Mountain View, Calif. -- As big data and connected services combine to drive the development of mobility integration business models, 60 percent of original equipment manufacturers (OEMs) in the North American and European automotive industry will develop big data strategies and offerings in the next two years, driven by high-bandwidth, embedded connectivity technologies, such as long term evolution (LTE), according to Frost & Sullivan.
These OEM strategies may include strengthening in-house capabilities or outsourcing the job to big data experts, according to Frost & Sullivan. In either case, the focus is competitive differentiation based on brand awareness, digital engagement of customers, and response time.
The report, "Strategic Analysis of the Impact of Big Data on the European and North American Automotive Industry," finds that approximately 35 million vehicles in North America and Europe by 2020 will deliver relevant data sets for OEMs to convert into actionable insights. Frost & Sullivan predicts that post-2015 or 2016 integrated service providers will emerge with expertise in end-to-end services across the automotive value chain from consulting to implementation.
The report indicates that the concept of connectivity is gaining ground in the European and North American automotive markets, driven by demand to create a three-way data sharing network among dealers, customers and the OEMs. The benefits for OEMs include leveraging big data to offer value-added services with facilities to integrate navigation and parking slots/reservations, electric vehicle (EV) charging spots and car sharing.
"Supporting customers with proactive monitoring of vehicles and services will strengthen the OE dealership and customer relationship post warranty periods," said Niranjan Manohar, Automotive & Transportation Program Manager, Frost & Sullivan, in a statement. "Proactive monitoring will not only enable the OEM to collect information regarding the user's needs, but also create an opportunity to analyze and collate data on vehicle performance."
Overall, the driver is big savings. The push behind implementing a three-pronged approach to big data (internal, external and connector) in the automotive industry is the "billion dollar costs savings it can provide OEMs per year, and new revenue generation opportunities it can generate across the industry ecosystem," according to the report. Frost & Sullivan expects OEMs to achieve savings through the reduction in warranty costs, product development costs, recall related expenses and increased after sales revenues.
"The real differentiating factor for OEMs is to have a big data framework, a clear connectivity strategy with the ability to pull large volumes of data, and most importantly, partners to help them harness the true power of this data," Manohar added. "The most successful OEMs will be those that can use predictive data analytics to affect a one to three percent reduction in warranty costs and enable other important software and firmware over-the-air-updates."