In the IT world, it’s hard to avoid the cliché that “data is the new oil”, yet in the auto industry it might actually be true. As it moves from a very 20th Century data-light, vertical model of building cars to a horizontal digital future of mobility solutions and services, the data that flows in and around the auto incumbents will become important.
It may indeed, clichés notwithstanding, become the energy source that drives the transformation and survival of the big automakers.
Currently there is debate about how and whether the incumbent auto industry will survive. Former CEO of GM Bob Lutz suggests it won’t. “For hundreds of years, the horse was the prime mover of humans and for the past 120 years it has been the automobile.
Now we are approaching the end of the line for the automobile because travel will be in standardized modules.” he said in 2017.
His view is that mobility will be provided by software and tech giants, with the big automakers reduced to just hardware suppliers.
That other challenge, the shift to electric vehicles, is a relatively simple step and after a slow start the big auto makers are catching up with Tesla’s great leap forward. Propulsion choice is only one part of the transformation equation. For the record, Lutz does not believe Tesla has gained much from being first mover.
“Tesla has no tech advantage, no software advantage, no battery advantage. No advantages whatsoever. It’s heading for the graveyard” he told FoxCNBC.
In fact, Tesla (despite its high-tech image) and Big Auto share a traditional focus on building vehicles and vehicle performance, competing in the same spaces. Unless they too focus on data and software and new value chains then they are indeed in some danger. There is no reason to believe that Tesla is capable of exploiting data opportunities than its incumbent rivals.
Big Data calling
What to do then with all the data that the industry is beginning to generate? This is not only that collected by cars through the increasing numbers of sensors fitted (including inside tyres) which is valuable, but also the data that will come through the new horizontal industry networks that are being shaped. This will come from new and unexpected areas.
Data that will shape the next generation of cars (or mobility solutions) will be collected from the supply chain, logistics, robots and warehousing, as well as marketing, advertising within the industry – but also form previously untapped sources such as retail channels (not just dealers), consumer behaviour, fleet management and social media from the outside. The auto industry is not alone in this shake up, but it is far less mature in its collection and analysis of data than other sectors.
This lack of data awareness is one reason that analysts believe that Big Auto may face a tricky future or become Tier 1 suppliers to a new ecosystem of mobility providers who have AI driven data engines to react rapidly to changing customer demand.
Trends and demographics play a part. Research by French IT consultancy firm Capgemini found that buyers would be tempted away from traditional auto makers to buy cars from the likes of Google or Apple, and the figure was higher in emerging markets such as India and China.
Mike Woodward, Automotive Leader at Deloitte UK, believes that auto makers can carve out an important role as data and mobility managers that own the customer relationships. “If they don’t start getting ready now for the future shifts, they could end up as mere hardware platform providers supporting the new entrants and tech companies” he said.
There is no doubt that data driven mobility companies such as Uber and Lyft will feature as part of the mobility future but they will not necessarily dominate.
What they don’t have is decades of experience in designing and building cars and wrapping up mobility in highly desirable and emotive packages.
The automobile gave us freedom and personal transport. By using big data, big auto may be able to remain the biggest providers of mobility “hardware” by offering services on top and understanding what kind of car people will want in the future, whether they drive it themselves, let it drive them, rent it or even buy it.
Data in action
IBM and Volvo Group keep on trucking with data led predictive maintenance
IBM worked with the Volvo Group to enhance processes by integrating new, predictive maintenance strategies. Volvo had plenty of data: from pressure, vibration and temperature sensors as well as voltage and flow meters. But data does not a cohesive plan make; the organization needed actionable insights.
By integrating this data with the IBM SPSS Modeler, predictive modeling software that combines business intelligence and probable decision making outcomes, Volvo Group was able to identify patterns from the past and gain insights for the future. And all this knowledge could be used to influence decision making moving forward.
According to IBM, preventive services are now quite achievable; reliability-centred maintenance is now possible. Organizations can predict what’s coming next, in real time, and provide repair instructions and identify replacement part – even before a truck arrives for service.
For Volvo Group, this capability had a very real operational impact. It meant a reduction in diagnostic times by up to 70 percent and repair times of more than 20 percent, says IBM.