communication Using instead of owning … Finance & insurance comp. Minimizing risks by monitoring & control Maintenance management … OEMs & dealers Customer relationship mgmt. Service & repair, warranty … Authorities eCall, anti-theft solutions Emission control Road charging & traffic mgmt. … Commercial customers1 Improved efficiency & cost optimization Status & location monitoring … Technology & infrastructure I&C technology performance & infrastructure New power train technology …
  • 4. 33© Oliver Wyman | Connected Cars Battle Fields.pptx Connected car market The rapid market penetration of vehicle connectivity opens up large business opportunities for different industries in the coming years Market fitment/penetration rates of smartphone and embedded connectivity units fitted to newly-assembled passenger cars and light vehicles, 2007-2027, (%) In 2027, a hundred percent penetration of in-vehicle connectivity units is expected in all new sales vehicles in Japan, North America and Western Europe Source: QUBE – just auto, Oliver Wyman 0,0% 20,0% 40,0% 60,0% 80,0% 100,0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2022 2027 North America Mercosur Western Europe Central Europe Russia Japan China India Korea
  • 5. 2011 20162011 2016 Connected Cars market volume and development The global number of cars with connectivity devices will rise to 210 million in 2016 – by then more than 80% of new vehicles sold will be connected cars 1 Telematics refers to embedded OEM and aftermarket systems (hardware plus included services) as well as hybrid systems based on smartphone connectivity Source: ABI Research, BCC Research, iSuppli, Oliver Wyman analysis Telematics market coverage Worldwide vehicle population, 2011-2016, in million units % share of worldwide car fleet 5% 18% CAGR 36% Telematics market revenue Worldwide market, 2011 – 2016, in billion USD CAGR 22% $15 bn. $40 bn. 45 210 Comments • Number of Connected Cars fore- casted to grow strongly at ~36% p.a yielding 210 million in 2016 • Shipments of OEM telematics systems grow from ~26 mn. in 2011 to 70 mn units in 2016 (CAGR 22%) • Aftermarket shipments of telematics systems rise from 8 to ~16 million units in 2016 (CAGR 15%) • Overall market revenue will rise by only 22% p.a. to 40 billion USD in 2016 - due to increasing number of affordable non-embedded, hybrid solutions (e.g. Ford SYNC) x% Significant growth of telematics shipments & a global penetration of +80% in new vehicle sales
  • 6. 55© Oliver Wyman | Connected Cars Battle Fields.pptx Connected car service map – Regional disparity Different focus and speed of service implementation in different regions are driven by customer preferences, infrastructure and government policies LB services (location based services), CVs (commercial vehicles), PVs (passenger vehicles), SVT (Stolen vehicle tracking), GSM (Global System for Mobile Communication), GPRS (General Packet Radio Service) , GPS (Global Positioning System), V2I (Vehicle to infrastructure) Source: Desk research, Oliver Wyman USA Leading market with strong players for infotainment, navigation & location based services Brazil Mandatory equipment of GSM/ GPRS anti-theft system, which allows SVT and drives insurance service and enables “pay as you drive” tariff structures s Europe Mandatory implementation of eCall system till 2015 boost safety and remote services Russia Navigation service with the highest growth; ERA- GLONASS emergency call system will be mandatory in CVs by 2013 China Positioning and navigation for PVs and CVs are currently the main telematics applications in China Japan Leading in smart & real-time traffic management based on GPS / navigation services and V2I technology India Fleet management for CVs starts to pickup, joint venture is built between India & Russia to provide navigation services in India Connected car services global view
  • 7. 66© Oliver Wyman | Connected Cars Battle Fields.pptx Competitive overview Different players have entered the market, looking for growth opportunities as well as strategies to enhance existing business model Key player groups and motivation Player examples Automotive OEM Enhance car value proposition • Increase car sales • Protect car price • Improve drive experience for customer retention Strategic intent Telematics device supplier Transform business model to integrated service provider • Compensate eroding device business with new business opportunities • Enhance device price & margin Independent aftermarket player Improve customer acquisition and retention • Increase parts and service sales • Better customer retention Fleet operator Optimize existing business • Increase fleet efficiency • Reduce maintenance and breakdown costs Bank, finance & insurance Differentiate service and offerings • Provide better offerings and services to customers • Differentiation in sales Source: Oliver Wyman (Operation) software player Build car services as core business • Generate new business • Customer retention & cross selling Network operator Build new business & leverage existing strengths • Increase SIM- card / connectivity sales • Build platform and profit from B2B services • Leverage existing strengths Web service company Grow existing business scale • Increase number of users • Develop new business based on strength Mobile device player Increase service revenue as platform provider • Increase device sales • Increase service revenue by revenue sharing with third providers Not Exhaustive
  • 8. 7© Oliver Wyman | Connected Cars Battle Fields.pptx 7 Value chain of connected cars – 6 player groups OEMs, device & software providers, network operators, web service & content suppliers have positioned themselves along the value chain 1 Including all content suppliers around connected cars services, such as media, traffic information, logistic and transport information etc. Source: Oliver Wyman, Expert interviews Web services players Software providers Network operators Device companies Auto OEM Content suppliers1 1 2 3 4 5 6 = Current compentence focus = Recent strategic moves/positionings Provide integrated solutions to consumers from one hand based on selective strategic positioning and partnerships along the value chain Supply integrated solutions to OEMs Supply connectivity platform for all applications to OEMs and device companies Develop own service platform and services Supply connectivity platform with own services to OEMs and device companies Increasingly build up own service platform to enhance sales channels Cooperate with device and software companies to provide integrated solutions to OEMs CarContent Service Distribution Device Content bundling Content Perso- nali- zation Billing Service proces- sing Custo- mer data mgmt. Back- bone Platform/ channels Connec- tion setup Opera- ting system HMI Device integra- tion Content providing Software solution Car integra -tion Not Exhaustive
  • 9. 88© Oliver Wyman | Connected Cars Battle Fields.pptx Strategic battle fields along connected cars value chain The recent strategic moves show two key battle fields around service platform with billing & the device solution including HMI & software solutions 1 Including all content suppliers around connected cars services, such as media, traffic information, logistic and transport information etc. Source: Oliver Wyman Web services players Software providers Network operators Device companies Auto OEM Content suppliers1 1 2 3 4 5 6 = Current compentence focus Supply connectivity platform with own services to OEMs and device companies Increasingly build up own service platform to enhance sales channels Cooperate with device and software companies to provide integrated solutions to OEMs CarContent Service Distribution Device Content bundling Content Perso- nali- zation Billing Service proces- sing Custo- mer data mgmt. Back- bone Platform/ channels Connec- tion setup Opera- ting system HMI Device integra- tion Content providing Software solution Car integra -tion Service platformB • Customer service platform – who owns the platform/channels to generate additional value? Device solutionA • Solution design (embedded vs. mobile device solution) • Proprietary vs. Open source operating system for devices
  • 10. 99© Oliver Wyman | Connected Cars Battle Fields.pptx Definition and classification of service plays 7 Service plays Source: Oliver Wyman A Service play contains a bundle of connected car services, which – are based on a set of telematics functionalities; – belong to one self-contained ecosystem; – have access to the same profit pools; – target the same customer group; – contains different business designs tapping the same power sources in the play 1 2 3 4 5 6 Insurance service 7 Payment & commerce Service N O S W @ Safety & remote service A fully customized aftersales service portfolio could be offered based on the eCall platform Fleet management service Telematics hardware penetration enables but not determines fleet Management service penetration Mobility service Vehicle telematics will become additional platform for offering innovation mobility services Navigation & Location based service Increasing location based B2C and B2B opportunities have emerged through enhanced navigation technologies Infotainment service Web-based information and entertainment services are offered in in-vehicle environment New policy offerings and differentiating customer services are enabled based on better driver data base Mobile payment services will be adapted and extended to in-vehicle use cases 7 Service plays 7 service plays are emerged as battle fields, containing different business designs competing to exert control and extract value
  • 11. 1010© Oliver Wyman | Connected Cars Battle Fields.pptx Automotive OEM Telematics device supplier Mobile device player (Operation) software player Network operator Web service company Independent aftermarket player Fleet operator Finance, bank & insurance 1 Safety & remote service 2 Fleet management service 3 Mobility service 4 Navigation & Location based service 5 Infotainment service 6 Insurance service 7 Payment & commerce Service Current competitor positioning Different player groups currently focus on different plays, leveraging existing assets, build up new competences to compete in different service ecosystems Key player groups and motivation Source: Oliver Wyman N O S W @ Focus plays Related plays Not yet active
  • 12. 1111© Oliver Wyman | Connected Cars Battle Fields.pptx Payment & commerce service • Mobile payment services will be adapted and extended to in-vehicle use cases Business segments for connected services Oliver Wyman evaluated 7 key service areas in a recent study – after sales remote services with strong relevance and monetization potential for OEMs N O S W Monetization potential of connected services, indicative Fleet management services • Approx. 4.3 mio fleet vehicles in approx. 1.6 mio company fleets in Germany • Market for fleet management services in Germany with significant volume Navigation & location-based services • Recruitment bonuses, kick-backs esp. in B2B Remote services for after sales • eCall platform as a basis • bCall and after sales remote services to secure the parts business as central profit driver Mobility services • Intermodal services, new mobility concepts, car-sharing Insurance services • New policy offerings/ differentiating customer services based on better driver data base: pay as/ how you drive • Worldwide volume of telematics-based insurance in 2020 widely exceeds 10 bn EUR6 @ Infotainment services • Web-based information and entertainment services
  • 13. 1212© Oliver Wyman | Connected Cars Battle Fields.pptx Success factors for connected car business models Six major factors are essential for the successful introduction of new connected car business models Source: Oliver Wyman 1 2 4 5 6 3 Strong focus on partner win-win setup and detailed understanding of payment mechanism as success factors in online market places Strong focus on marketable use- cases based on core customer pain-points Early definition of KPIs and organizational setup to establish sustainable business design Holistic view on business models across two levels: overall OEM service strategy level and single service level Incorporation of IT and security expertise early in business model definition (ability to implement) Structured prioritization of services to ensure business model validity and OEM fit-to- brand
  • 14. 13© Oliver Wyman | Connected Cars Battle Fields.pptx 13 Willingness to pay for connected services Customers have a limited willingness to pay for connected services – particularly compared to other vehicle related payments Direct willingness to pay (examples/segment averages) in EUR, per month/service user in 2012 47 30 25 22 22 18 18 5 5 7 4 2 2 2 2 0 50 100 150 200 250 300 350 400 450 500 Leasing instalment Fuel costs Vehicle maintenance expenses Automobile wear-and-tear repair Connected services in vehicle Online dating Comprehensive coverage Internet and telephony Automobile liability insurance Traditional computer games Paid services for data storage and e-mail Online journalism Comprehensive coverage excl. collision Online music download Add-ons for online gaming subscription Gaming apps (smartphone & tablet) Online gaming subscription Smartphone apps 25 - 35 >200 >> Rather small amounts – do connected services in vehicles pay off? 2
  • 15. 14© Oliver Wyman | Connected Cars Battle Fields.pptx 14 Level 1 - Business design archetypes overview Business models need to be discussed for overall OEM connected cars business as well as for specific services with in the portfolio Business Design Archetypes for OEMs Selected examples Source: Oliver Wyman Mobile device solution Embedded solution Solutiondesign Operating model Proprietary control Platform play OEM proprietary service platform OEM customized service platform based on standard solutions OEM customized service platform based on open source solution OEM proprietary device with exclusive service platform OEM proprietary device with standard service platform OEM common device with 3rd party service platform 1 2 3 4 5 6 BMW connected drive (Integrated solution by Co- operation of IBM, Hughes, Oracle) (By cooperation of Deutsche Telekom & Continental) GM OnStar Implemented in Daimler & Chrysler cars 2 Not Exhaustive
  • 16. 15© Oliver Wyman | Connected Cars Battle Fields.pptx 15 Level 2 – Monetizing of connected car services Six general revenue models are identified to monetize service offerings in the connected cars, serving OEMs, private, commercial and business consumers Value streams of service offerings (examples) OEM Third-party (IT companies, telcos etc.) OEM • Internal efficiency improvement (Internal cost reallocation, subsidies etc.) • License fees (one time, ongoing etc.) Private & commercial vehicle consumer • Increased device margin (at vehicle sales) • Service fee (subscription/purchase/ registration fee etc.) • Service fee (subscription/purchase cost etc.) Other business customers (IT companies, telcos, business customers etc.) • Shared revenue (provision, supplier fee etc.) • Advertising fee • Service fee (subscription/purchase cost etc.) Paidby 2 3 4 5 6 Provided by 1 Source: Oliver Wyman 2 Not Exhaustive
  • 17. 1616© Oliver Wyman | Connected Cars Battle Fields.pptx Decision criteria Market observations Examples Innovation power Service value and user experience are key innovation areas • Service-Follower - Offering of established 3rd party services, (e.g. Renault, Fiat) • Innovator - Advanced mobility solutions with complex backend processes (e.g. VW Parking pilot, Audi, BMW) Strategic control Control of services & data to define customer experience and to leverage customer insights • Data as commodity - Data control with partners to reduce costs (e.g. Renault, Fiat) • Data as core business - Data leverage for secondary business opportunities (e.g. BMW TeleServices) Solution architecture Business model and service ambition drive proprietary elements and backend complexity • Standard - Integrated/tethered solutions with 3rd party backend • Proprietary - Embedded solutions with complex custom backend Organization/ skills Strategic priorities and capability needs determine functional anchoring vs. dedicated resource pools • Min. use of resources - leverage of functional competencies (e.g. VW) • Dedicated Unit : PSA has a specific unit • Build-up of skills - Dedicated resource pools/competence center (e.g. Daimler, BMW) Cooperation model Complex ecosystems emerging with tech and SI players building reference cases as service aggregators • Turnkey solution - e.g. Android based (e.g. Atos/Renault), Windows OS based (e.g. Microsoft/Fiat, Ford), Apple OS – CarPlay (Ferrari, PSA..) • Extended workbench solution - e.g. BMW WirelessCar) Connected car services – Strategic decision criteria Strategic positioning of Automotive OEMs in connected services is determined by five key decision criteria A B C D E Source: Oliver Wyman Connected Car Study, OEM websites 2 Not Exhaustive
  • 18. 1717© Oliver Wyman | Connected Cars Battle Fields.pptx Source: Oliver Wyman ServicesCustomer targeting Engineering Technology platform X Fleet services Processing management Route planning Accounting (Customer-) communication Information service Price modeling General navigation Asset/Car sharing Infotainment Private customers Dealerships Industry & service provider Car rental Corporate clients etc. App on bring in mobile phone App on Click- in/Cradle for phone/pad Custom build bring- in Custom build with (OBD) adapter Embedded special purpose Embedded multi purpose OEM Apps New connected services platform Android / iOS Standard Proprietary Tom Tom bring-in App development / IT etc. X X X X … Results • Clear understanding of feasible solution architectures • Compatibility check with product portfolio • Clear Go/No- Go decision by each dimension • Identification of customer segments • etc. Examples Potential solution – Business dimensions A wide variety of possibilities along all business dimensions need to be considered C
  • 19. 1818© Oliver Wyman | Connected Cars Battle Fields.pptx Examples, anonymized and simplified Premium OEM 1, EU Organizational units with dedicated responsibility for Connected Car services Premium OEM 2, EU Volume OEM, Asia Volume OEM, EU Cross-sectional function connected services Services as innovative cross-sectional function (SI) Dedicated cross-sectional function arising Product- management Lead from customer perspective (requirements) In coordination with R&D Currently product management in lead Development (E/E) Implementation of innovations, provider management Serial implementation in coordination with SI End-to-end responsibility for connected services Purchasing Accountability to provider management, also operations Production Sales Procedural support in sales’ services Sales’ services and in-house call centre IT Support with software expertise End-to-end complete distribution Substantial contribution to implementation Cooperation Implementation of innovations, provider management Selective support with software expertise Selective support with software expertise Source: Oliver Wyman Organization / skills – Responsibilities across functional silos Organizational set-ups for Connected Car services vary by OEM and the experimentation will continue D
  • 20. 1919© Oliver Wyman | Connected Cars Battle Fields.pptx Cooperation models – Platform partners / core cooperations Integrated, connected services require a complex ecosystem of providers to be launched and managed E • Integrated, connected services require a complex ecosystem of providers • Individual aspects of connected driving experience are well established • Integrated provisioning is still premature, with mostly closed ecosystems emerging • Device manufacturer’s, tech and SI firms with the ambition to act as “aggregators” • OEM will need the capability to build and integrate a portfolio of partners suited to serve the specific service aspiration Source: Oliver Wyman analysis Content/ Social Media Providers Technology Providers (Telematics, Payment) System Integrators Infrastructure (Carriers, Cloud) Distributors (App Stores) App Developers (OS, UI, APIs) Device Manufacturers (Automotive/CE) Connected Car Ecosystem Not Exhaustive
  • 21. 2020© Oliver Wyman | Connected Cars Battle Fields.pptx Customers High expectations by increasing connectivity in daily life (Smartphones, Tablets, …) Technology Technology has reached sufficient maturity level (Bandwidths, performance, hardware costs,…) Regulation Regulation actively steers towards safety and sustainability (e- Call, Emissions, Traffic management, …) New business model around Connected Car Services Source: Oliver Wyman project example § € Business Case Transactional direct refinancing from customer not sufficient (innovative payment models, holistic consideration,…) Customer access Numerous new competitors fighting for access to customer (internet player, IT-specialists, service provider,…) RunBuildPlan Software/ Service orientation Real-time operation of services and short product life cycles (Service portfolio, continuous software updates, …) New business model for Connected Car Services Disruptive changes to business model pose central challenges to the OEMs and their organizational structures OEMs have to adapt their business design, strategy & organization to a completely new business model
  • 22. 2121© Oliver Wyman | Connected Cars Battle Fields.pptx Source: Oliver Wyman Key challenges to OEMs organizational structures Disruptive changes towards a service oriented organization pose central challenges to OEMs Line 3Line 1 Line 2 R & D Production and Purchasing Sales After Sales Finance … Product mgmt. Traditional OEM organization Lifecycle • ~ 5 vehicle types per line • 5 yrs. development, 7 yrs. production • 20-30 services • < 1 yr. development, update every 3 months R&D process • Standard R&D process • Ongoing development/improvement • Plan/ Build/ Run (or Scrum) Products • Hardware centered • Bill-of-material and component mgmt. • Solution centered • Mgmt. of software, services and functions Purchasing • Traditional large Tier 1 supplier • Multiple content provider, start-ups, service integrators Customer access • OEM  dealer  customer • Dealer manages sales & support to customer • OEM  customer • Direct customer management (contracts, sales & support) R&D Connected service organization ? Preliminary Organization
  • 23. Connected Cars But this is a true business opportunity for the French automotive industry • Rules of the game are being redefined • Services around connectivity is a growth lever • There is no clear winning model yet • Connected cars allow to reconnect directly with final customer • A new ecosystem is emerging • French players are already in the game with some nice moves, products & services • France has so many assets... Let’s transform it together now !!!
  • 24. Automotive

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