A new survey released by IBM indicates that the primary disrupters in the automotive industry by 2025 will be consumers, mobility, and the ecosystem. The Automotive 2025 Global Study also reveals that growth will come from delivering additional value instead of just selling more vehicles. While the automotive industry will offer a more personalized driving experience by 2025, “fully autonomous vehicles or fully automated driving will not be as commonplace as some think,” said IBM.
"While the automotive industry has seen a resurgence in recent years, a new industry identity is emerging—one that is more open, inclusive, and without borders. Welcoming this transformation can result in benefits the likes of which haven't been seen since the automated assembly line," said Alexander Scheidt, Global Automotive Industry Leader, IBM Global Business Services, in a statement. "By 2025, the industry will not only recreate our highly personalized and digitized lives inside our cars, but also give consumers a bigger role in defining that experience, whether as a driver or passenger."
The IBM Automotive 2025 Global Study is based on interviews with 175 executives from automotive OEMs, suppliers, and other thought leaders in 21 countries. The study covers topic areas such as customer expectations, growth strategies, mobility requirements, and ecosystem disruption. The "Automotive 2025: Industry without borders" study is a follow-up to IBM’s "Automotive 2020: Clarity beyond the chaos” report.
One key finding reveals that automotive industry growth will come from providing additional value. The biggest growth opportunity cited by 73 percent of respondents is collaborating with other industries. This is up 34 percent from the Automotive 2020 study. This is followed by creating new services-based offerings (69 percent of respondents), and leveraging disruptive technologies outside the vehicle (62 percent of respondents). These opportunities were up 13 percent and 20 percent, respectively, compared to the 2020 study.
While one-third of respondents feel they will be able to adapt to the challenges around providing additional value, only one in five think they are prepared now.
One interesting finding, said IBM, is that 57 percent of respondents see new business models as one of the best growth options. However, the percentages differ significantly between suppliers and OEMs: 71 percent of suppliers said they will invest in new business models to grow versus 51 percent of OEMs. Other top growth strategies include creating new product categories, entering new markets, forming new joint ventures/alliances/partnerships and targeting new customer segments.
The study also reveals that executives believe that external forces that directly affect consumers will have a greater impact on how the industry changes versus those that primarily affect the business. This means technology progress, changing consumer expectations, and emerging mobility offerings will become more important, said IBM. But at the same time, the automotive industry must be able to meet new government regulations and requirements for globalization, economies/markets and sustainability.
Consumers are ranked as one of the top disrupters in the automotive industry by 2025. IBM finds that consumers will disrupt the industry in two ways – they want digital engagement and they want the opportunity to co-create products and services such as infotainment, influencing corporate strategy.
The report also finds that nearly two out of every three (63 percent) executives surveyed saw mobility services or car/ride sharing as an area for greater collaboration with consumers. More than half (59 percent) believe product design, marketing campaigns (54 percent) and service/after-sales (52 percent) were areas that could benefit from working directly with consumers.
Mobility (both self-enabling cars and consumer-driven mobility) and the ecosystem also were ranked as primary disrupters for the industry.
“Nearly 80 percent of the executives felt in-vehicle cognitive technologies will be a key component of how vehicles learn and reason to provide a better experience for the occupants and optimize its own performance,” according to the study. "Fifty-seven percent believe vehicle social networks would be in place where vehicles would communicate with each other, allowing vehicles to share not only traffic or weather conditions, but information specific to a given automaker."
However, there is a lot of skepticism about the availability of autonomous cars by 2025. Only eight percent believe autonomous vehicles will become common by 2025, and 19 percent believe a fully automated environment will be common by 2025. But 87 percent of respondents said they believe partially automated driving such as self-parking or lane change assist technologies will be common by 2025.
These findings also indicate the automotive industry must transform into an ecosystem that is “open, collaborative and filled with new innovators.” Case-in-points from the study:
- 73 percent of OEM executives rated mobility services, cost-effective alternatives to vehicle ownership like car/ride-sharing, as a significant area for co-creation with consumers
- 73 percent of all executives rated collaboration with other industries as the best opportunity for industry growth as it progresses toward 2025
- 75 percent of all executives expect non-traditional industry partnerships to have a key role in the automotive ecosystem by 2025
Overall, IBM said it identified nine external influencers, including economies/markets, government regulations and sustainability that affect other industries. However, the biggest difference between the Auto 2020 and the Auto 2025 studies are changes in consumer expectations. In the latest study, addressing consumer expectations ranks only behind technology in terms of importance to the automotive industry. The complete study findings can be found here.