Mercedes Benz Industry 4.0 - digitizing the automotive industry
Even with a recent increase in global sales, automakers must navigate three powerful forces to gain market share now and extend the benefits of their products rapidly changing.
The global automotive industry has enjoyed a period of growth and relatively high profitability, and annual sales reached levels in some areas before the recession, however, considerable uncertainty remains about the future.
The most immediate challenge is the inequality of the world leaders in the automotive industry and market experts tend to be optimistic about the US market, forecasting annual sales in North America in the short term a car relatively robust 16 million against only 13 million in 2008. However, the outlook in Europe is much lower than the region's emerging fitfully from a fall in sales of six years and sales have plunged Russia and South America they fell by about 25 percent and 15 percent, respectively, in August 2014 years-over- year Meanwhile, the Indian market performance is inconsistent and growth in China's largest auto market world has slowed, although investment by most OEM original equipment manufacturers, who bet big on future demand, continue to ramp up Reacting strategically to c are changes in demand will be a top priority for leaders of the industry in 2015.
North America is experiencing robust forecasts of 16 million cars, an increase of 13 million in 2008.
Sales plummeted in South America by about 15 percent in August 2014.
Europe is lower than the region is emerging from a six-year crisis.
Although British male trend here car manufacturing volumes are on track to break all time records by 2017.
Sales plunged in Russia by 25 percent in August 2014.
Meanwhile, the performance of the Indian market is inconsistent.
And growth in China the world's largest auto market slowed, although investment by most OEM original equipment manufacturers, who bet big on future demand, continue to gain momentum.
Reacting to strategic changes in demand will be a top priority for auto executives in 2015.
In this context of macroeconomic uncertainty, we believe that the major transitions are underway that will transform the automotive manufacturing over the next 10 years, OEMs, suppliers and dealers must not only navigate through these short-term changes to gain share market and profitability, they should also take steps now to position themselves for success in the next decade.
From ground level, three powerful forces are unleashed changes in the automotive industry to consumer demand, extensive regulatory requirements for economic security and fuel, as well as the increased availability of data and information .
The changing consumer demand of consumers seem rethink their long love affair with individual car brands and display of cars more than the transport machinery Although this should not have a major impact on sales volume it affects how people are willing to pay for automobile This desire is also affected by the decline in product differentiation, in part due to a general increase in vehicle quality in the Detroit Three industry Japanese manufacturers have caught up, and the mass market is catching up with luxury consumers are also demanding more sophisticated cheap infotainment systems, and expect more high-end features to be standard.
The key transitions are underway that will transform the auto manufacturing over the next 10 years.
Expanded regulatory requirements of regulatory average fuel economy stricter CAFE US companies and the world are more expensive for OEMs to comply, which requires a higher volume to amortize the increase regulatory costs are also mandating that over security-related features, such as backup cameras, be included as standard equipment on the new models, which adds to the costs.
Increasing the availability of data and the vehicle information on the use of information and the use of driver behavior proliferates as sensors and telematics systems become more common all players across the value chain of the automotive sector are interested in collecting more data from customers and car, but uncertainty about how to use is still widespread During this time, consumers are flooded with easily accessible information on automotive specifications, prices, discounts, quality and performance, giving buyers more bargaining power.
These trends offer huge opportunities and risks equally outsized for the automotive sector to respond in a way that results in competitive advantage, it is essential to understand the specific ways that these trends are already affecting the industry.
Increased electronic content and software cost of electronics and software content in automotive was less than 20 percent of the total cost ten years ago today, it is up to 35 percent, according to studies by Manfred Broy, Professor of computer Science at the technical University, Munich more importantly, electronic systems continue to contribute more than 90 percent of innovations and new features all major manufacturers are targeting traditional products such as quality and safety; Infotainment is a way for OEMs and suppliers to differentiate their products A recent Consumer Reports survey found that infotainment equipment is the most annoying characteristic vehicles in 2014, which suggests a strong increase for companies that can design superior systems.
Telematics features, including aid for the semi-autonomous driving as automatic parallel parking and lane keeping assistance, and sensor-based reports on car maintenance and use, also has the chance to forge a closer relationship with customers and increase margins for example, OEMs and distributors can provide proactive service more convenient, alert a car owner for the maintenance or repair to come also the characteristics of telematics offer opportunities for tie-ins with insurers such as offering discounts for customers who drive safely.
Most manufacturers are thus focus a lot on customer data collection and vehicles, and in rare cases have OEM articulated a strategy to use the Mercedes of data, for example, has a program called Mercedes me in Europe, is a set of client services covering vehicle purchase, financing, maintenance, and even short-term rentals that are suitable for people and available on multiple digital platforms the aim is to consolidate customer data disparate and credentials to increase consumer loyalty and purchases, Internet companies emulating models like Apple, Amazon and Google.
The growing importance of infotainment systems and telematics is disruptive for OEM and traditional suppliers, put a premium on innovation and change in ways that players design and develop new industry products and services software breakthroughs are becoming as important as the hardware innovation, and competition is increasingly coming nontraditional players ever greater software content has also accelerated the pace of change in products and features Whereas the new vehicle launch schedule is usually three to four years, the cycle of new iterations of software, often driven by interactivity with mobile devices is measured in months.
Mix changes made products to meet regulatory requirements regulatory pressures to reduce overall emissions of the fleet are regularly adding to costs automakers, for example, US CAFE standards that take effect in 2016 should add as many as 1,000 production cost of a vehicle, according to the national Association of automobile Dealers, only a minority of auto buyers are willing to pay for choice more environmentally friendly such as electric vehicles, so that the pressure cost is largely on OEMs a way to meet the stricter standards, which require that the average fleet manufacturers of 34 1 miles per gallon, is to reduce the weight by substituting more most dramatically evidenced by the lightweight materials Ford decision to replace a significant amount of steel with aluminum in 2015 version of his pickup truck F-150 This adds approximately 500 gross truck material costs, more than 395 higher MSRP Ford announced for the new base model, according to a number of sites that cover F new ord.
The mandatory safety equipment costs is also difficult for manufacturers to transmit, for example, the US Department of Transportation requirement that all new vehicles have a rearview camera increases the cost of vehicles by almost 200, to least some manufacturers will have to cover.
New generation of platforms and modularization of the platform under the pressure of both consumer preference for more segmented vehicles and the need to reduce costs for reasons of competition and regulation, manufacturers add to the number of models they offer and at the same time reduce the number of vehicle architectures on which they are built, greatly improving the Volkswagen commonality, the first major OEM to adopt the strategy goes to four modular platforms GM will 30 basis and regional platforms in 2010 to 26 in 2015, and announced its intention to move to four flexible platforms 2025 Toyota, Ford and other manufacturers follow a similar approach to cost increases resulting complexity somewhat, but additional costs are offset by savings from sharing common components between cars and es platforms and increased volume.
The adoption of these common platforms for next generation will also lead to a consolidation of suppliers which will result in a smaller number of large global players Ford recently announced it will reduce its suppliers of its current 1,150 to 750, and other OEMs plan to follow this example.
The changing face of retail consumers want a seamless car buying experience that includes the purchase decision, financing and insurance and customers and dealers are motivated to accelerate the transaction Most car buyers go already online to gather the information they need to choose a car, and although they may want to always take a test, many have also expressed that they would like an online purchase button and an auto buying experience without pressure it is clear that, even as the Internet gains importance as a sales channel, dealers will always want to use the test drive as a way to get face to face with consumers and close a sale Accommodating these shifting attitudes against the purchase of a car will require changes equal to the dealer process, including s investment in new technologies.
Dealers earn little in sales of new cars; profits come largely service, parts sales, and sales of used cars However, they continue to be an important part of the sales chain, and the absence of a strong dealer network will to foreseeable future a competitive disadvantage for any automaker.
Faced with new strength and significant consequences for the industry, auto companies clearly have their work cut out for them are our recommendations on how industry categories should mobilize their resources and where they should focus their development efforts strategic.
OEM priorities Given the increasing electronic content, manufacturers must work with suppliers and experts outside the traditional auto industry Accomplishing this will require changes in direction depending on OEM For example, they may need to use venture capital funds to feed and support companies that can technologically innovate and provide access to more non-traditional suppliers, including hardware and software companies a promising and effective way would be to move towards more interfaces standardized systems and telematics modules and infotainment.
OEM should also prioritize projects for R & D and engineering to focus on the ones that offer the best value and differentiation and to meet new safety and environmental regulations in the most cost effective way to meet new rules they should also work closely with suppliers to determine whether OEM or seller, or a combination of both, is best equipped to develop technology and innovative solutions required to meet the regulations again, manufacturers must improve their skills in the collection and analysis of consumer data to better serve their customers and improve brand loyalty switching to modular platforms will require OEMs work closely with suppliers to achieve cost savings and production improvements they hope nt gain by increasing the scale.
Priorities of suppliers Suppliers are in partnership with innovative non-traditional automotive electronics and infotainment providers to use their speed to market and sometimes more scale should also rationalize their portfolios and strive to be among the two or three suppliers for each of their commodity OEMs be looking for key suppliers to co-invest in new global platforms and providers should carefully evaluate opportunities to expand their manufacturing footprint as their primary suppliers direct to to simple architectures worldwide early cooperation will enable long-term dividends.
Dealers Dealer priorities must invest in data management and customer care technologies that will make the fastest purchase transaction, more efficient, less pressure and more enjoyable for consumers They must also improve their online capabilities, like other retailers, so the distinction between bricks and mortar and the Web greatly diminishes doing so, they must promote a continuous connection with customers through a life cycle of software vehicle and applications to boost sales service and parts under way.
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Trends for 2015 auto industry, 2015, automobiles, industry trends.