Today’s economies are dramatically changing, triggered by development in emerging markets, the accelerated rise of new technologies, sustainability policies, and changing consumer preferences around ownership. Digitization, increasing automation, and new business models have revolutionized other industries, and automotive will be no exception.
The New Trends for the Automotive industry
According to KPMG’s Global Automotive Executive Survey (the chart is below), there are three disruptive technology-driven trends in the automotive sector: digitalization, diverse mobility, and connectivity. Meanwhile, the growth in emerging markets is no longer the most important key indicator to the automotive sector. Therefore, the concept of “Connected Car” will be richer and broader. In addition to traditional concept of Telematics, “Connected Car” will also be the umbrella term for a series of services to the vehicle consumers, such as digital service, diverse mobility service, ecommerce and after service like vehicle maintenance, car washing and designated driving etcetera. As a result, the new innovative solution will be DMSP (Digital &Mobility Service Provider) which conducted by FutureMove Automotive , the leading company of Connected Vehicle Service.
The deficiencies of traditional TSP business
Connectivity, automation and personalization are increasingly important for the consumer buying a new vehicle. order to position themselves to successfully compete for the connected customer, OEMs need to adapt a holistic perspective in defining their future business requirements, with a particular focus on internal digitization and the creation of a digital end-to-end user experience. This requires software development skills, integration into an ecosystem, and a closer relationship with the end customer. OEMs need to build up skills for software development to match their new competitors’ capabilities and fulfill new requirements (e.g., cyber security, faster innovation cycles, customer experience innovations etcetera). This involves moving to a software development model based on top talent in an agile and fast-paced development structure, complemented by the capabilities of partners in a common ecosystem. To adapt this rapid and dynamic evolvement and win the market, OEMs attempt to a third-party who is able to provide a thoroughly A to Z solution that could achieve in-car content and services, vehicle relationship management, insurance, driving assistant and other add on values such as aftersales service and ecommerce etcetera.
Automotive OEMs had done many trails on partnership with traditional Tier 1 provider, traditional TSP will be the reference. Unfortunately, there are two major obstacles that OEMs encounter in China commonly. First, it is the disordered TSP markets. In pace with the popularization of the concept of “Telematics”, many TSP businesses sprout in the market. The vague concept and absent standard, giving the traditional TSP businesses less credibility and reliability. It gives OEMs difficulties to elect. Second, the traditional TSP businesses only can provide a certain applications, usually only focused on Telematics Services Platform or only CP/SP integration. But neither of them is a thoroughly A-Z solution to OEMs. Along with the changing of consumer demand and expectation, “all-purpose” vehicle and differentiation will be the key transformation for OEMs. The simple and traditional TSP is no longer competent to it.
Based on Automotive revolution – perspective towards 2030 conducted by McKinsey, the OEMs compete in a complex market landscape in 2030 is as follow:
The Dilemma of traditional TSP
As we have discussed earlier, TSP at least should have two functions that building Telematics Services Platform and integrating CP & SP. The dilemma for the traditional TSP in China is that the one, usually international TSP, who has the capability to build the Telematics Service Platform but doesn’t have the license to operate it in China; and the another one, usually domestic TSP business, who has the capability to integrate CP&SP but doesn’t have the Telematics Services Platform. The functions that TSP supposed to have is marked as the red blocks at the chart.
Based on KPMG and McKinsey’s report below, we can see consumers’ expectations to a car is much more beyond a transportation tool. “All purpose” car is in demanding. To achieve this demand, the function of TSP will be like an engine. As the chart above, we can see Telematics Service Platform is the core of the TSP. Moreover, the design, development and operation is the core of the Telematics Service Platform. Ironically, designing and developing a Telematics Service Platform is the very short slab for the domestic TSP. It will be a big challenge to change the traditional TSP’ operational ideologies and business model. It requires technology innovation, capital back up and consumer acceptance. Most importantly, it is the timing. Therefore, If the traditional TSP businesses cannot find the solution quickly, fading out will be inevitable.
The terminator – DMSP
DMSP is most innovative and comprehensive solution to Connected Car industry. The DMSP is the combination of Telematics, digitalization and Mobility service which could satisfy customers’ expectations and OEMs transformation. This is what DMSP does:
DMSP business should have the following features:
1. Strong creativeness and out of box thinking approaches
2. International, experienced and complemented team
3. Understanding on automotive sector and connected car in depth and have the insights of the dynamic consumer expectations
4. Understanding on Internet of Things, Intelligent Transportation system, Smart City, Hadoop, E-commerce, and sharing ideology
5. The business model which correspond to OEMs’ needs and based on data analysis and applications.
6. Extensible and comprehensive Telematics platform
7. Software and hardware R&D
8. Powerful integration capacity
9. Flexible management and efficient decision making chain
10. Excellent execution
FutureMove Telematics is definitely the pioneer in the next generation Connected Vehicle Service in China. With their prospective and consumer-oriented vison, at the end of 2014, FutureMove proposed an innovative concept to OEMs that Smart and Vehicle should be as a Service. This redefinition of automobile will be as a smart moving public tool instead of a transportation tool. This concept is prior to OEMs strategic transformation. Most OEMs gave fully understanding and recognition on this idea. One year later, OEMs announced their strategic transformation to the public successively. Some Research Institutes also took this idea as their standpoint in their research report, which is as follows:
Many global leading automotive OEMs have already taken the steps forward to “all purpose” automobile. This landscape is evolving quickly. But still, it will take time to domestic car companies to recognize and complete their transformation. There is still long way to go, but the evolution is inevitable.