Digital transformation in automotive industry: Miles to go

dx in automotive sector 1Automotive firms lag behind other sectors in digital transformation journey; less than one third of firms is having digital capabilities, says a new research from Capgemini.

As per the report, only 28 percent of automotive companies have launched a new business based on digital technologies. Meanwhile, only 19 percent believe their digital platforms allow them to reach customers who would not be reached through traditional approaches.

Automotive companies struggle to develop the necessary leadership capabilities for digital transformation. Only 32 percent of automotive organizations agree that leadership actively promotes digital skills for development of employees.

Other key findings are the following:

Nearly half of consumers (47 percent) say they prefer a mix of human and AI interactions when purchasing high-consideration products.

Only 33 percent of automotive organizations use analytics to personalize marketing communications. In comparison, 62 percent of consumers say that their purchase decision is likely to be influenced by social media.

36 percent of consumers say their current car does not have connected car services which they would like in their next car.

Over six out of ten automotive respondents, (63 percent), including employees, managers and leadership, say that culture is the top hurdle to digital transformation. The research also identifies that there is a strong disconnect between leadership and the workforce when it comes to understanding what digital culture means.

Fewer than 30 percent of automotive organizations have a digital unit or coordinate digital initiatives across silos, conversely nearly 70 percent of digital masters (across all industries) have a digital unit.

39 percent of organizations globally (across all industries) have launched new businesses based on digital technologies. Unfortunately, this number drops to 28 percent for automotive firms.

dx in automotive sector

Based on these findings, the research agency recommends the following:

To meet consumer expectations, automakers need to leverage AI and IoT technology.

A digital center of excellence could accelerate the digital transformation and enable an automotive organization to develop the digital value chain so critically required but without the proper integration to traditional automotive business units it will inevitably fail to contribute.

By providing a standardized and open digital platform for third-party contributors and partners, an automotive organization can increase its innovation capacity significantly.

Innovations, such as autonomous cars and mobility services, will further alter the relationship with the consumer. However, a common theme will be the in-car experience replacing the driving experience.

Digital natives – such as Google, Apple, and the Chinese technology company, Baidu – understand that while autonomous cars might give them an entry point to the sector, digital platforms, along with apps and services, will establish their long-term staying power in the automotive industry.

With 45 percent of consumers saying they would like to be able to buy in-car apps and services (e.g. additional navigation features) online, open digital platforms will play a very critical role in addressing this gap.

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