Our newest study shows that the dynamics of the consumer-vehicle-enterprise relationship are starting to change drastically as traditional industry boundaries disappear. Automotive (auto) enterprises must adapt to how consumers can access vehicles in new ways and use them in their digital lives — and how cars now fit into an increasingly complex web of transportation options. Interconnectedness is the essence of the creative disruption ahead: between consumers and automakers; between consumers and vehicles; and among traditional and non-traditional participants in the industry ecosystem. Looking toward 2025, the enterprises that welcome openness are setting the stage for success.

—Automotive 2025 Global Study

Three primary disruptors—consumers, mobility and the ecosystem—are fueled by external forces, causing industry boundaries to blur and even disappear. Source: IBM. Click to enlarge.

Executives interviewed in the study said that external forces that directly affect consumers will have a greater impact on industry change than those that primarily affect the business. Top external forces included:

• Technology progress. Rated the highest in both “Auto 2020” and “Auto 2025,” technology related to digital, vehicle and the enterprise will remain a major industry influence.

• Consumer expectations. This was the most dramatic shift among external influencers and the only one to change direction between the two studies. It now only ranks behind technology. Digitally enabled consumers are expecting significant changes in products, services and how enterprises engage with them.

• Government regulations. A significant increase from “Auto 2020,” a combination of focus on safety (such as preventing digital distraction), autonomous driving, retail channel disruption and new mobility (for example, taxi services) is leading governments to develop positions that affect industry participants.

• Personal mobility. Mobility is increasing in importance for 2025 as urbanization, lifestyle changes and cost-effective alternatives affect how people want to move from one place to another.

Current and expected impact of the four highest-rated external forces at four points in time, based on interviews from “Auto 2020” (rankings for 2008 and 2020) and “Auto 2025” (rankings for 2014 and 2025). According to the study, changes in consumer expectations were the most dramatic shift between the Auto 2020 and Auto 2025 studies. Addressing consumer expectations now ranks behind only technology in order of importance to the automotive industry. Source: IBM. Click to enlarge.

The report also indicates that nearly two out of every three (63%) executives surveyed saw mobility services or car/ride sharing as an area for greater collaboration with consumers. In addition, more than half (59%) felt product design, marketing campaigns (54%) and service/after-sales (52%) were all areas in which the industry would benefit from working directly with consumers.

By 2025, the vehicle will be sophisticated enough to configure itself to a driver and other occupants. Also, it will be able to learn, heal, drive and socialize with other vehicles and its surrounding environment. Nearly 80% of the executives felt in-vehicle cognitive technologies will be a key component of how vehicles learn and reason to provide a better experience for the occupants and optimize its own performance.

Fifty-seven percent believe vehicle “social networks” would be in place where vehicles would communicate with each other, allowing vehicles to share not only traffic or weather conditions, but information specific to a given automaker. For instance, if a vehicle was experiencing some type of problem not recognized before, it could communicate with other vehicles of the same brand to seek help on what the issue might be.

In contrast to common beliefs, the report also underscores considerable skepticism about fully autonomous vehicles—in which no driver is required and the vehicle is integrated into normal driving conditions. A mere 8% of executives see it becoming commonplace by 2025.

Moreover, only 19% believe that a fully automated environment—meaning the driving system handles all situations without monitoring, and the driver is allowed to perform non-driving tasks—will be routine by 2025.

Eighty-seven percent of the participants felt partially automated driving, such as an expansion of today’s self-parking or lane change assist technologies would be commonplace. Moreover, 55% said highly automated driving, where the system recognizes its limitations and calls driver to take control, if needed, allowing the driver to perform some non-driving tasks in the meantime, would also be adapted by 2025.

Overall, the IBV Automotive 2025 study paints a very clear picture: Industry growth will come from delivering additional value rather than just selling more vehicles. And even though one third of those surveyed feel they will be able to adapt to the challenges this presents, only one in five feel they are prepared now.

The future requirements from the study emphasizes that the rigid, self contained industry of the past century must quickly transform into an ecosystem that is expected to be open, collaborative and filled with new innovators:

• 73% of OEM executives rated mobility services, cost-effective alternatives to vehicle ownership like car/ride-sharing, as a significant area for co-creation with consumers.

• 73% of all executives rated collaboration with other industries as the best opportunity for industry growth as it progresses toward 2025.

• 75% of all executives expect non-traditional industry partnerships to have a key role in the automotive ecosystem by 2025.