Digital Transformation Offers Billion-dollar Opportunities for Automakers, Frost & Sullivan Says

From connected cars, Internet of Things (IoT), autonomous technologies, and the impact of smartphones on in-vehicle experience to intensifying regulatory and safety mandates, the automotive industry is facing unprecedented disruption, Frost & Sullivan says in a new report.

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Original equipment manufacturers (OEMs) and Tier 1 suppliers are fast realizing that software investments must take center stage. Early adoption is crucial to strengthen their position in an expanding ecosystem. However, selecting the most suitable incremental technologies that optimise valuable resources will be the clinching factor for success.

Digital Transformation of the Automotive Industry, recent research from Frost & Sullivan’s Future of Mobility Growth Partnership Service program, finds that digitalization spending will transform the component hardware-driven automotive industry into one focused on software and solutions will rise rapidly and reach $82.01 billion in 2020.

The study explores business activities, process improvements, and the development of competencies and business models across five key pillars: connected supply chain; industrial IoT(IIoT) and Industry 4.0; connected and autonomous cars; digital retailing; and mobility-as-a-service (MaaS).

“Digital transformation will affect the entire automotive value chain, including design, production, distribution and retail, reshaping the traditional automotive business model. New models will consider data, connectivity and customer-centricity along with cybersecurity,” said Frost & Sullivan Mobility Senior Consultant Sriram Venkatraman. “As a result, the drivers of digital initiatives will change from CEOs, CIOs and the IT departments; by 2020, Chief Digital Officers will steer the strategic and digital initiatives of OEMs across luxury and economy brands.”

OEMs and tier 1 suppliers will seek partnerships with technology vendors and specialists for cloud computing, cybersecurity, telematics, connectivity and 3D printing solutions. Robert Bosch, Harman International, Continental, Magneti Marelli and Denso are focusing on digital initiatives. OEMs such as Ford, GM, Tesla, Volkswagen and Toyota, which focus on connected cars, autonomous driving, and mobility, must prepare to compete with technology, semiconductor manufacturers and mobility companies.

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Nate Fisher