The transition from traditional vehicles to connected cars signifies more than just a technological shift; it represents the transformation of automakers from hardware manufacturers to technology companies. Internet-powered connected vehicles — leveraging both digital and mechanical technologies — are redefining driving experiences, expanding customer segments, offering unique features, and raising the bar for what vehicles can achieve. In fact, the pursuit of these goals is leading to a more interconnected ecosystem, including a diverse range of stakeholders — tier I suppliers, technology and telecommunications providers, and others previously isolated from the automotive space.
For a deep dive into the dynamic world of connected cars, click here to access Frost & Sullivan’s latest growth opportunity analysis on the subject.
While this shift offers lucrative growth opportunities for original equipment manufacturers (OEMs) and has captured consumer interest, the landscape is continuously evolving. Strategic factors are rapidly changing, and competition is intensifying. To thrive in this budding environment, industry leaders are embracing key strategic imperatives to craft effective growth strategies for long-term success.
How are you leveraging technological partnerships, new business models, and other strategic imperatives to stay ahead in the dynamic connected car industry?
Read on to explore the top nine strategic imperatives driving the future of connected cars.
Innovative Business Models
- Shifting from Vehicle Sales to Service Offerings: The traditional business model of generating revenue through direct sales is facing obsoletion. Instead, OEMs are leveraging 5G, edge computing, artificial intelligence (AI) and other disruptive technologies to develop and offer sophisticated vehicle services. Partnerships with software and cloud providers are becoming crucial as automakers increase their focus on digital solutions.
- Innovating On-Demand Features: A central aspect of this business model transformation is the development of in-vehicle connected solutions. From infotainment services and sought-after ‘features on demand’ to data monetization avenues, industry participants are exploring new ways to unlock strategic growth in the connected car realm.
- Enhancing Accessibility and Adoption: Despite the potential of vehicle telematics, in-vehicle solutions, and on-demand services, many consumers lack the technical know-how to utilize these technologies. Connected car stakeholders are focusing on simplifying user interfaces (UIs) and enhancing customer learning to ensure widespread adoption.
Industry Convergence
- Accelerating Technology Integration: The automotive industry is expanding its ecosystem by integrating informational technology (IT), entertainment, software, gaming, and audio functionalities. Collaborative expertise from these industries is enabling faster implementation of advanced solutions in the connected era, paving the way for the emergence of ‘software-defined vehicles.’
- Partnering to Develop Consumer-Friendly Digital Solutions: Automakers are forging partnerships beyond the vehicle realm to build innovative digital solutions. The fusion of digital cockpits with advanced display technologies, for instance, is driving cross-industry collaboration to meet consumer demand for immersive driving experiences.
How prepared is your organization to incorporate these strategic imperatives in your growth strategy to help you maintain a competitive edge?
Disruptive Technologies
- Monetizing In-Cabin Space: Automakers are capitalizing on the in-cabin space by harnessing advanced features like AI-powered infotainment systems and enhanced navigation systems via strategic partnerships. For instance, BMW partnering with AirConsole for in-car gaming features, and Volvo collaborating with Dolby for integrating Dolby Atmos in its upcoming electric SUVs highlight the importance of technological alliances.
Competitive Intensity
- Driving Innovation Amid Ecosystem Expansion: The automotive industry is experiencing heightened competition from traditional players, tech giants, and startups. This competitive intensity is driving innovation and pushing traditional companies to differentiate their offerings. For example, Qualcomm, a newcomer to the industry, now produces mobile processors for digital cockpits.
Compression of the Value Chain
- Adapting to Advanced Technologies and Direct-to-Customer (D2C) Models: New customer-facing models are compressing the customer value chain, making it essential for companies to streamline operations. Connected car technologies are reducing the steps customers need to take to purchase, use, and maintain their vehicles, by enabling virtual reality (VR) and augmented reality (AR) experiences and even digital showrooms.
Internal Challenges
- Keeping up with Rapid Technological Change: Automotive companies are finding it difficult to cope with the speed at which connected technology is evolving. This includes organizational resistance, the need for new skills and competencies, and the challenge of integrating new technologies into existing vehicle platforms.
In conclusion, while the connected car ecosystem has firmly established itself within the automotive space, this is only the beginning. Regional expansion, advanced connected vehicle services, high-definition (HD) maps, hyper-personalized interior spaces, and advancements in data analysis and privacy are a few of the many segments in the domain that remain nascent. OEMs must act now to capitalize on these growth opportunities.
With these imperatives as your guide, which key growth opportunities will you seize to propel your growth journey?
If you’re unsure where to begin, Frost & Sullivan’s team of growth experts is ready to guide you in navigating these strategic imperatives and uncovering fresh growth prospects for your organization.
Join the Transformation Journey
