The emergence of new services through digital innovations is increasingly threatening existing business models. Technological trends such as self-driving cars, connectivity, and car sharing in the automotive industry will open up numerous opportunities for new business models. These technologies also create opportunities for innovative new entrants who are in the process of fundamentally transforming the automotive industry.
Digital transformation can be found in almost every industry in the central strategies of companies. The automotive industry is also facing a fundamental upheaval and must go digital. Compared to other sectors, however, the automotive industry is still in its infancy. In particular, the increasing competition from new competitors shows that more customers rely on innovative approaches. In addition, the vehicle continues to lose relevance in everyday life, so that mobility plays a central role in the entire industry.
The automotive industry is in the midst of transformative change led by innovations in cloud technology. In a world where users expect a seamless shopping experience, want mobility options, and want their cars to be as personalized as their smartphones, we can expect the pace of change in the automotive industry to accelerate. The enduring trends of sustainability, safety, convenience, and personalization are relatively unified, but technology drives these trends and changes.
The automotive industry has always been regarded as Germany's flagship industry. But with digitization, the local automobile manufacturers must also perceive the customers' new requirements. However, a study by the ITC industry association Bitkom clarifies that the automotive industry is increasingly skeptical about digitization.
One in ten now assumes that digitization is a risk for their own company. Nevertheless, 88 percent see great opportunities arising from a successful digital transformation.
Despite these fundamentally positive expectations, it is evident that automobile manufacturers should invest more in relevant digital technologies. Accordingly, only some investments are made in critical technologies such as artificial intelligence.
This trend is surprising since AI, a critical technology, will have a decisive impact on assistance systems and autonomous vehicles.
Cloud computing is one of the critical technological forces transforming the automotive industry. Flexibility and speed are the main benefits of moving to the cloud. It creates efficiency, delivers meaningful insights, and allows for the development of new, agile business models across the whole value chain. Additionally, non-cloud businesses can reinvent themselves through the cloud.
Cloud technology is helping automotive customers to lead this change with their expertise in four key areas:
The automotive sector has changed rapidly over the past two decades. The industry has seen continuous manufacturing, efficiency, and design improvements, but digitization is critical. Recent advances have resulted in rapid and disruptive innovations that have accelerated efficiency and improved user experience - key areas to increase the return on investment.
The advantages of digitization are numerous and varied. For example, repair and maintenance can increase the accuracy of estimates, while automobile manufacturing can take advantage of better efficiencies.
We all experience the impact of digitalization, as it is already gradually taking place in transport. The world is filled with digital maps, which contain information about roads and their load, traffic jams and accidents, surface quality, etc.
Environment: As environmental awareness becomes more essential and environmental policies are implemented to address climate change, people want to use eco-friendly cars. Car manufacturers are trying to build more sustainable vehicles.
Connectivity: The companies in the industry have started to design and produce new cars with connectivity features. Motorists want to change their driving experience and expect:
Autonomous Driving: Self-driving technology will be a reality and widespread soon. Data from cameras and sensors is analyzed by advanced algorithms, enabling people to drive safely. However, privacy and cybersecurity can be significant challenges in this area.
In addition to Tesla, many companies are investing in autonomous vehicles, including Apple, Audi, Bosch, and Huawei. According to McKinsey, autonomous cars will account for 15 percent of all passenger cars sold worldwide by 2030.
Other trends: In addition, the digital transformation in the automotive industry increases process awareness through digital twins, process and task mining, and applications of the IoT in manufacturing. Other trends include increased back-office automation through robotic process automation (RPA) and improved analytics through automated machine learning.
In the meantime, German automobile manufacturers have recognized the relevance of digital transformation and identified digitization as one of the significant megatrends. However, other trends, such as ongoing urbanization, require new models, such as shared mobility or transportation on demand.
The platform concept plays a central role in these two areas in particular. However, from the point of view of the German manufacturers, connectivity and autonomy, in particular, should have a lasting influence on the entire industry. With the help of autonomous driving, around 90 percent of traffic accidents could be avoided, and the tense situation on the road eased again - after all, people spend an average of 38,000 hours of their lives in traffic jams.
IT companies such as Uber and Alphabet are already researching autonomous driving. Accordingly, established manufacturers must refrain from allowing themselves to be demoted to hardware suppliers who merely adopt the competition's technology.
However, it is already certain today that self-driving systems require attractive technical features such as 360-degree laser cameras, high-performance computing units, artificial intelligence, and machine-learning map material. To anticipate this development, manufacturers have committed themselves to become mobility service providers. This change is already visible among some German manufacturers.
However, a fundamental prerequisite for the success of digital change is a change in the underlying corporate culture.
Clear hierarchies characterize the traditional German automotive industry. Accordingly, oldfashioned software development processes based on the waterfall method are also used. However, for a successful transformation, agile methods must be used. If this fundamental change can be completed, the only obstacle to a successful digital transformation is ultimately one's innovative strength.
The automotive industry has long been regarded as Germany's flagship industry. And even today, the industry is regarded as a job engine. The automotive industry is also facing a decisive change driven by digitization. The manufacturers have to say goodbye to the car as a core product and instead focus on digital business models. These must reach the buyers and continue to bind them to the brands.
Mobility is also playing an increasing role. Megatrends such as autonomous driving will become increasingly relevant soon. However, the basis for successful change is the cultural change in the company.
Once this has been mastered, the focus can be placed on the key technologies. Above all, artificial intelligence, the Internet of Things, or Blockchain technology contributes to developing new business models.
Further development is an increase in crewless vehicles, including public ones. The world is actively testing uncrewed metro trains, buses, and aerial drones.
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Adapting to change is key in today's automotive industry. Consumer preferences are shifting, sustainable practices are becoming increasingly important, and global economics are continually evolving. These changes present new opportunities for the automotive sector through advancements in autonomous mobility, digitalization, and electrification. Our expertise in engineering drives transformation in vehicles, businesses, and for consumers. Our flexibility allows us to navigate the constantly changing landscape and our innovative approach enables you to implement breakthrough ideas on a large scale.
Smart solutions for safe, comfortable, and eco-friendly transportation: Advanced driver assistance systems and autonomous driving, vehicle lifecycle management, safety and security, infotainment, and electric mobility.
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