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Smart Revolution

Connectivity Will Change The Automotive Industry

Consumers are increasingly demanding constant connectivity to the Internet or the cloud. This change of mindset is causing automotive OEMs to rethink the overall automotive ecosystem.

As with every technology disruption that has a widespread impact on society, constant connectivity in the automotive industry is not an exception to the norm. In the past, connectivity has been primarily been focused on urban environments. However, the rise of the Internet economy combined with push from governments is rapidly changing the concept of connectivity

The disruption that constant connectivity will have on the automotive industry is one that will force another dramatic upheaval. Just as the financial crisis forced automotive OEMs to right size their operations, the connectivity revolution will force automotive OEMs to introduce fundamental operational process changes. These operational process changes will occur in areas such as customer relationship management, revenue diversification and partner selection and management. There are three specific phenomena driving this dramatic operational change: Consumer vehicle purchasing and ownership is dramatically changing and will have a significant impact to overall automotive operations. The increasing demand that consumers have on their devices and their environments to always be “connected” and the effects that this is having on automotive business models. The new players that this constant connectivity is introducing to the automotive space and the added pressures that existing OEMs and suppliers are feeling from industry stress points.

Changing consumer purchasing and ownership

Consumer behavior is rapidly changing when it comes to vehicle purchasing and ownership. No longer are individuals viewing the automotive experience as one that is tied to individual freedom and mobility. Automotive ownership and the concept of driving is increasingly viewed by today’s generation as solely a means of getting from Point A to Point B.

Today’s generation is increasingly viewing technology as their generation’s version of personal freedom and mobility. Changing demographics are also shifting automotive purchasing and ownership behavior. As the urban-rural split increasingly favors urban growth, individuals are moving into smaller accommodations due to higher geographic densities and higher land price premiums. Due to these trends, individuals are thus forgoing some of the “traditional” norms that were associated with an average middle income lifestyle such as automobile ownership and are adopting new norms such as car sharing services to compensate.

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