Consumers are placing less and less value on car brands. Especially the digital experience a car offers is going to play an important role in the future.
This is according to research by IBM Institute of Business Value (IBV) on the future of the automotive industry. For the study, 11,500 consumers and 1,500 managers from the automotive industry were surveyed. The development is part of the shifting usage model around cars. While many consumers currently own a car, in the future they will increasingly use automotive services that allow them to have a vehicle on demand.
Digital experience in particular is important
Which brand of vehicle they are transported with is becoming less and less important; 48% of consumers surveyed said they have no preference for a specific brand when using such a service. They primarily value the digital experience offered by the vehicle, the cost-effectiveness of the solution and ease of use. "48% of consumers say the brand does not matter to them - cost and convenience are most important. But consumers are willing to look beyond cost and convenience if a brand can offer other experiences - especially digital ones," IBM writes in its report.
The need for shared cars is largely dependent on the type of environment in which a user lives. A user in an urban area is more likely to need a shared car, which can be explained in part by the availability of such services and the relatively high running costs of vehicles due to, among other things, parking costs. Those living in rural areas tend to have fewer alternative mobility options available and therefore place more value on having their own vehicle.
Use of digital technology
The use of digital technology is also higher among residents of urban areas. For instance, 62% of this group uses social media, compared to 55% among users from rural areas. 60% of urban residents additionally use multiple digital devices daily, compared to 50% of those from rural areas. 48% of urban users use a digital assistant in their homes, compared to 30% in rural areas.
The five main reasons for choosing a specific brand are:
- Data security and privacy (57% urban, 46% rural)
- Matching vehicles to a specific purpose such as medical facilities for the elderly (54% urban, 40% rural)
- Receiving loyalty points that can be used to purchase mobility services (53% urban, 40% rural)
- The ability to have voice conversations with vehicles (urban 50%, rural 33%)
- Better digital experiences in the vehicle itself (urban 49%, rural 32%)
Major impact on companies
The development is having a major impact on companies in the automotive industry. In fact, 50% of surveyed managers state that their organisation will have to reinvent itself digitally to be successful or even survive. The industry is expected to invest some USD 33 billion in retraining staff by 2030.
IBM points out that several predictions about the automotive industry for the year 2030 support its view. For example, Martech Advisor predicts that in that year, every person will own 15 different connected devices. McKinsey expects up to 15% of new cars sold by 2030 to be fully autonomous. Herbert Diess, CEO of Volkswagen, expects software to account for 90% of all innovation in the industry. Morgan Stanley predicts that shared cars will be responsible for 26% of all mileage travelled worldwide.
New contact moments
Regardless of how fast these developments actually materialise, two things are indisputable, according to IBM. First, digital technologies are creating new ways to create touch points with consumers. Insights gathered from them can be used to deliver personalised services and integrate vehicles with different aspects of customers' personal lives. Second, consumers expect the digital experience offered by their car to be as good or even better than that of other smart devices.
"For many people, getting in the car and travelling somewhere is a waste of time. They stop their activity, travel to their destination, pick up their previous activity again or do something else. It is estimated that the average American spends an average of 51 minutes in their vehicle each day. This time can be used for other tasks, such as shopping online, booking a holiday or viewing personalised news reports. Virtually all of these options can be accessed directly from the vehicle," IBM writes.
Personalised content
Users not only expect an autonomous vehicle to be able to move around autonomously, but also to offer other functionalities. For instance, vehicles can use artificial intelligence (AI), Internet of Things (IoT) and the cloud to recognise users and offer personalised content. Vehicles can also keep learning and offer new suggestions based on users' needs. In addition, IBM points out that users expect to interact with vehicles via voice.
As users using autonomous vehicles have the opportunity to spend their time differently, mobility services are an important consideration for consumers. For instance, health-conscious consumers have a need to be able to monitor their health on the go and preferably share this data with other healthcare-related devices. However, also consider functionalities that help users book the nearest hotel or restaurant on the go. Location-based marketing and advertising are also becoming possible.
Growing organisation
Managers were also asked in the survey how they plan to grow their organisation in the coming years. The two most frequently mentioned methods are investing in new business models such as digital platforms (81%) and entering new geographical markets (81%). Creating new product categories follows with 79%, while 76% choose to focus on new customer segments. 71% want to create new mobility services.
More information can be found in the research report 'Automotive 2030: Racing towards a digital future' by IBM.
