The Biggest Challenges Facing Automotive
The automotive industry is poised to increase digital services revenue vastly in the coming years. But, currently, a few challenges stand in the way of bridging this revenue gap and bringing the industry to its full potential. Within the next two decades, digital services could generate as much as US$3.5 trillion in additional revenue for the automotive industry globally.
And yet, currently, only 3% of automakers’ revenue globally accounts for digital services. So, despite the potential for digital services to generate significant revenue, the automotive industry is seeing a relatively slow adoption. To better understand this disparity one has to consider the main challenges faced by automotive companies today.
Top challenges of IT for this industry
Staying Ahead of Digital Transformation | Addressing Regional Differences | The Complexity of the Verticalization of Automotive | Moving Beyond Traditional Business Models
Staying Ahead of Digital Transformation
As the world becomes more tech-savvy, automotive companies face the ever-evolving challenge of anticipating customer needs – and meeting them with digital transformation.
Thanks to this data-first mindset, automotive companies understand the customers’ pain points and can tailor solutions that properly fill the gaps in their experience. This becomes hugely important when scaling new use cases based on customer feedback to scale – rather than solely relying on efficiency-driven business cases.
Addressing Regional Differences
Another challenge when providing exceptional customer experiences worldwide is addressing regional differences in automotive.
Unlike other industries, such as Consumer Goods, which are advised to approach regional differences with a global template, automotive companies should avoid embracing a one-size-fits-all approach and rather focus on regionalization.
The Complexity of Verticalization of Automotive
The new D2C is B2B2C. This motto perfectly encapsulates the automotive industry’s significant shift to verticalization. As the industry becomes increasingly complex, with the expansion of upstream and downstream elements, another challenge for automotive companies in 2024 is maintaining a seamless customer experience despite verticalization.
In transitioning to attend huge electric mobility targets, companies pursue joint ventures to improve battery production within the chemistry industry. As this is new territory, it would make the entire ecosystem even more complex. This means there’s much more potential for larger use cases and experiences to connect with cross-industry partners, new customers, and more. In this case, trends, such as composable commerce or marketplace capabilities, are not only buzzwords; companies in the industry should embrace these new terms in their digital strategies.
Moving Beyond Traditional Business Models
Currently, electrification is “still” on the rise, and manufacturers focus their innovative thinking mainly on charging infrastructure. But this is only the first step. Incorporating marketplace capabilities into the conversation brings potential to enhance the ecosystem.
Marketplace capability is not a trend – it’s a reality. But this reality has not yet been embraced by the automotive industry. This means automotive companies are leaving enormous potential untapped, especially when it comes to the customer experience.
Digital Transformation is essential for further Challenges
- Smart Manufacturing
- Connected Cars
- Predictive Maintenance
- Autonomous Vehicles
- Digital Showrooms
- Mobility-as-a-Service (MaaS)