This document discusses potential disruptions to the auto industry from new technologies like electric vehicles, autonomous vehicles, connectivity, and mobility services. It notes that the industry is changing faster than it has in 100 years and outlines challenges for traditional OEMs, dealers, suppliers, insurers, and repair shops. For each group, it identifies key disruptions they need to prepare for, such as new business models, partnerships, skills, and approaches needed to adapt to an evolving industry landscape and shifting customer needs and expectations.

1. Auto Industry Disruption…
Will Your Business Be a Winner or Loser?

2. Who is Frank Terlep and asTech® ?
Frank Terlep
• 35 years of auto industry
technology experience
• asTech® CTO since 2017
• 3 time Entrepreneur
• Senior Executive: Mitchell
International
• Senior Executive: AKZO Nobel
• Senior Executive: Carstation.com
asTech®
• Leading diagnostic service provider to the fleet and
collision industries
• Provides remote access to OEM diagnostic tools for
our customers
• The asTech process allows vehicles to stay in the
production lane, reducing cycle time while improving
repair quality, resulting in improved customer
satisfaction, elevated safety and a lower overall cost of
repair
• We presently offer four lines of service all anchored by
our Patented Remote asTech® diagnostic

3. Presenting sponsor
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dis·rup·tion /disˈrəpSH(ə)n/
“A disruption happens when new products and services create a new market and, in the process, significantly
weaken, transform or destroy existing product categories, markets or industries.”
Automotive Industry Disruption

4. • The auto industry is changing faster today than it has in 100 years.
— Mary Barra, CEO, General Motors.
• Carmakers have less than a decade to reinvent themselves or risk being commoditized amid a seismic shift in how
vehicles are powered, driven and purchased. Developing technologies like electrification, self-driving software and
ride-sharing will alter consumers’ car-buying decisions within six or seven years.
— Sergio Marchionne , Fiat Chrysler Automobiles
• The (auto) industry is at an inflection point for massive change... not just evolutionary change.
— Tim Cook, CEO, Apple
• By 2030, 25 percent of miles driven in the U.S. could be in shared self-driving electric cars...automakers and parts
suppliers would face the most profound challenge to their business models in a century.
— Boston Consulting Group
• On-demand electric autonomous vehicles will essentially become ten times cheaper than owning a vehicle. This will
make economic sense as much in India as in Africa as in the US as in Europe. This is a global disruption
— Roland Berger
Automotive Industry Disruption

6. • Do not look at auto
industry’s past performance
to predict the future
• This is not just an ICE to EV
disruption
• This not an automobile
disruption, it is a technology
disruption…
• It is also a business and
ownership model disruption
• Technology improves in cost
and utility at an
EXPONENTIAL rate!
• I believe the speed of auto
industry disruption will be
equal to smart phone
adoption
Automotive Industry Disruption

7. Automotive Industry Disruption

8. https://www.techemergence.com/self-driving-car-timeline-themselves-top-11-automakers/

9. Who will Be the
Disrupters… Disrupted?
Automotive Industry Disruption

10. The Entire Automotive Ecosystem will be Disrupted

11. The
Automotive
Ecosystem
Today (2018)

12. The Automotive Ecosystem Today (2018)

13. The Automotive Ecosystem Today (2018)

14. U.S Auto Body and Repair Market Revenues: 2018

15. Automotive Aftermarket
The Automotive Ecosystem Today: Auto Aftermarket
Automotive Businesses
535,000 879K 70%
30% $243 BB
# of technicians
of DIFM vehicle owners
choose independent repair
facilities to have their car
repaired
Total Automotive Aftermarket
2
0
Retail Parts Locations
*Auto parts, hardware stores, warehouse
clubs, superstores & convenience stores
265,000 of DIFM vehicle owners
choose new car dealer
facilities to have their car
repaired

16. NA: $70 BB
by 2024
Global Industry by 2024: $280 BB
US Collision Revenue: $46 BB
Euro Market:
$112 BB by 2024
Asia: 3+%
Growth
The Automotive Ecosystem Today: Collision Repair
Big 4 Consolidation % of $$: Will
Soon be 20%+

17. • Many diagnostic tools DO NOT
communicate with critical safety
systems
• Less than 1% of vehicles repaired
have their ADAS and electronics
systems calibrated
• 30% of those being calibrated are
calibrated correctly
Proper Repairs/Liability
Vehicle Safety Systems Diagnostics and Repairs (2018)

18. • John Eagle Collision Center admitted it
ignored Honda’s repair specifications
• Only 24% of collision repairers use OE
repair procedures on all repairs
• Repair procedures can change 1-4 times
per year
• Research is required on ALL repairs
Proper Repairs and Liability
The Importance of OEM Repair Procedures (2018)

19. The Automotive Ecosystem Today (2018)
72%

20. The Automotive Ecosystem Today (2018)

21. Connected Car and Dashboard Systems

22. Eight (8) Key
Elements
Needed to
Drive Auto
Industry
Disruption
Auto Industry Disruption

23. Auto Industry Disruption: Two Views…..

24. Presenting sponsor
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The Consumer

25. The Consumer

26. The Consumer

27. The Consumer

28. • For many consumers the car will serve as
a means rather than an end in itself.
• 40% of US city center dwellers would
switch from car ownership to
autonomous driving services if they cost
less
• Today’s and tomorrow’s consumers will
value experience over product
ownership.
• “Consumers expect to bring their own
functionality into the car, whether this is
music, email or navigation... if you can
bring the elements of your life that make
you happy into the car, it makes for a
more positive experience.”
– Andreas Gupta, IBM Automotive
The Consumer

29. Experience will Matter More than Ownership

31. Presenting sponsor
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The Vehicle

32. Short History of “The Connected Car”

33. Today’s
Connected
Car

34. Lane-departure warning (LDW)
Lane-keeping assist (LKA)
Adaptive cruise control
Automatic emergency braking

35. 1% 1% 1%
3%
6%
10%
16%
22%
39%
60%
97%
0%
1%
4%
8%
13%
14%
18%
31%
40%
51%
58%
63%
70%
79%
89%
99%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
% Sales (AEB Standard)
%AEB Offered
AEB initially
offered on select
Lexus and Volvo
vehicles
Acura and Volvo are
first brands to offer
AEB standard
Volvo becomes the first to
offer AEB across the
entire brand
The Mazda 6 becomes
the first model under
$30,000 MSRP to offer
AEB standard
Tesla becomes the
second to offer
AEB 100%
standard
Toyota and Nissan
make AEB
standard on most
vehicles
Data sources:
• U.S. Market Insights - JATO
DYNAMICS LIMITED
• IHS Automotive - ADAS – Current
& Future Perspectives
• Thomas Germain - Where
Automakers Stand on Automatic
Emergency Braking Pledge
On March 17th, 2016, the U.S. Department of Transportation’s National Highway Traffic
Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS)
announced a commitment by automakers, representing more than 99 percent of U.S.
automobile sale volume, to make automatic emergency braking (AEB) technology a
standard feature on all new cars in the United States no later than 2022 and on all new
trucks by 2025.
Ford to make AEB
standard on most
vehicles
The Vehicle: Automatic Emergency Braking

36. High Tech on High Production, Low Cost Vehicles
The Vehicle

37. The Vehicle: “Software, Lines of Code"
F22 Raptor – 7.0 Million
787 Dreamliner– 7.0 Million
Ford GT– 10.0 Million
Ford F-150 – 150 Million !!!!
Facebook– 6.7 Million
MS Office – 50 Million

38. Today’s Connected Cars Create 25 GB of Data an Hour

39. Data is the New Currency of a Digital Society

40. Data is the New Currency of a Digital Society

41. Data is the New Currency of a Digital Society
Future Data Driven Value and Revenue Generation Eco-System
$$$ $$$ $$$$$$$

42. Why is Vehicle Data
So Important?
• User data based on location,
intentions, and preferences is GOLD
to marketers and anyone else that can
harvest, analyze and process it!
• Drivers and occupants are a captive
audience
• Could dramatically increase annual
manufacturer revenues
• The ZERO $$$$ CAR!!!!
Data is the New Currency of a Digital Society

43. Autonomous Vehicles: Levels of Autonomy

44. Autonomous Vehicles – Levels of Autonomy

45. Computers on Wheels

46. Automotive Cybersecurity

47. • Vehicles are Migrating to a
Server/Compute Architecture
• Increasing Role for Ethernet in the
Vehicle
• By 2020, it is estimated that 40% of the
cost of a car will be in electronics,
trending toward 50-60%.
Automotive Cybersecurity

48. • Connectivity and Software Use in
Vehicles Is Leading to Increased
Emphasis on Cybersecurity
• Existing Auto 2.0 Suppliers Transforming
Into Software Companies
• Automotive Cybersecurity will affect
aftermarket access to vehicle data
Automotive Cybersecurity

49. Why are We Doing This?

51. Today’s OEM Challenges…
• (OEMs) face momentous and difficult
decisions.
• They operate in an uber-competitive
business with
• Enormous capital requirements….
• Low operating margins and return on invested
capital remain low.
• Sizeable excess production capacity
• Today it is possible for the industry to produce
113 million vehicles annually,
• Sales hover around 70 million
• Regulatory requirements remain stringent and
costly.
• Consumers relentlessly demand the latest
technologies.
The Disruption of OEM Manufacturers

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The Disruption of OEM Manufacturers

53. More OEM Challenges
• Digital services will reinvent today’s
business models & create new ones…
• Smartphones VS OEM built-in
technologies is a critical battleground
• Data and services monetization is a key
industry issue
• OEMs and Internet players have very
different mindsets
• Data could help move ownership of the
customer away from dealerships to the
OEM

54. The Disruption of OEM Manufacturers

55. The Disruption of OEM Manufacturers

56. Industry Disruptions OEM’s Need to Prepare For……
• There is clearly a shift is happening in the auto ecosystem, changing
where and how value is created
• The DNA of the OEMs has worked for the last 100 years, that does not
mean it will continue to work…
• New core capabilities will be needed, such as a
• “Fail fast” approach to new business models
• Non-traditional partnering
• Ability to sense and respond to rapidly changing customer needs
• OEMs need to continue to ask themselves “What business are we
really in?”, and think outside the box.
The Disruption of OEM Manufacturers

57. Industry Disruptions OEM’s Need to Prepare For……
• OEM’s need to revitalize their agility and focus from the physical
assets to knowledge, connectivity software and service.
• They need to reinvent the customer experience, from “fun to drive”
to seamless convenience.
• OEM’s need to refocus their innovation efforts from car features to
intelligent services.
• They need to reshuffle their talent base from the engineering of
physical products to more software and analytics expertise.
The Disruption of OEM Manufacturers

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The Disruption of New Car Dealers

59. The Disruption of New Car Dealers

60. The Disruption of New Car Dealers

61. The Disruption of New Car Dealers

62. The Disruption of New Car Dealers

63. The Disruption of New Car Dealers

64. Industry Disruptions Dealers Should Prepare For……
• Shared Mobility Solutions Will Impact Future New Car Sales
• Subset of population DOES NOT want to own a car
• Reduction in Service Revenue
• EV’s need much less service
• The Need for Dual Technical and Sales Expertise
• EV’s and ICE
• Autonomous Vehicles Will Continue to Rise in Popularity
• The Push for Fully Online Vehicle Transactions
• Root survey = 50% of people comfortable with online purchase process
• Direct Selling
The Disruption of New Car Dealers

65. Presenting sponsor
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Tech Companies Creating Disruption

67. Presenting sponsor
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Insurance Industry Disruption

68. The core business models for traditional
automobile insurance carriers may be under
threat of obsolescence, with automobile
manufacturers potentially becoming
a viable alternative to cover driving risk
- KPMG
Insurance Industry Disruption

69. Top 3 Potential Insurance
Disrupters
1. Autonomous Technology
• Potential 90% reduction in accident
frequency by 2050
• Effects of ADAS/AEB already happening
• Short term cost of accidents to rise, long
term will probably fall
• Total losses could fall by more than 60%
Insurance Industry Disruption

70. Top 3 Potential
Insurance Disrupters
2. OEM Emergence and Involvement
• Shift of driving risks to OEM
manufacturers
• Consolidation of legal exposure
• Control of driving data
• Extends depth and breadth of
customer relationships
• OEM’s redefine insurance
marketplace
• Insurance premiums could replace
loss of parts sales and profits
Insurance Industry Disruption

71. Top 3 Potential
Insurance Disrupters
3. Emergence of TaaS
• Shift has already started
• OEM’s are already making HUGE
investments
• Insurance product mix will need
to change
• Different vehicle use models will
affect insurance products that
offered
Insurance Industry Disruption

72. Insurance Industry Disruption

73. 7 To Do’s for Insurers
• DEVELOP NEW VALUE PROPOSITIONS
• RETHINK YOUR UNDERWRITING AND SERVICE MODELS
• FORM PARTNERSHIPS WITH TECHNOLOGY FIRMS AND OEMS
• IMPLEMENT TECHNOLOGY TO SIMPLIFY THE CLAIMS PROCESS
• LEVERAGE AI
• EMBRACE THE INTERNET OF THINGS
• LEVERAGE BIG DATA
Insurance Industry Disruption

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The Aftermarket Supplier Disruption

75. The Aftermarket Supplier Disruption

76. The Aftermarket Supplier Disruption
• More and More Individuals are Buying Car Parts on Their Own
• UPS study stateS 12% of online shoppers purchased auto parts/accessories

77. • Ford launches Omnicraft line of
replacement parts
• AutoNation launches
AutoNation Precision Parts,
aftermarket parts business
The Aftermarket Supplier Disruption

78. The Aftermarket Supplier Disruption

79. The Aftermarket Supplier Disruption

80. The Aftermarket Supplier Disruption

81. Six (6) Disruption To Do’s for Suppliers
1
• Focus and diversify at the same
time!
2 • Understand your customer’s
needs before they do!
3
• Determine what makes you
different than your competition
and exploit those items!
4 • Invest in people, processes and
technologies that build a moat
around your business model
5 • Determine what “game” you
want to play…Speed, Cost or
Quality
6 • Be fast, be flexible and be ready
to change your business “on
the fly”

82. Presenting sponsor
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Repairer Disruption

84. Where are the Techs?????.
Repairer Disruption: Workforce Challenges

85. Future Knowledge Requirements
• Ability to Perform Detailed
Research
• 12V, 24, & 48V Systems
• Up to 20 Different
Operating Systems
• Wiring Diagrams
• Wireless, Bluetooth end
Ethernet
• Willingness to Work with
Remote Experts
• Ability to use Augmented
Reality
Repairer Disruption: New Knowledge Requirements

86. Repairer Disruption: Multiple Operating Systems

87. Automotive Cybersecurity: At the Shop….

88. Repairer Disruption: Access to Vehicle Data
Security and the ODB II Port • The 30-year-plus OBD-II Assembly Line Data Link
(ALDL) has likely outlived its originally designed
intent
• ALDL is a potential gateway for vehicle
security breaches
• OEM’S cannot afford to allow independent
repair shops to be the weakest link in the chain
that makes up automotive cybersecurity.
• Existing AM diagnostic equipment may need to
be upgraded or replaced with OEM tools or
OEM approved vendors!
• Repairers (Mechanical, Collision, Glass and
others) may need to sublet diagnostics to OEM
approved vendors

89. Repairer Disruption: Vehicle Design/Materials

90. Repairer
Disruption –
Industry
Consolidation
Repairer Disruption: Industry Consolidation

91. Can The
Generalist
Survive?

92. Eight (8) Disruption To Do’s for Repairers
1
• Decide if you and your business
are prepared for rapid change &
adoption
2 • Focus and diversify at the same
time!
3
• Lead from being in front:
Embrace new technologies &
create a technology roadmap
4 • Reimagine how the consumer
“experiences” your business
5 • Disrupt your business BEFORE
the industry does!
6 • Embrace OEM technologies
and repair procedures
7 • Embrace and Implement Digital
Marketing Technologies
8 • Document EVERYTHING you
repair/replace for the consumer

93. Today

95. Future
Industry Value
Creation and
Disruption

96. The Future of the Automotive Ecosystem
• The automotive ecosystem itself will get bigger
• New parts are required to support the innovations in automotive.
• New services are and will continue to emerge
• New industries will be born.
• Utilization will change with autonomous cars.
• The role of data in connected and autonomous cars will expand significantly.
• Disruption and chaos produces fear and opportunity

97. How to Be a Winner During Industry Disruption
• OEM’s/Dealers/Suppliers/Repairer/Others: Use of connected car
data to increase internal efficiency, quality, and product
differentiation
• Dealers/OEM’s: Defend list price levels through differentiation, using
connected services to reinforce customer loyalty
• OEM’s/Dealers/Suppliers/Repairer/Others: Establish comprehensive
ecosystem of consumer services, with partners and revenue sharing

98. How to Be a Winner During Industry Disruption
• OEM’s/Dealers/Suppliers/Repairer/Others: Create systems and
services for using customer data
• Dealers/OEM’s: Sell connected car packages to consumers bundled
with new cars (GM, Audi, Mercedes-Benz, and Tesla are already doing
this)
• Education Organizations: Creation of vehicle electronics diagnostic
training and certification for organizations and individuals

99. How to ”Win” During and After Industry Disruption
• Repairers: Specialize in vehicle electronics diagnosis, repair and
calibrations
• Repairers: Differentiate your business by “partnering” with OEM’s
• Repairers: Specialize in particular makes! Electronic platforms by
manufacturer becoming too complex to generalize

101. Auto Industry Disruption…
Automotive Industry Disruption
Will Your Business Be a Winner or Loser?