Digital Transformation of the Automotive Industry

Digitalization Spending to Grow Rapidly to $82.01 Billion in 2020

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Research ScopeIn 2015, automotive industry investments in key focus areas were about $19.57 billion. Growing digitalization and advancements in technology will increase the investments to $82.01 billion by 2020. The rapid pace of digitalization is transforming the component hardware-driven automotive sector to a software and solutions-focused industry, accelerated by consumers’ evolving digital lifestyle expectations and demands for new and innovative services. The future roadmap of digitalization in the automotive industry is expected to move rapidly from “digital services” to “car-as-a-service” to “mobility-as-a-service”, transforming the car into an element of a connected living solution by 203

Table of Contents

Executive Summary—Introduction to Digitalization in the Automotive IndustryExecutive Summary—Key FindingsThe Five Pillars of Digitalization in the Automotive IndustryFour Key Functional Areas Impacted by Digital TransformationInvestment in Digital Transformation in the Auto IndustryNew Automotive Digital Ecosystem—Over 1700 new Digital Startups to Disrupt Industry Supply ChainSnapshot of Major Automakers Investment and M&A Activity IoT Platform for the Automotive Industry Automotive OEMs—IoT Platforms Automotive Digital Retailing—Vision 2020What Digitizing the Retail Environment EnablesAutomotive Industry Digitalization Underpins Aftermarket EvolutionConnected Cars and Autonomous Vehicles—TrendsConnected and Autonomous Cars—Growing Software DependencyData Monetization—Direct and Indirect Revenue Opportunities Product as a Service—Connected Cars Roadmap Towards Integrated Mobility is DigitalOEMs Moving Towards Car as a Service (CaaS)Industry 4.0—The Four Functional FacetsDigitalization in Manufacturing—Automotive Industry 4.0 ApproachConventional (Current ) vs. Digitized (Future) Supply ChainRecommendations to Automotive OEMsResearch Scope, Objectives, Methodology, and BackgroundResearch Scope and ObjectivesKey Questions this Study will AnswerResearch BackgroundFrost & Sullivan—CES 2017 InterviewsResearch MethodologyFrost & Sullivan Digital Transformation FrameworkDigital Transformation Framework—Digital EcosystemDigital Transformation Framework—Business ModelsDigital Transformation Framework—Business Functions Pillar 1—Digital RetailingFuture of Automotive Retailing is DigitalNew Customer Journey is Already DigitalDigital Solutions Supporting Individual Building BlocksDegree of Digitalization in Car Retailing—2010 to 2020Future Automotive Retail EcosystemGlobal Automotive Aftermarket eRetailing—OverviewAftermarket eRetailing Penetration by 2022Connected Supply Chain—Impact on Service Aftermarket Digitalization Reshaping Leasing and Vehicle FinancingGamification Leads to Next Level of User Engagement ModelsExhibit A—Rockar: Leader in Digital Retailing in EuropeExhibit B—Rockar Hyundai: KPIsExhibit C—BMW’s eCommerce StrategyExhibit D—eCommerce in Automotive Aftermarket: BMW Web StoreExhibit E—Mahindra KUV Launch Digital Marketing Highlights Pillar 2—Mobility as a ServiceAutomotive Companies Unrealized Transportation OpportunitiesIndustry Drivers—On Demand Mobility ServicesMobility as a Service—TrendsDigital Transformation to Drive Integrated Mobility Platforms and AppsNew Business Models Underpinned by TechnologyMobility as a Service—Services, Business, and Pricing Models Market Evolution of Vehicle Sharing Technologies Digitalization Enabling the Shift to Car as a ServiceBlockchain and Mobility SolutionsExhibit F—Daimler Moving Towards Car as a ServiceExhibit G—MaaS Global’s Solutions “The Whim App”Exhibit H—Technology Enabled Mobility Integration Platform FordPass Platform—Parking Service to Autonomous Taxi ServiceMobility as a Service Market—2015 vs. 2025Pillar 3—Connected and Autonomous CarsConnected Car—Regional Trends and HighlightsConnected Cars & Technology StartupsRollout of 5G from 2020 will Accelerate Digitalization of Vehicle5G and Satellite Communication—Use Cases Incremental Updates based on Navigation Data Standard (NDS) Connected Living—The Alphabet Ecosystem Smartphone Interfacing Technologies Input HMI Related Trends—Displays and Touch Screens Input HMI Related Trends—Voice & Handwriting Recognition Output HMI Related Trends—HUD and Instrument Cluster Display Key Developments in Voice Recognition Automotive Industry—Rise of Automation Natural Language Processing & Machine Learning for Self Driving Cars Self Driving Technology Trends Software and Self Learning Cars—2016 to 2025 Self Learning is not Autonomous—It is Beyond Self Learning Technology—OEM Analysis True Type Learning Algorithm Based Self Learning CarSelf Learning Revenue OpportunitiesRe-thinking Automotive with Big DataAutonomous Supply Chain—M&A Opportunity for OEMs & Tier IsPillar 4—Industry 4.0Industry 4.0 and the Automotive IndustryIndustry 4.0 in Automotive ManufacturingBig Data—Enhancing the Quest for a Lean EnterpriseImpact of Industry 4.0 on MES PlatformsMES Solutions—Automotive IndustryFuture of Automotive ManufacturingIndustrial Robotics—Implications for Automotive ManufacturingIIoT Driving a New Industrial Revolution ManufacturingCyber Security—The New Normal in Production DesignGM Digitalization Initiatives to Reduce Factory DowntimeBMW Approach for Digitalization of Production FacilitiesMercedes-Benz’s Approach to Connected FactoryGeneral Electric—IIoT Platform Seems to be Most Preferred SolutionPillar 5—Connected Supply ChainFuture of Automotive Supply Chain—Connected Supply ChainAutomotive Supply Chain Network Architecture Connected Supply Chain Network Features—2016 vs. 2018 Conventional (Current ) vs. Connected (Future) Auto Supply ChainConventional (Current ) vs. Connected (Future) Auto Supply Chain (continued)Logistics OptimizationTotal Supply Chain Management Cost—Potential for 25–50% ReductionSupply Chain Operations Reference Level-1 Strategic MetricsSupply Chain Operations Reference Level-1 Strategic Metrics (continued)Supply Chain Operations Reference Level-1 Strategic Metrics (continued)Automotive Cash to Cash (C2C) Cycle TimeConnected Supply Chain—Effectiveness and EfficiencyMeasuring Connected Supply Chain SuccessCompetitive Analysis—OEM Activities in the Digitalization SpaceAutomotive OEMs—IoT PlatformsAutomotive OEMs Big Data Analytics InitiativesAutomotive OEMs Technology InitiativesAutomotive OEM Mobility StrategiesDigital Transformation Building Blocks—FordBusiness Models—FordFord Mobility Experiments Volkswagen Digital Lab and Enhanced Digital Platform General Motors (GM)—Digital Transformation Elements Future Digitalization of Service TechnologiesKey Digital Initiatives by OEMsAutomotive Digital Transformation—Growth Opportunity Analysis, Conclusions, and RecommendationsAutomotive Digital Transformation—Strategic ImperativesDigital Transformation Solution Accelerators for Automotive CompaniesDigitalization and Mobility CompaniesManufacturing—Connected Factory will Transform the Supply ChainConnected Supply Chain and Enterprise Operations EcosystemKey Conclusions Recommendations to Automotive OEMs Legal DisclaimerAppendixProduct OperationsPeopleInformation ManagementCustomer JourneyLeadershipMarket Engineering Methodology

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