The future of mobility is unthinkable without intensive networking and data-based processes. This was a key insight coming from the world’s largest motor-show, IAA Mobility, in Germany recently.
Ahead of Transport Month in South Africa, Thomas Braunmiller, business value director: automotive at Oracle, shares an overview of megatrends in the automotive sector.
Comprehensive Investments in Cloud Connectivity
Consistently advancing — this short formula can accurately describe the expectation of the automotive industry. As one of the most important industries in this country, it has always been the subject of extensive future investment.
Due to digital transformation, there is a particular focus of activities on the technology trends for electric mobility, connected cars, shared services, and autonomous driving.
In addition to the need for suitable operating systems that connect vehicles to the cloud, development is characterised by a general modernisation of the IT landscape in the automotive sector.
This raises the question which technologies and partners manufacturers should specifically target and which technology options they should ideally secure in the form of an in-house development of intellectual property.
Reimagining Traditional Organisational Structures
As pioneering developments in the industry tend to lead to software-based solutions, the mindset within the workforce and its connected organisation will have to evolve towards decentralised teams with appropriate skills.
Given the modest number of local candidates, it will prove critical in the race for the best talent to shift the focus away from vehicle hardware solutions and allow sufficient time for the transformation process.
While some manufacturers are already driving the construction of specific functional areas for vehicle software, there is an industry-wide need to reduce overcapacity, for instance in the area of internal combustion engines.
Sustainability and a Political Framework from a Global Perspective
With a view to the expected development of entire electric model series and the at least partial replacement of the internal combustion engine, each manufacturer is well advised to take along their customers, investors, legislators and employees in the form of a detailed sustainability agenda.
CO2 footprint, availability of rare earths for chip manufacture and economic policy framework as the cooperation with different 5G providers, are important factors for the decision-making process on what the urgent need for greater sustainability can look like in a connected world.
Closely associated with this is the need for clear measures for investing in the appropriate technology stack as well as for the policy agenda, including multi-cloud scenarios in generally restrictive countries.
The share of digital products and services is growing rapidly and, inevitably, classic revenue models, which do not explicitly incorporate digitisation as an opportunity, become less important.
In addition to the ability to include digital offers in the calculation from the outset, it is important to identify potential savings from the perspective of the large vehicle manufacturers and their suppliers.
At the same time, it is recommended to further develop existing data-based products and services, such as insurance, traffic management and autonomous driving, and to establish them as strategic sources of revenue.
Accelerating the Integration of Digital Business Models and Technologies
As an intersection of the trends already listed, automotive industry companies would do well to evaluate the value chain accurately: which technologies are best to aggregate, analyse, and draw the right conclusions from the ever-growing volume of available data in and around the vehicle.
This includes a complete re-evaluation of business models, as well as redesigning the customer experience from the perspective of digital interaction and new touchpoints.
The meaningful combination of digital and physical vehicle functionalities with connected cloud solutions are laying the foundation for a mobile ecosystem which, in essence, reinvents driving.
Alignment with Regulatory Frameworks
To successfully address the challenges faced by the industry and to follow these trends, a look at the legal framework within which each company operates is essential.
In addition to overall business risk management and compliance and security standards, this includes the hugely important aspect of cybersecurity, specifically for vehicles, and the anchoring of technological compliance requirements from vehicle development throughout the lifecycle.
Proactive engagement and the development of expertise in this sector is more than a nice-to-have — it serves to protect important values, such as brand image, credibility and capital.
On and On and On …
The automotive industry is undergoing a profound change. Although some distinctive future megatrends can be identified, it is important to remember that things will not be different overnight.
In fact, well-known and emerging technologies, processes, and revenue models will coexist in a way that the market and therefore the demand side dictates. Whatever happens in future, mobility remains a marketable asset – and the core business of an industry that for decades has proved its ability to innovate time and again.