KPMG Survey: execs say connected car generates 10x revenue than a conventional vehicle; market share based on units “outdated”; BEVs #1 trend
Advancements such as connectivity, big data, autonomous vehicles and artificial intelligence are driving new economic models for automakers, and most see tremendous revenue potential and consumer value in leveraging driver and vehicle data to offer mobility services, according to the 2017 KPMG Global Automotive Executive Study.
The KPMG research, which polled nearly 1,000 executives with the world’s leading automotive companies, found that 76% say one connected car generates more revenue streams than 10 conventional cars. In fact, expectations for data-driven revenue are so great that 71% say measuring OEM market share based on units sold is outdated.
The game has changed for automakers, as cars have evolved into rolling computers and consumers have been quick to embrace autonomy, connectivity and mobility-on-demand. A car is no longer defined by its utility, it is defined by the experience it provides to the driver and passenger—and that opens a tremendous pipeline for new revenue streams and business services that KPMG projects could top $1 trillion in the next decade or so.—Gary Silberg, KPMG’s Automotive Sector Leader
|Ford taps Apple for Chief Brand Officer|
|Ford has hired Musa Tariq as vice president and chief brand officer as part of its expansion to an auto and a mobility company. Tariq, elected a Ford Motor Company officer, begins work 30 January.|
|Prior to joining Ford, Tariq was Apple’s Global Marketing and Communication director for Retail. Prior to Apple, Tariq was the senior director of Social Media and Community at Nike, as well as the global head of Digital Marketing and later the first director of Social Media at Burberry.|
|At Ford, Tariq is responsible for further building and differentiating the company’s Ford brand. He will work with Marketing, Communications and company leaders to define, build and communicate the Ford primary brand and what it stands for with all stakeholders.|
Eighty percent of executives in the KPMG study agree that data will be the fuel for future business models, and 83% believe they will make money off of that data. In order to create value and consequently monetize data, 82% of the executives agree that a car needs its very own ecosystem/operating system (OS) as otherwise the valuable consumer and/or vehicle data will be most likely routed through third parties. In this case many valuable revenue streams would be lost.
In conjunction with the executive survey, KPMG surveyed 2,400 consumers from 42 countries, to compare their perspective against the opinion of the world’s leading auto executives. KPMG found that consumers agree. Sixty percent of consumers say that as we move toward autonomous driving, they’ll only care about what they can do with the time they’re in the car, rather than the attributes of the car. However, both executives and consumers agree that data security and privacy is the top purchasing criteria in the self-driving age where passengers are interacting with the car’s digital platform.
You cannot overstate the importance of data security in the autonomous era. The massive amounts of data that is being collected presents a tremendous business opportunity for auto companies. Addressing information security concerns is a critical priority for automakers, and one they cannot afford to get wrong.—Gary Silberg
Executives and consumers don’t agree on who should own that consumer and vehicle data. Auto execs are split between thinking OEMs (31%) and consumers (27%) should own the data, while consumers overwhelmingly believe only they should own it.
Good-bye to auto-digital fusion, hello to co-integration. KPMG analysts suggested that the emerging “clash of cultures” between the offline and online world in the auto industry is “insurmountable”—and that the two will never become fully congruent.
This means that we need to let go of the vision of a complete auto-digital fusion. We instead believe in an additional, overarching layer, a layer so to speak of the ‘next’ dimension in which both worlds are to some extent represented, a dimension characterized by co-integration in which the roles in the value chain have not yet been decided. For traditional auto companies, the key question will therefore be which role to strive for and how to tap new future revenue streams when traditional streams break away.
This year’s results demonstrate more than ever that the car itself will certainly be an essential part of revenue but not the only major source—of all the links in the value chain, it is the auto companies that will have to develop new service- and data-driven business models together in one digital ecosystem, placing the customer at the center.—KPMG survey
Other findings from the survey include:
76 % of the executives see ICEs as still more important than electric drivetrains for a very long time. However, 53% of the executives wither absolutely (19%) or partly (34%) agree that diesel is dead—or at least socially unacceptable—for light-duty powertrains.
62% either absolutely agree (22%) or partly agree (40%) that battery-electric vehicles will fail due to infrastructure challenges. 78% either absolutely (33%) or partly (45%) agree that fuel cell electric vehicles will be the real breakthrough for electric mobility.
High investments are planned for all powertrain technologies. Over the next 5 years, 53% of executives are planning to invest highly in plug-in hybrids and 52% in ICEs and full hybrids. However, looking at all powertrain solutions, there is only a 5% difference in distribution for high investment.
Automotive executives are torn between new but immature trends and traditional technological solutions.
BMW is still seen as electric mobility leader, but Tesla has made a big leap forward, moving up to second place, outpacing last year’s #3 Toyota and challenging BMW’s first place with only a 2% difference.
27% see BMW here as unrivaled leader in autonomous driving followed by Tesla with 9% and Honda with 9%. KPMG notes that the executive opinion does not correspond to the currently offered product range of the mentioned manufacturers.
68% of executives already feel that the traditional purchasing criteria will not determine the purchase of a car anymore.
89% absolutely or partly agree that in future, consumers will base their vehicle/mobility purchase on vehicle independent products and services.
83% of executives think it is extremely or somewhat likely that there will be a major business model disruption in the automotive industry.
59% of executives absolutely or partly agree that half of today’s car owners will no longer want to own a car in 2025.
This year for the first time, executives see the production and sale of an automobile and the operation of a digital platform to manage direct customer relationships offering vehicle dependent and independent services over the whole customer lifecycle (Grid Master) as the favored business model for OEMs.