'Connected Car' To Drive IT Investments In Automotive Sector

The automotive industry is experiencing substantial change in response to the global recession, and there are four key focus areas that will have a lasting impact on the industry and force companies to establish new long-term value propositions, according to Gartner.

“As automotive companies continue to weather the economy’s immediate challenges, companies must prepare for the market turnaround, changing consumer needs and the government’s increased focus on new energy policies, such as increased fuel efficiencies and alternative powertrain technologies,” said Thilo Koslowski, research vice president at Gartner. “This will require companies to concentrate research, development, planning and marketing efforts on four crucial market, societal, political and technological trends. Each of these trends will also have implications regarding the importance of technology in the automotive industry, from both product and process perspectives.”

Emerging versus Mature Markets

The global recession has led to large sales declines in mature automotive markets, which will take time to recover and will require dynamic strategies to succeed. Hence, automotive companies should focus technology initiatives in mature markets that enable flexible manufacturing capabilities, demand sensing and organisational agility.

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To gain from sales opportunities in emerging, growing markets, Gartner recommends automotive companies invest into technologies that centre on traditional manufacturing-related issues, including product lifecycle management (PLM), as well as supply- and demand-chain-related capabilities.

Sustainability

The automotive industry will play a key role in developing, deploying and sharing sustainable mobility and transportation solutions and efforts regarding alternative powertrain technologies, such as battery powered vehicles (electric vehicles) that will redirect companies’ technology investments. This will include the need to develop onboard energy management solutions as well as offboard solutions, including data communication services to find charging stations, learn from and influence driving behaviour and traffic management. Gartner expects that infrastructure and service providers addressing the energy management aspects of the electronic vehicle (EV) ownership phase will also continue to emerge, magnifying the need for successful partnerships as well as collaboration and data management tools.

Digital Convergence and Changing Demographics

The continued rise of connected consumer devices will increase consumer expectations for always-on data availability throughout their work and home and when mobile — including when driving. Gartner foresees the vehicle becoming the mobile technology platform that will connect the driver to the outside world to enable the consumption and creation of relevant and dynamic information. Successful technology and business strategies will be crucial in helping automotive companies play a critical role in developing these new value propositions.

IT investments will focus on wireless connectivity solutions, telecommunication networks, location-based services, data aggregation and analytics. Automotive companies will increasingly build in-house expertise to offer connectivity solutions and will work with other external partners to offer holistic offerings that address consumers’ automotive needs.

New Business Models

Although the need for private transportation will mean a continued demand for passenger cars, manufacturers must expand their business models to create revenue opportunities that address consumers’ broader mobility and transportation needs, ownership-requirements and driving-related service preferences. Partnerships with adjacent industries, such as energy and utilities, consumer electronics and media will become key success factors.

Gartner recommends that IT departments and planners become proficient with technology infrastructures in these adjacent industries. The role and responsibility of retailers will also be expanded, and dealers will evolve into the role as service and content consultants. This will require closer collaboration and training, as well as expansion of IT functionality between OEMs and dealers.

“The key enabling technology that will address the latter three of these four focus areas is the connected car,” said Koslowski. “The connected vehicle will become the technological foundation for a transformed automotive industry in the future. It will realise new product and service innovation, which will create new value propositions and business models and ultimately enable the connected driver.”