Digital Transformation of the Automotive Industry

Digitalization Spending to Grow Rapidly to $82.01 Billion in 2020

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Research Scope

In 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 2030. In the year 2016, digitalization underpins the transformation of business activities, process improvements, and the development of new competencies and business models across five key pillars within the automotive industry.

•     Connected Supply Chain
•     Industrial Internet of Things and Industry 4.0
•     Connected and Autonomous Cars
•     Digital Retailing
•     Mobility as a Service (MaaS)

The study, Digital Transformation of the Automotive Industry, analyzes the strategies, growth analysis, competitive landscape, business models, and future focus areas of original equipment manufacturers (OEMs) and Tier I suppliers. Digitalization in the automotive industry will have a spiral effect on other industries. OEMs and Tier Is realized that digitization along with IoT, technology partnerships, software capabilities, and customized solutions will be the way forward for the global automotive industry from the year 2016 to 2025.

Growing digitalization initiatives and pilot projects with software-centric focus from automotive OEMs and Tier Is will increase automotive IT spending from $37.9 billion in 2015 to $168.8 billion by 2025 (at a CAGR of 16.1%). More than 1700 new digital startups are expected to disrupt the automotive industry supply chain.

In addition to OEMs, Tier I suppliers, and technology companies initiatives, this study covers a detailed list of startups and technology companies across the five key pillars.

Key Questions this Study will Answer

•     What are the key pillars of automotive digitalization? What are the key recommendations to automotive OEMs? Discuss case studies and initiatives from OEMs, Tier Is, technology companies, and startups focusing on digitalization.
•     What are the key markets for start-ups to venture into and what is the current revenue potential of those markets?
•     Who are the key participants and what are their unique service propositions (USPs)?
•     Considering automotive digitalization, how much will the automotive industry spend from technology and software perspective?
•     What are the opportunities for digital ecosystem participants (aftermarket, Tier Is, technology companies and OEMs)?

Table of Contents

1. Executive Summary—Introduction to Digitalization in the Automotive Industry
Key Findings
The Five Pillars of Digitalization in the Automotive Industry
Four Key Functional Areas Impacted by Digital Transformation
Investment in Digital Transformation in the Auto Industry
New Automotive Digital Ecosystem—Over 1700 new Digital Startups to Disrupt Industry Supply Chain
Snapshot of Major Automakers Investment and M&A Activity (2011–2016)
IoT Platform for the Automotive Industry
Automotive OEMs—IoT Platforms
Automotive Digital Retailing—Vision 2020
What Digitizing the Retail Environment Enables
Automotive Industry Digitalization Underpins Aftermarket Evolution
Connected Cars and Autonomous Vehicles—Trends
Connected and Autonomous Cars—Growing Software Dependency
Data Monetization—Direct and Indirect Revenue Opportunities
Product as a Service—Connected Cars
Roadmap Towards Integrated Mobility is Digital
OEMs Moving Towards Car as a Service (CaaS)
Industry 4.0—The Four Functional Facets
Digitalization in Manufacturing—Automotive Industry 4.0 Approach
Conventional (Current ) vs. Digitized (Future) Supply Chain
Recommendations to Automotive OEMs
2. Research Scope, Objectives, Methodology, and Background
Research Scope and Objectives
Research Background
Frost & Sullivan—CES 2017 Interviews
Research Methodology
Frost & Sullivan Digital Transformation Framework
Digital Transformation Framework—Digital Ecosystem
Digital Transformation Framework—Business Models
Digital Transformation Framework—Business Functions
3. Pillar 1—Digital Retailing
Future of Automotive Retailing is Digital
New Customer Journey is Already Digital
Digital Solutions Supporting Individual Building Blocks
Degree of Digitalization in Car Retailing—2010 to 2020
Future Automotive Retail Ecosystem
Global Automotive Aftermarket eRetailing—Overview
Aftermarket eRetailing Penetration by 2022
Connected Supply Chain—Impact on Service Aftermarket
Digitalization Reshaping Leasing and Vehicle Financing
Gamification Leads to Next Level of User Engagement Models
Exhibit A—Rockar: Leader in Digital Retailing in Europe
Exhibit B—Rockar Hyundai: KPIs
Exhibit C—BMW’s eCommerce Strategy
Exhibit D—eCommerce in Automotive Aftermarket: BMW Web Store
Exhibit E—Mahindra KUV Launch Digital Marketing Highlights
4. Pillar 2—Mobility as a Service
Automotive Companies Unrealized Transportation Opportunities
Industry Drivers—On Demand Mobility Services
Mobility as a Service—Trends
Digital Transformation to Drive Integrated Mobility Platforms and Apps
New Business Models Underpinned by Technology
Mobility as a Service—Services, Business, and Pricing Models
Market Evolution of Vehicle Sharing Technologies
Digitalization Enabling the Shift to Car as a Service
Blockchain and Mobility Solutions
Exhibit F—Daimler Moving Towards Car as a Service
Exhibit G—MaaS Global’s Solutions “The Whim App”
Exhibit H—Technology Enabled Mobility Integration Platform
FordPass Platform—Parking Service to Autonomous Taxi Service
Mobility as a Service Market—2015 vs. 2025
5. Pillar 3—Connected and Autonomous Cars
Connected Car—Regional Trends and Highlights
Connected Cars & Technology Startups
Rollout of 5G from 2020 will Accelerate Digitalization of Vehicle
5G 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 Car
Self Learning Revenue Opportunities
Re-thinking Automotive with Big Data
Autonomous Supply Chain—M&A Opportunity for OEMs & Tier Is
6. Pillar 4—Industry 4.0
Industry 4.0 and the Automotive Industry
Industry 4.0 in Automotive Manufacturing
Big Data—Enhancing the Quest for a Lean Enterprise
Impact of Industry 4.0 on MES Platforms
MES Solutions—Automotive Industry
Future of Automotive Manufacturing
Industrial Robotics—Implications for Automotive Manufacturing
IIoT Driving a New Industrial Revolution Manufacturing
Cyber Security—The New Normal in Production Design
GM Digitalization Initiatives to Reduce Factory Downtime
BMW Approach for Digitalization of Production Facilities
Mercedes-Benz’s Approach to Connected Factory
General Electric—IIoT Platform Seems to be Most Preferred Solution
7. Pillar 5—Connected Supply Chain
Future of Automotive Supply Chain—Connected Supply Chain
Automotive Supply Chain Network Architecture
Connected Supply Chain Network Features—2016 vs. 2018
Conventional (Current ) vs. Connected (Future) Auto Supply Chain
Logistics Optimization
Total Supply Chain Management Cost—Potential for 25–50% Reduction
Supply Chain Operations Reference Level-1 Strategic Metrics
Automotive Cash to Cash (C2C) Cycle Time
Connected Supply Chain—Effectiveness and Efficiency
Measuring Connected Supply Chain Success
8. Competitive Analysis—OEM Activities in the Digitalization Space
Automotive OEMs—IoT Platforms
Automotive OEMs Big Data Analytics Initiatives
Automotive OEMs Technology Initiatives
Automotive OEM Mobility Strategies
Digital Transformation Building Blocks—Ford
Business Models—Ford
Ford Mobility Experiments
Volkswagen Digital Lab and Enhanced Digital Platform
General Motors (GM)—Digital Transformation Elements
Future Digitalization of Service Technologies
Key Digital Initiatives by OEMs
9. Automotive Digital Transformation—Growth Opportunity Analysis, Conclusions, and Recommendations
Automotive Digital Transformation—Strategic Imperatives
Digital Transformation Solution Accelerators for Automotive Companies
Digitalization and Mobility Companies
Manufacturing—Connected Factory will Transform the Supply Chain
Connected Supply Chain and Enterprise Operations Ecosystem
Key Conclusions
Recommendations to Automotive OEMs
Legal Disclaimer
10. Appendix
Product
Operations
People
Information Management
Customer Journey
Leadership
Market Engineering Methodology


List of Figures & Charts

1. Automotive Digital Transformation Market: Key Findings, Global, 2016–2030
2. Passenger Car Market: Unit Shipment Forecast, Global, 2016–2022
3. Automotive Digital Transformation Market: Key Participants, Global, 2016
4. Automotive Digital Transformation Market: Connected Cars and Technology Startups, Global, 2016
5. Smartphone Interfacing Technology Benchmark, Global, 2016
6. Automotive Digital Transformation Market: Metrics, Global, 2016
7. Automotive Digital Transformation Market: Supply Chain Costs, Global, 2016
8. Automotive Digital Transformation Market: Supply Chain Assets Management, Global, 2016
9. Automotive Digital Transformation Market: OEM Big Data Analytics Initiatives, Global, 2016
10. Automotive Digital Transformation Market: Ford Business Models, Global, 2016–2020
11. Automotive Digital Transformation Market: Digital Solution Accelerators, Global, 2016


1. Automotive Digital Transformation Market: Five Pillars of Digitalization, Global, 2016
2. Automotive Digital Transformation Market: Total Automotive IT Spending, Global, 2015–2020
3. Automotive Digital Transformation Market: Startups Snapshot, Global, 2011–2016
4. Automotive Digital Transformation Market: Automotive IoT Platform and Value Chain, Global, 2016
5. Automotive Digital Transformation Market: Automotive OEMs IoT Platform, Global, 2016–2018
6. Automotive Digital Transformation Market: Automotive Digital Retailing, Global, 2014–2020
7. Automotive Digital Transformation Market: Retail Network Digitalization, Global, 2016
8. Automotive Digital Transformation Market: Automotive Data Monetization, Global, 2016
9. Automotive Digital Transformation Market: Integrated Mobility Roadmap, Global, 2016
10. Automotive Digital Transformation Market: Industry 4.0 Functional Facets, Global, 2016
11. Automotive Digital Transformation: Digitalization in Manufacturing, Global, 2016–2022
12. Automotive Digital Transformation Market: Conventional vs. Future Supply Chain, Global, 2016–2022
13. Automotive Digital Transformation Market: OEM Recommendations, Global, 2016–2022
14. Automotive Digital Transformation Market: Digital Customer Journey, Global, 2016–2022
15. Automotive Digital Transformation Market: Car Retailing Digitalization, Global, 2010–2020
16. Automotive Digital Transformation Market: Future Retail Ecosystem, Global, 2016–2020
17. eRetailing in Automotive Aftermarket: eRetailing Region-wise Revenues, Global, 2015 and 2022
18. eRetailing in Automotive Aftermarket: eRetailing Growth Opportunity Areas, Global, 2015–2022
19. Automotive Digital Transformation Market: Aftermarket eRetailing Penetration, Global, 2022
20. Automotive Digital Transformation Market: Transportation Opportunities, Global, 2015
21. Automotive Digital Transformation Market: Industry Drivers, Global, 2016
22. Automotive Digital Transformation Market: Mobility as a Service Trends, Global, 2016
23. Automotive Digital Transformation Market: Integrated Mobility, Global, 2016–2020
24. Automotive Digital Transformation Market: Mobility Business Models, Global, 2016–2022
25. Automotive Digital Transformation Market: Daimler Engagement, Global, 2014–2020
26. Automotive Digital Transformation Market: MaaS Global Solution, Global, 2016
27. Automotive Digital Transformation Market: Mobility Services Landscape and Market , Global, 2015–2025
28. Automotive Digital Transformation Market: Alphabet Ecosystem, Global, 2016–2022
29. Automotive Digital Transformation Market: Smartphone Interfacing Technologies, Global, 2016–2020
30. IVI OS Market Share, Global, 2016 and 2025
31. Smartphone Interfacing Technology Penetration, Global, 2016 & 2020
32. Automotive Digital Transformation Market: Voice Recognition Developments, Global, 2016
33. Self Learning Cars: Popular Forms of Machine Learning Algorithms, 2016
34. Automotive Digital Transformation Market: Self Driving Technology Trends, Global, 2016–2025
35. Automotive Digital Transformation Market: Software and Self Learning Cars, Global, 2016–2025
36. Automotive Digital Transformation Market: Self Learning Technology OEM Analysis, Global, 2016–2025
37. Automotive Digital Transformation Market: Self Learning Cars Algorithm, Global, 2016
38. Automotive Digital Transformation Market: Industry 4.0, Global, 2016
39. Automotive Digital Transformation Market: Industry 4.0 in Automotive Manufacturing, Global, 2016
40. Automotive Digital Transformation Market: Big Data Implications, Global, 2016
41. Automotive Digital Transformation Market: Future of Automotive Manufacturing, Global, 2015–2025
42. Automotive Digital Transformation Market: Cybersecurity Implications, Global, 2016
43. Automotive Digital Transformation Market: GM Digitalization Initiatives, Global, 2016
44. Automotive Digital Transformation Market: BMW Industry 4.0 Approach, Global, 2013–2016
45. Automotive Digital Transformation Market: Connected Supply Chain, Global, 2016
46. Automotive Digital Transformation Market: Logistics Optimization, Global, 2016
47. Automotive Digital Transformation Market: Supply Chain Management Cost, Global, 2016
48. Automotive Digital Transformation Market: Metrics, Global, 2016
49. Automotive Digital Transformation Market: Supply Chain Costs, Global, 2016
50. Automotive Digital Transformation Market: Supply Chain Assets Management, Global, 2016
51. Automotive Digital Transformation Market: Cash to Cash Cycle Time, Global, 2000–2011
52. Automotive Digital Transformation Market: Avaya Connected Supply Chain, Global, 2011–2014
53. Automotive Digital Transformation Market: OEM IoT Platforms, Global, 2016–2020
54. Automotive Digital Transformation Market: OEM Technology Initiatives, Global, 2016
55. Automotive Digital Transformation Market: OEM Mobility Strategies, Global, 2016
56. Automotive Digital Transformation Market: Ford Mobility Experiments, Global, 2014–2017
57. Automotive Digital Transformation Market: Future Digitalization of Service Technologies, Global, 2016
58. Automotive Digital Transformation Market: Conclusions, Global, 2016–2030
59. Automotive Digital Transformation Market: OEM Recommendations, Global, 2016–2022



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