This document discusses technology trends in the automotive industry and how technologies are transferring between industries like aerospace and automobiles. It notes that electronics and software costs in cars are increasing and will account for 40% of vehicle costs by 2020. It also discusses how customer priorities are shifting towards safety and how technologies like ABS brakes originated in aerospace but are now common in cars. The document warns that customers may reach a "tipping point" of frustration with new technologies. It suggests automakers find a balance focusing on cost, lifestyle, safety and convenience when developing cars for emerging markets. The way forward may be offering customizable options allowing customers to choose their own technology add-ons.

1. 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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2. 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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3. 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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4. 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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5. 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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6. Aerospace to automotive:
technology “osmosis”
Technology “osmosis”
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7. ABS – from aerospace to auto
Originally developed to assist in landing heavy aircraft
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8. Heads-up display
F/A-18C
jet fighter
Wikipedia
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9. Heads-up display
Chevrolet Corvette
Wikipedia
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10. GPS / HUD – aerospace
Integrated Primary
Flight Display
Honeywell
Honeywell
Runway Awareness
and Advisory
System
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11. GPS: automotive navigation
Stand-alone
Navigation
Systems
(for cars)
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12. US DoT
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13. US DoT
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14. 24X7 connectivity
GM OnStar
• Safety, security,
convenience
• Vehicle
diagnostics
• 24X7 connection
to Advisor
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15. Airbags – from auto to aero!
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16. 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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17. The tipping point ?
“Tipping
point” ?
Customer
enthusiasm
Fascination Frustration
Technology
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18. 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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19. Customer needs in emerging
markets – finding the balance
COST
LIFESTYLE SAFETY
CONVENIENCE
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20. 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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21. Thank you!
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