Automakers face significant business challenges.
So many choices
• Led by digital natives, consumers increasingly expect
their vehicles to connect and interact with all of the
online services they use for business, entertainment and
• In many large, urban environments, younger consumers
are opting for car- and ride-sharing over car ownership.
• Original equipment manufacturers (OEMs) can respond
to competitive pressures and market trends by owning
the integration of leading-edge, digital services into their
vehicles to connect consumers with the rest of their
• The key question OEMs must answer: Where will they
play along the spectrum of digital services, from
entertainment and navigation capabilities to advanced
driver-assistancefeatures and fully autonomous
Cars will change from productivity dead zones to digital enablers that
connect people to homes, offices and communities.
• Connected cars are the next big thing. They’ll either
remake traditional OEMs, or run
• Today’s consumers now expect the same connectivity
built into their cars and trucks that they experience in
their everyday lives.
• By 2020, the number of new cars with technology that
connects them to the surrounding world will more than
• The challenge for automotive OEMs is how to
integrate advanced software and digital services into
vehicles in ways that enable consumers to seamlessly
interact with the rest of their world.
• Global revenue from digital content in autos will grow
more than 300 percent by 2021.
Fully autonomous vehicles offer unprecedented convenience for
travelers, yet raise questions about passenger safety, liability,
insurance and government regulation. Automakers can begin to
address safety issues now by expanding the use of advanced
Safety first for
• Self-driving cars grab all the headlines, but
autonomous vehicle technology will probably appear
first in long-haul trucks, which move 69 percent of all
U.S. freight and 75 percent of the freight in Europe.
• As automated driver assistance systems (ADAS) frees
up motorists to safely make more productive use of
their time on the road, OEMs can attract consumers by
transforming cars and trucks into platforms that
seamlessly integrate and deliver digital services.
• Wireless technology will connect vehicles to other
vehicles (V2V), vehicles to the surrounding road
infrastructure and traffic control (V2I), and even to
pedestrians walking by (V2P).
• There are at least 50 vulnerable attack points within a
typical vehicle’s electronic systems, communications
networks and control software. Protecting all of them
can cost five percent of the total vehicle electronics’
Electric vehicles will transform the auto industry, but not as
quickly as once believed.
Not giving up the fossil fuel
• Automakers are pushing development of plug-ins and
hybrids to meet fuel economy and emission
requirements, but low oil prices and improvements to
conventional engines will slow the arrival of mainstream
• Today’s electric vehicles (EVs) typically cost more than
comparable internal combustion engine (ICE) models,
which limits adoption. However, the combination of
regulatory pressure and cheaper, higher-capacity
batteries could make EVs more affordable.
• To meet rising fleet mileage requirements in the United
States — 54.5 miles per gallon by 2025 — and similarly
demanding requirements in Europe, OEMs must rely on
a combination of the following solutions:
• Electronic fuel management systems
• Increasingly complex transmissions
• Aerodynamic shapes
• Reducing vehicle weight by replacing steel with
lighter metals, plastics and composites
Automakers must become master integrators of digital systems
throughout vehicle designs, assembly lines and supply chains
— or watch new entrants drive away with market share.
The digital makeover
• Traditional automakers face the unique challenge of
managing existing product lines while retooling vehicle
designs, technology and factories for the digital and
• Big Data and advanced analytics will be the keys to
operational efficiency and competitive differentiation for
OEMs. Look for automakers to add more data scientists
as well as programmers who can build and test
enhancements based on what the data scientists
• Traditional OEMs are world-class integrators of
mechanical subassemblies. Going forward, they can
bring software engineering and data analysis in-house,
or they can rely more on tier 1 suppliers and technology
companies to integrate digital devices and services.
• OEMs have updated the ways they design and build
vehicles, cutting product development cycles from four
to five years to between two and three years.
Ride-sharing and alternative-ownership trends are either the
beginning of the end for the auto industry’s 100-year dominance
of personal transportation, or the opportunity to provide mobility
and transportation services that meet local needs in each
country and city.
• By 2030, one out of every 10 new cars or trucks will
be a shared vehicle.
• Car-sharing could best meet the needs of about 40
percent of city drivers and 20 percent of compact car
drivers in Europe.
• Regardless of the model, car- and ride-sharing is
good for the environment. Each shared vehicle takes
nine to 13 cars off the road because users either sell
their vehicles or postpone buying a car. As a result,
users can reduce household carbon emissions by up
to 41 percent a year.
• OEMs will allow market demand to shape up before
making too many changes in products they offer, but
they’re not sitting idle, either. They are partnering
with and investing in ride-sharing companies and
Driving to digital
In a changing transportation landscape, established automakers
will find that smart manufacturing and connected vehicles are
the keys to survival.
• OEMs can thrive despite challenges from consumer
trends, regulations and aggressive new entrants.
They can add smart manufacturing and connect
vehicles to the digital services that people use on
and off the road.
• Automakers can continue to make cars and trucks,
launch transportation and mobility services, or deliver
some blend of both.
• Whichever route they take, OEMs will need to
augment their products and services with leading-
edge digital technology capabilities because
consumers expect their cars and trucks to function
like their smartphones, connecting them to home,
work and everything they do in between.
• We believe OEMs can build customer loyalty by
integrating data from connected car services and
information from customer relationship management
Read more about the tools you’ll need to
accelerate your organization’s
transformation from now to next.