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IMA Executive News & Views Blog

Connected-car Future Requires Manufacturers to Network

by Marjorie Loeb

 

To realize the potential of connected and autonomous vehicles, vehicle manufacturers and technology providers must work together to integrate software and applications into the heart of the vehicle operating system.

The hoped-for result is to protect against growing safety and cyber threats, while leveraging connectivity to analyze massive amounts of data that can be used to teach cars how to drive.

Success will require vehicle manufacturers and technology providers to build on each other’s core strengths while smoothing the cultural frictions that can infect relationships.

Manufacturers have relied on robust design specifications and extended testing protocols around safety, cybersecurity and interconnectivity to achieve regulatory compliance.

Technology companies take a more iterative approach to develop specifications to allow for changes and ongoing upgrades resulting from field experience, technology evolution and regulatory and customer feedback.

Striking a balance is critical to building vehicles that enable manufacturers to identify and mitigate safety risks caused by operator distraction and misuse, and evolving cybersecurity threats, throughout a vehicle’s life cycle.

Also, to service these vehicles and realize the value potential of transportation services separate from vehicle ownership, manufacturers and dealers may have to adapt to changes in the end-user service delivery model.

However, changes to the existing manufacturer-dealer model — which is based on the dealer, not manufacturer, having the primary end-user relationship — may require the parties to rethink the fundamental economics of their relationship.

Several factors will push toward a stronger connection between the manufacturer and the end customer and in turn stress the existing economic relationship. They include:

The shift to a model of adaptability to changing customer needs and regulatory developments.

The need, and in some instances, regulatory obligation, to keep software current, using secure updates throughout the life of the vehicle.

The increasing collection and analysis of vehicle and user data to improve performance while complying with applicable privacy rules.

The loss of vehicle service and repair business may adversely impact dealership revenue as well as reduce dealers’ opportunities to build customer loyalty and generate repeat vehicle sales.

At the same time, manufacturers may seek to sell transportation services either directly to the end user, as part of their services to a fleet customer or by taking an interest in existing transportation companies. These services rely on leveraging user data in a way that complies with privacy policies, so manufacturers will have further incentive to foster a relationship directly with end users.

Vehicle manufacturers, technology providers and dealers are all competing for shares in the same pot of gold: the ability to monetize the massive amounts of data collected by autonomous vehicles to sell products and services.

The vehicle manufacturer sits in the middle and must disrupt existing paradigms of operation at each stage — engineering, design and development, procurement, building of strategic alliances, manufacturing and testing, and sales and service — to maintain its leading position in the personal transportation game.

 

Source: Automotive News

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