Connected Cars and Beyond: How Digital Transformation is Fueling the Rise of Smart Vehicles

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6 minutes
Digital Transformation is Fueling the Rise of Smart Vehicles

As a seasoned Digital Transformation Expert, I’ve spent decades observing and participating in the evolution of various industries, yet the rapid, transformative change that digitalization has brought upon the automotive industry remains unmatched. From manufacturing techniques to consumer behavior, every facet of this industry has been revolutionized.

Infotainment and the Connected Car

Consider, for example, the realm of automotive infotainment, which sits at the epicentre of a fascinating tug-of-war between automakers and consumer tech giants. Half of automakers surveyed believe they will own the future infotainment systems, despite the growing popularity of smartphone applications like Apple’s CarPlay.

The real magic of connected cars lies in their ability to open up an array of possibilities through their infotainment systems. Today, you can pay for fuel through your Jaguar’s infotainment system without stepping out of the vehicle, courtesy of Jaguar and Shell’s innovative partnership.

However, the elephant in the room is the challenge posed by automotive software updates. The current model of a five-year vehicle platform lifecycle conflicts with the swift pace of technological advancements in our smartphones. The critical question then, is how to create an environment where automotive manufacturers can remain competitive? Or better yet, how do we convince customers to embrace in-car infotainment systems over the convenience of a dashboard-mounted smartphone?

Looking ahead, I firmly believe that automotive manufacturers investing in self-developed, vehicle-specific infotainment services is a shrewd strategy. These systems hold an edge over smartphones by providing tailored information about the car’s performance, tire wear, service requirements, and more.

Importance & Benefits of Automotive Industrial Digital Transformation

The digital transformation of the automotive industry has led to a creative surge in design and efficiency. Car retailers have capitalized on this shift by providing virtual experiences like online showrooms and 360-degree car photography to attract a larger customer base.

Trends in the Automotive Industry

The past decade has seen a significant shift towards digitization in the automotive industry. As an industry observer, it fascinates me how customer preferences have drastically changed post-2020 due to the pandemic.

Online searches for “Car sales” have skyrocketed by over 60% globally, while queries for “best car under” have grown by 80%. Evidently, the appeal of online shopping has seeped into the automotive sector too, with 63% of car buyers expressing a willingness to purchase a vehicle online. Hyundai capitalized on this trend in 2021, launching their new Elantra model via a live stream to nearly 800,000 viewers.

With digital technologies now contributing 50% to a car’s total value, cars have evolved from mere modes of transport to complex, digitally-advanced machines. Manufacturing plants have also jumped onto the digital bandwagon, achieving a 75% automation level, up from 25% in 1990. This leap in automation has resulted in a drop in defect rates to a staggering 12 per million.

Meanwhile, the U.S roads are witnessing an exponential rise in connected vehicles, with an estimated 84 million connected cars already in use. With such numbers, it is anticipated that the U.S will soon become the largest market for connected vehicles.

On the industry front, collaborations seem to be the go-to strategy, with General Motors acquiring Cruise Automation for $1 billion in 2016 and Sony teaming up with Honda Motors in 2022. The shift in an average car’s composition from 90% hardware and 10% software today to a projected 40% hardware, 40% software, and 20% content in the future speaks volumes about the industry’s trajectory.

Looking Ahead

Ultimately, I envision a future where vehicles will no longer be mere machines, but intelligent, connected entities designed to offer a seamless, personalized driving experience. Remember, “Digital transformation is not about the destination; it’s about the journey!” and, for the automotive industry, this journey promises to be an exhilarating ride. To drive is human, to connect divine!

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