ATLANTA — The automotiveIT International conference, which concluded here last Wednesday, highlighted the breadth of the challenges and opportunities in the auto industry as companies change processes, products and business models. Industry speakers at the two-day event said a bright future lies ahead if automakers and suppliers successfully manage to develop and start adopting new technologies to improve production efficiency, make their products smarter and raise customer satisfaction, especially on the car retailing side. And executives speaking at the conference agreed that IT is a driving force in making the industry transformation happen.
“We will all be working in IT in a few years,” Faurecia CIO Rene Deist told the conference in an opening keynote. That doesn’t mean that everyone in the auto industry will soon report to a CIO, he explained, but digital technologies will become so crucial that they will play a key role across the entire automotive value chain.
Deist also cited a major precondition for success as the transformation picks up speed: collaboration. “It’s all about partners,” he said, arguing that an ecosystem of technology partners, joint ventures, start-ups, third-party service providers and universities will be needed to fully capture new monetary opportunities arising from mobility.
The conference, the first major automotiveIT International event in North America, was co-located with The Supply Chain Conference, which was hosted by automotiveIT sister publication Automotive Logistics.
The IT gathering, the first major automotiveIT International conference in North America, had as its motto “IT in the driving seat: Developing an agile automotive industry.” Speakers offered a range of practical examples of the role of IT in the transformation. And they underlined how connectivity can help process and monetize data that have until now played a minor role in automotive companies’ business strategies.
Tenneco CTO Ben Patel introduced the company’s DRiV digital shock absorber, which can monitor and stream information on road conditions. He cited big potential for such components, but said it’s early days for the trend yet. “We’re just at the beginning of figuring out how to make dumb products smart,” he said. But Patel predicted that, longer term, demand for smart suspension systems will grow as autonomous vehicles take off.
Schaeffler North America CIO Shoukat Ali Bahmani revealed that his company’s ball bearings will also, in future, have the ability to transmit sensor data. Both insights underscored how connectivity is adding a level of sophistication to automotive components and systems that will open up entirely new business opportunities.
That cars will be connected wirelessly to their surrounding infrastructure is almost a given. General Motors introduced its OnStar program 20 years ago. Ford has announced that 100% of its vehicles will have connectivity by 2019. But Roger Lanctot, director, automotive connected mobility at consultants Strategy Analytics, was one of several speakers who argued that connected functions must become a standard feature, rather than based on a subscription, in order to attain market-wide usage. Car companies may be unwilling to give up the roughly $2 billion they make from subscriptions annually, but the potential financial benefits of standard connectivity are even greater. “At the end of the day the car is a browser on wheels,” he said, and predicted that the monetization of usage data could be worth $100 billion a year.
Sanjay Ravi, general manager automotive industry at Microsoft, stressed – in line with earlier comments by Faurecia’s Deist – that collaboration is key to realizing connected business opportunities. He noted that his company is collaborating with Apple to help premium car maker BMW launch its Open Mobility Cloud. “We need a strong ecosystem of partnerships so we can work together to light up these opportunities,” he said. Car companies will also have to share data in order to combat cyber security intrusions, he added.
Several speakers at the automotiveIT International Congress agreed that there is a need for greater integration of technology and services offered by car companies to create platforms. “We consider platforms among the most exciting new technologies; that’s how [the industry] will achieve economies of scale,” said Vikas Krishna, vice president digital strategy at supplier ZF Friedrichshafen. Added Alex Oyler, head of car IT at consultants SBD Automotive: “The vehicles can change, but it’s the infrastructure, platforms that provide new experiences to drivers.”
The platform trend is playing out at major carmakers. “We are building a platform for whatever Toyota wants to do in the future” said Powell Kinney, who heads the “Mobility Services Platform” at Toyota Connected. He said one advantage of a platform is that, once it is in place, new applications can rapidly be developed and launched on it, as was the case, for example, when partner company Servco requested an application to manage its car rental business. “It wasn’t just that we could build it, we could build it quickly,” he said. “We built the first version of Servco’s app in 3 weeks, up and running 6 weeks later.” The information gathered from partners such as Pizza Hut, Amazon, Uber and Didi will also guide Toyota’s car development programs. “We want partners to help us build the right car, the right platform to help their business,” said Kinney.
Toyota unveiled it’s so-called “e-Palette” vehicle at the CES trade show in January. Kinney said in Atlanta that it is arguably the best example of a “combination of vehicle and software platform.” Toyota sees the multi-purpose autonomous vehicle as an enabler of what it calls Autono-MaaS, or autonomous mobility as a service. He stressed the importance of software to realize this form of new mobility, but said that a complex new mobility landscape cannot be realized with individual pieces of software. What’s needed, he said, is “a platform that supports a whole range of mobility opportunities.” Fleet management, car sharing and other use cases are all supported by Toyota’s mobility services platform.
One of the challenges of connectivity the industry is coming to terms with is how to process the vast amounts of data that need to be managed – and, at some point, monetized. Norman Marks, global director, automotive industry, at Nvidia pointed out that 500 hours of testing an autonomous vehicle produces more than a billion pictures. The problem comes with trying to determine which of those pictures are of value. In the short term, he said his company has 1,500 people in India and China “looking at pictures.” But in the longer term, Nvidia is looking at ways for on-vehicle software to make its own judgment of what data is valuable and should be passed on to the cloud.
Faurecia’s Deist said key data that the interiors specialist hopes to monetize in future is related to health. He said his company is working with automakers to design car interiors that can track the vital signs of drivers (with their permission), such as seats than measure blood pressure. That information can help doctors track a patient’s health, or a music streaming company judge what tunes will enhance the drivers mood. “When cars can assess the wellbeing of drivers and passengers it will create a completely new market,” he said.
The auto industry also is in the midst of a transformation on the retail end of the business and speakers in a session on digital retail and new business models explained how traditional sales and marketing models are rapidly changing. Clutch, an Atlanta startup, provided an example of a new automotive business area that is being tested with the help of software. Clutch makes a subscription platform that today already allows automakers, including Porsche and BMW, to test novel ways of marketing vehicles. Alan Powell, senior vice president Clutch Technologies and one of its founders, said artificial intelligence plays a big role in making the software work. Tom Roach, director North American IT, at Porsche, said the premium sports car maker’s “Porsche Passport” test with a subscription model in Atlanta reflects a new customer focus that is also triggering a rethink of its sales approach. “Customers are replacing dealers at the center of the retail system,” he said.
Mike Burgiss, vice president digital retailing at Cox Automotive, presented the perspective of one of North America’s largest dealer groups. “We’re not talking about the death of the daelership, but about the death of the way we buy cars,” he said. Traditional dealerships will continue, he predicted, because that’s where the sale will have to be completed and the car delivered. But processes will become more efficient and the link between the online brand experience and the physical dealership will be improved. That’s key, Burgiss said, because surveys show that a mere 1 percent of American car buyers are happy with their experience. Why? Because car buyers have to spend too much time negotiating a price and obtaining financing and haggling over a trade-in. And, said Burgiss, all the while they are being bombarded with financing and insurance offers.
The automotiveIT International conference had as its motto “IT in the driving seat: Developing an agile automotive industry.” The focus was on the digital tools and information technologies that are key in the transformation of the car industry. Conference sessions included a progress report on that transformation; a perspective on the 21st century evolution of the car; the outlook for car retailing in the digital era; and the search for new automotive business models.
By Jason Booth and Arjen Bongard