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Future of Mobility: Connected Mobility and the Changing Role of Vehicle Manufacturers - Frost & Sullivan Market Insight


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Future of Mobility: Connected Mobility and the Changing Role of Vehicle Manufacturers

Frost & Sullivan Market Insight by By Martyn Briggs - Mobility Programme Manager

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Future of Mobility: Connected Mobility and the Changing Role of Vehicle Manufacturers - Frost & Sullivan Market Insight

  1. 1. MARKET INSIGHT Future of Mobility: Connected Mobility and the Changing Role ofVehicle Manufacturers By Martyn Briggs - Mobility Programme Manager
  2. 2. Frost & Sullivan | Market Insight 2 FUTURE OF MOBILITY: CONNECTED MOBILITY & THE CHANGING ROLE OF VEHICLE MANUFACTURERS With continued urbanisation and the rise of“digital natives”,the changing landscape of mobility products and services is causing vehicle manufacturers to rethink their positioning in this space. The role and perception of the automobile in our lives continues to evolve.With increasing population density and connected lifestyles, we're witnessing a new wave of products and services improving the efficiency of the transportation network,and facilitating seamless integration of several services to make it easier for people to get from A to B, which is beginning to make people question the need to own as many cars in their household. This trend is commonly referred to as Mobility - a mixture of products,concepts,services,partnerships, and digitally enabled platforms that improve a cities transportation offering - a trend that is disrupting the automotive and transportation sectors, and leading to every vehicle manufacturer looking to capitalise on this opportunity and analyse any potential threats to their business. I was fortunate enough to attend the 84th Geneva Motor Show in Switzerland this month, one of my favourite motor shows due to the array of luxury vehicles and supercars on show to satisfy my inner petrolhead (or perhaps in future: range extended plug in hybrid supercar head!), in a beautiful setting and in a relatively compact area compared to other shows. However, what we've witnessed in the last two years in particular is the confirmation of several of the mega trends impacting mobility being put into practice with new products for the automotive industry. I Small IsThe New Big Whilst the aforementioned supercars were great to admire, the standout highlight for the rest of us normal folk was the array of compact vehicles targeted principally at Urban Mobility,to give city dwellers the means of getting from A to B with the benefits of being easy to park, and environmentally friendly, equipped with several premium infotainment features to replicate a drivers connected lifestyle in the car as well as improve their mobility, such as connected navigation systems to identify traffic and rerouting, and locate and book. This was demonstrated with new models fromToyota (Aygo) Citroen (C1), Opel (Adam Rocks/S), and Renault (Twingo) in particular, all predicated on enticing customers with a desire for connectivity and personalisation, and boasting impressive in car technology replicating smartphone functionality, as well as numerous ways to customise the vehicle to retain a sense of individuality to each customer visually, but with a reduced number of Eco friendly engine variants. What this tells us is that despite some tough times for the European automotive sector, with six consecutive years of declining annual total vehicle sales, all of the volume manufacturers are targeting this customer segment,likely to be predominantly younger buyers,with cost conscious mobility options without a compromise on technology.
  3. 3. 3 Frost & Sullivan | Market Insight Technology Whilst this is still a key differentiator for several of the manufacturers, the common trend continually emerging is connectivity, which is in turn enabling improved infotainment and safety to the drivers, and providing manufacturers an increased understanding of the vehicle after the point of sale.This increased visibility, commonly referred to as big data, provides several new business models such as automotive app stores and services, and has the potential to lower costs by issuing over the air updates (avoiding recalls) for example. There were several telematics and connected service partnerships announced at the show,such as GM launching their OnStar platform in their European vehicles from 2015/16 focused around safety and linked to forthcoming eCall regulations.However the headline grabber was certainly the launch ofApple CarPlay, on display in the newVolvo XC90 going on sale late 2014, fully integrating their iOS software and logic into vehicles.This will also be implemented in Mercedes and Ferrari vehicles (with a rumoured implementation from a further 13 OEMs set to follow), and sets the scene for a race between Apple and Google (already integrating their android software into several VW brands and Tesla) to be the dominant provider. Growth of Carsharing The global carsharing market continues to grow, with the members of such services increasing by 52% between 2012-2013 to over 3.5m members,1.4m of whom are in Europe.Frost & Sullivan research has shown this market opportunity could rise to over 26m members by 2020 if the current adoption, expansion and increasing awareness continues. This has led to most vehicle manufacturers having implemented, piloted or considered carsharing as a new mobility business model opportunity.However the two most prominent to date have undoubtedly been Daimler and BMW, both offering free floating (one way) carsharing. Both outlined bullish plans on growth of their successful operations, car2go and DriveNow respectively, in Geneva. Car2go aim on increasing their 26 city presence by a further 5-10 locations, targeting over 1million members in 2014 (up from 600k in 2013), and introduced their new car2go black product at the show. This will for the first time enable station based (two way) carsharing using larger Mercedes B Class vehicles, aimed at providing longer rental durations and targeting new customer use cases, initially with 100 cars each in Hamburg and Berlin. DriveNow are looking to increase their presence from six cities to up to 25 in 2014, underlining their assurance on the carsharing business model as a viable and potentially profitable premium mobility service going forward. Taxis & Demand Responsive Mobility One of the core drivers of the increase in one way carsharing in particular, is the on demand aspect of the business model, whereby customers don't need to book the vehicles in advance, but can literally request rental access on demand to undertake their journeys, and conclude the rental at any location within the defined carsharing operating areas,fulfilling a role similar to taxis.With location based services a key enabler of this business, in a similar vain so to has the taxi and private hire industry been revolutionised by location aware technology, leading to the rise of hail-a-cab applications, better linking supply and demand.
  4. 4. Frost & Sullivan | Market Insight 4 The business model operates by taking commissions on each fare,which is attractive to buyers especially in off peak times, where up to a third of their day can be filled just searching for a fare.As such drivers are willing to pay for this kind of service; the application providers typically charge 3-15% of the fare based in several parameters. This lucrative business model has already seen considerable investment from vehicle manufacturers, private equity houses and venture capital firms alike, raising over $500m amongst the top 4 providers alone,most notably google ventures $300m stake in Uber technologies.Indeed,Uber had a collaboration with Cadillac at this year’s Geneva motor show,offering a customised version of their service to provide complimentary shuttles to and from Palexpo; great marketing for both the Uber concept and Cadillac alike - showcasing their respective cutting edge technology and premium vehicles.With Uber operational in over 70 cities and looking to continue expanding in 2014, and several other on demand mobility providers emerging in chauffeur/taxis and ridesharing models in particular,the revolution and disruption of this market is set to continue. Autonomous Driving Equally it is rumoured Google's intent in investing into on demand technology providers such as Uber is to create a business model application for their autonomous vehicle technology, something that id likely to revolutionise the way in which consumers consider urban mobility in future.This is likely to be implemented in a phased approach starting with applications in closed environments such as the personal rapid transit pods we see at Heathrow and Masdar City, to semi and fully autonomous applications on our roads in the future. This was also prevalent in Geneva, with Mercedes positioning the new S class as the most highly auto- mated vehicle on the market today, jokingly drawing comparisons to the iconic Knight Rider vehicle and TV series from the 1980s. Equally the concept from Rinspeed (ExchangE) showcased the potential of a fully autonomous car, in this case a Tesla Model S, in enabling entertainment and relaxation of the driver, and the potential this opportunity can bring; the concept showcased being able to move the steering wheel to the centre of the vehicle to allow driver/passenger the use of a touchscreen entertainment console, or to swivel the seats to watch a flatscreen tv in the back of the vehicle for example. Impact to Automotive Industry and Outlook All of these business opportunities will have considerable impacts to the automotive and mobility landscape going forward,from changing the consumer mindset towards more shared usage of transport and equally Increasing their expectations for connected services within mobility.There are several ways in which this can be monetised, from creating a product directly, partnering with service providers, or enabling new digital and data related revenue opportunities. All of these themes will be covered extensively at Frost & Sullivan's Urban Mobility 3.0 workshop in London on 26th June, with top speakers confirmed from across the mobility ecosystem, such as Daimler Mobility Services, General Motors, Zipcar, Cisco,Truecar, and Avis. For more information go to Get involved
  5. 5. 5 Frost & Sullivan | Market Insight Frost & Sullivan’s mobility research team will be undertaking a detailed market research study on corporate mobility requirements and business models in 2014,in addition to a“Voice of the customer” survey amongst fleet and corporate mobility decision makers, to ascertain their current and future preferences towards all aspects of corporate mobility.To contribute in this research, and to find out more about our mobility and automotive research, please contact me at please contact the author, Martyn Briggs at Join our LinkedIn group: Future of Mobility Follow us on Twitter: @FS_Automotive
  6. 6. Precious Metals Market Opportunity and the Role of South Africa 6 © 2014 Frost & Sullivan Text Auckland Bahrain Bangkok Beijing Bengaluru Bogotá Buenos Aires Cape Town Chennai Colombo Delhi/NCR Detroit Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make orbreak today’s market participants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? Contact Us: +44 (0) 20 7343 8383 • • Mumbai Moscow Oxford Paris Pune Rockville Centre San Antonio São Paulo Seoul Shanghai Shenzhen Silicon Valley Singapore Sophia Antipolis Sydney Taipei Tel Aviv Tokyo Toronto Warsaw Washington, DC Dubai Frankfurt Iskander Malaysia/Johor Bahru Istanbul Jakarta Kolkata Kuala Lumpur London Manhattan Mexico City Miami Milan