Three mega trends are set to rock the car industry and retail in the next decade, automotive experts have told Car Dealer.
Speaking on Car Dealer Live, Capgemini’s Markus Winkler and Robert Pears said the automotive industry has a history of constantly transforming.
However, the next decade will see major developments that will see the way cars are made and sold change on an unprecedented scale, according to Capgemini’s latest report.
‘There is so much happening in the automotive industry – it’s in constant transformation,’ Winkler, executive vice president, global automotive at Capgemini, said.
‘The Covid situation, however, has accelerated the pace of change. We are now convinced the industry has to refocus and tackle this transformation.’
In the video – which you can watch at the top of this story – the pair explain the three mega trends that’ll occur in the next 10 years and beyond – from more sustainable production methods in car factories to dealers operating agency sales and car subscription models.
This is the next phase the automotive industry will find itself in, believes Capgemini. The 1970s saw the end of the industrialisation era while 1979 saw the start of globalisation. 2014 was the year of the digitalisation era – but now the industry is entering the ‘sustainability age’.
‘We are exiting from the journey of digitalisation,’ says Pears, Capgemini’s UK vice president, head of automotive and manufacturing.
‘Digitalisation has been a trend for the last 10 to 15 years as the core of the vehicle itself has been more tech-centric. Gone are the days of miles and miles of cabling and relays and now its ECUs and compatibility around the vehicle.’
Capgemini believes a net-zero CO2 impact for the car industry will be the norm by 2030.
But, with the growing adoption of electric vehicles, there are questions surrounding the sustainability of battery technology – from acquiring the ingredients for battery production to a lack of recycling solutions.
Dealers have a great opportunity of starting to look at how they can play a role in the end-to-end ecosystem
More than that, research carried out by Capgemini has found 62 per cent of automotive firms have claimed to have created a comprehensive plan for sustainability.
‘We’re now moving into the sustainability era, and this is very much about the lifespan of the product, how you maintain it and how technology can help to meet that agenda and help balance traditional business models with new environmentally-friendly activity,’ said Pears.
The next trend is a focus on the customer. Capgemini has found 59 per cent of the under-35s are considering buying a car – that’s up from 35 per cent in April 2020 showing the traditional view of young people are not interested in buying cars is changing.
However, this group of buyers have a different set of requirements and are shifting from offline to online channels and, as Capgemini puts it, ‘from standard services to personalised customer journeys’.
It’s for this reason Capgemini believes the trend of putting the customer central in the buying process is a major one for OEMs and dealers to focus on.
The Covid-19 pandemic has quickened this trend thanks to AI and VR technology and contactless sales and deliveries, and out of this car subscription and agency sales models are emerging.
Capgemini believes car subscription programmes could make up 10 per cent of all new car sales in the US and Europe by 2030.
Meanwhile, agency sales – where the OEM speaks directly with the customer and handles the transaction – will only grow in the next 10 years.
But dealers shouldn’t be concerned about this trend, believes Winkler.
He said: ‘We have to work out what we want to be for the consumer – it is similar to what the OEMs are working out. Will I just be the supplier or will I be the supplier of the metal and the software – and is this is the area I want to excel in? Dealers have to fight for their right to be a part of this new set-up.’
One example, explained by Winkler, is dealers offering car connectivity packages to customers rather than the customer buying them through their phones.
The last big trend which will influence the automotive sector in the near future is intelligent industry.
Rather than large factories with automated machines, the future will see closer collaboration between the machines, workers, dealers and customers.
‘This is about integrating information and operational technology, so the factory floor and the office are no longer separated,’ said Pears.
‘Let’s take an example – why not have the dealer actually defining what digital services need to look like in the car? So, that goes back through the supply chain, design and the R&D departments of the OEM; it’s the dealer that has the interaction with the customer, the data and the buying histories of customers.’
New technologies like 5G, AI and cloud-based systems will allow the industry to work closer. Capgemini believes intelligent industry will be the norm by 2030.
The interview also discusses:
- The future of historic OEMs in the face of start-ups
- Car companies will resemble tech companies like Google, Microsoft and Amazon
- Is this the most significant time in automotive manufacturing and retailing for 100 years?