Director–After Market Service Transformation & IoT Solutions
The world is getting hyper-connected. Many factors are fueling this, such as the Internet, wired and wireless network connectivity and quality reaching far corners of the world, ubiquity of smartphones, as well as the emergence of Internet of Things. With such breakthrough advancements in technology along with societal demand, transportation is on the verge of a major transformation. Major technology players along with auto manufacturers are taking note. In a recent interview with the Wall Street Journal, Apple CEO Tim Cook stated that the auto industry is in for a “massive change” with software becoming “an increasingly important part of the car of the future.” Connected cars are a key result of this industry disruption, and will become mainstream globally by 2025.
Connected Car Solutions will become one of the major Business Drivers for the Automotive Industry in future.
Automotive Aftersales – The Business Case
- Globally there are app. 1,2 billion vehicles on the road today
- In 2016 the annual global turnover in aftersales will exceed $ 740 billion
- The automotive manufacturers initially have a 50% market share in the aftersales business
- The automotive manufacturer are loosing 80% of their “customers” within the first 3 years after the warranty period
- Today, less than 25% of all new cars sold are connected ==> app. 49 mil- lion “unconnected” new cars
- In Europe alone, 60% of all new cars are sold with a loss!!!!
- Be connected with the automobile throughout its life cycle
- Create the best customer experience by predicting technical issues/failures before that occurs
- Retain customers and improve customer loyalty
- Regain market share and increase revenue and profitability
Connected car solutions already have a significant impact on existing vehicle development and aftermarket sales. This is one of the results of a comprehensive survey across the European automotive sector that PAC conducted in 2014/2015. The market for connected car solutions has already reached a ‘second wave’ of maturity, with a first generation of connected car solutions, such as infotainment and environmental information services, already rolled out and operated by manufacturers and services providers, and a second generation of services, such as security, after-sales and driving assistance, currently being in development and testing phases.
CVP- A customer value proposition is a promise of potential value that a business delivers to its customers and in essence is the reason why a customer would choose to engage with the business. It is a concise statement that highlights the relevance of a product o?ering by explaining how it solves a problem or improves the customer’s situation, the specific value against the customer’s needs and the difference to competitors.
Importance of CVPs- A good customer value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customer’s attention and approval will help build sales faster and more profitably, as well as work to increase market share. Understanding customer needs is important because it helps promote the product. A brand is the perception of a product, service or company that is designed to stay in the minds of targeted consumers.
Car Owners are just not customers…They also are…
Needs are different, different value to exploit…Apart from savings, the value aspirations are…
Differentiated Engagement…Beyond other features we over, some could be catered to do…
Automotive manufacturers and suppliers consider connected car solutions as a strategic long-term topic for their business development with customers identifying these technologies as a mandatory requirement for future vehicle acquisitions and manufacturers aiming to use their technological edge as a main differentiator. In future the core competencies of many companies in this industry will focus on connectivity and embedded software development.
OEMs and Suppliers must bundle services and deliver a seamless user experience to lead the next wave of Connected Car.
Indian Auto Market – Key Trends
Untapped Market, but Tepid Growth
– Penetration of just 18 vehicles per 1,000 compared to 400-800 globally.
The Changing Auto Shopper
– Auto shoppers do more research than ever before car purchase, about 24 research touch points on an average.
Dealership Experience is Pivotal to Closing Sales
– 72% of Auto shoppers are more likely to visit another dealership on the same day.
Low Aftermarket Retention
– More than 60% of Indian customers visit unofficial dealerships instead of authorized ones after 2-3 years, 80% after 5 years.
Emergence of Certified Pre Owned (CPO) Market
– Auto Trader study revealed, 84% auto shoppers considered buying used cars when exposed to CPO definition.
Rising importance of Data
– OEMs are interested in exploring potential of data from cars to improve effciencies, over value to stakeholders and
potential monetization strategies.
What value does a Connected Car provide to Customers?
1. Monetary Impact > Focus
2. Convenience & Values>Equally Important
Value of Location
Contribution to Environment
Extended Car Life
Price to Customer–Is Customer willing to pay?
How much is a Consumer willing to pay?
How often does a Consumer want to pay?
Indian Customer Survey– Wipro Conducted a Survey on “Car Connectivity Feature Preference” in the Indian Car Market
Demographics of Survey Respondents
Demographics of Survey Respondents