ACI_february2018DISRUPTIVE TECHNOLOGY

Over the past 2 decades, the automotive industry has been actively transforming and reinventing itself by establishing new alliances, outsourcing to tier-1 suppliers, expanding globally, developing new car platform strategies, embracing lean principles, adding diversity to its product line-ups, speeding up product development cycles, and reducing emissions. To its credit, the industry has succeeded to a great extend in implementing these changes. Despite fundamental market developments such as globalisation, enhanced quality, and fragmentation of traditional customer segments, there has been no radical change in the industry structure. Apart from increased concentration, the automotive industry is organised essentially the same way as it was a few decades ago—vertically integrated around large manufacturers.

The original justification for vertical integration no longer holds good. The present car technologies and global supply chains are mature. The carmakers have improved quality and digitisation. New business models have revolutionised the industry which is being driven by 4 megatrends: diverse mobility, autonomous driving, electrification, and connectivity. Most industry players and experts agree that these technology-driven trends will reinforce and accelerate one another, and the industry is ripe for disruption. However, there is no integrated perspective on the future shape of the automotive industry.

In another disruptive development, software competence is becoming one of the most important differentiating factors for the industry development. Software will be used to deliver wide range of features and services like mobility, advanced safety, location-based services, in-vehicle content, and remote analytics. Automakers need to be strategic about which part of the connectivity ecosystem they control to profit from connectivity and keep the vehicle itself from becoming a commoditised content platform. However, as cars are increasingly integrated into the connected world, automakers will have no choice but to participate in the new mobility ecosystem that emerges from technological and consumer trends. Therefore, electronics is going to revolutinse the automotive industry with many innovations in vehicles. Electronics will be both an enabler and a solution provider to the industry to follow these megatrends.

Bhargav TS
Executive Editor
s.bhargav@nextgenpublishing.net

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