How technology is revolutionising the automotive manufacturing industry
Cars have been around for more than a century, and while they look very different now from the early days of the industry, fundamentally an automobile is still a metal outer shell with four wheels. Even the drive-chain technology is largely the same as ever. That’s not to say, however, that the automotive manufacturing industry has not been evolving ever since Henry Ford invented the assembly line.
New tech has been developed in everything from safety equipment, through drivability and product design, and new customer ownership models have emerged. But now, perhaps for the first time, there are radical trends emerging that mean automotive manufacturers are going to have to adapt to unprecedented turmoil if they’re to survive.
Environmental concerns front and centre in the industry’s future
From the public’s point of view, the focus of the automotive industry’s efforts to combat climate change is the move away from fossil-fuel combustion engines to electric technology. This aspect of environmentally driven change is, however, given too much weight, and is far from the cure-all that it’s often perceived to be.
Electric vehicles are not without their own environmental concerns, as lithium for batteries must be mined, for example, Furthermore, while these cars’ maximum range is growing with every new generation of vehicles that emerges, the infrastructure for charging is still not as widespread as it will need to be, and prices remain high. Nonetheless there is momentum behind the shift to electric vehicles.
The threat to the motor industry comes from a change in thinking about the sustainability of private car ownership as a concept. With increased awareness of the need for a holistic approach to sustainability, longer-term environmental strategies are turning toward smart cities. With their much greater emphasis on public transport, connected mobility and lower pollution all round, smart cities could mean the end of widespread private ownership of cars.
Using data and connectivity to increase efficiency
In every industry, data is king. The automotive sector is no exception, with manufacturers leveraging data insights for everything from efficient operation of their factories to predictive maintenance. In particular, the impact of data on connectivity is relevant to the automotive industry because of the critical link between Information Technology and Operational Technology in the sector.
Cars are no longer dumb machines awaiting the physical input of their operator. They’re increasingly connected, smart devices, with the industry moving toward self-drive vehicles that will make everybody in the car a passenger. The new thinking this requires in the core IT used in cars, alongside increased use of AI in their design, is severely disrupting the industry. Entirely new skills are now needed to conceive, build, test, drive and maintain vehicles, and these skills are grounded in software rather than engineering.
Furthermore, the use of data once the car has been sold doesn’t end at predictive maintenance or GPS route planning. With cars now having unique digital fingerprints, an individual vehicle can now be tracked for insurance, driver safety or fleet management needs. Smart cities could direct drivers to less congested routes or even available parking spaces. The detail in such data leads to new concerns in the industry about privacy and security, raising questions the sector has never had to think about before.
However, with consumers increasingly happy to share their data if it brings them personalised benefits, data could also be used to offer, for example, reduced insurance premiums based on driver behaviour, pay-as-you-go insurance or even optional vehicle intervention in your driving.
An existential threat to the industry
These environmental and digital trends are playing a role in the single biggest revolution, and potential threat, to the automotive industry; the model of vehicle ownership itself. Traditional ownership as we currently understand it may already be evolving toward extinction. With increased awareness of the unsustainability of fossil fuels and the rising costs of both car ownership and fuel, many people have already veered toward greener options including bicycles, scooters and public transport.
Shared and hybrid ownership, leasing, and brokered, part-time access to vehicles are all on the rise, and likely to compete with the personal ownership model, at least in urban areas, in the years to come. Mobility-as-a-Service will certainly grow in importance in the connected, smart cities of the future. Moreover, if the act of driving a vehicle is to die out as autonomous cars become the norm, will the sense of ownership disappear completely? Taking a car for work or leisure may simply be a matter of ordering one from a central pool, getting into it when it arrives and stepping out of it at your destination.
The automotive industry, while accustomed to evolution, changing habits and shifts in consumer demands of their vehicles, is facing a period of disruption unprecedented in its relatively short history. But it’s an industry that has always been a leader in adaptation, and often at the cutting edge of technological advancement, and with the right planning and foresight, there are strategies for automotive Original Equipment Manufacturers to survive and thrive.
50 years of industry knowledge
NTT DATA has worked closely with the automobile industry for over 50 years, since collaborating with leading automotive OEMs in Japan at a time when many of the industry’s best practices were laid down. The company’s advice for automotive OEMs going forward into an uncertain future is:
• Decide what you want to be. Do OEMs want to retain control of the ownership model and remain the primary provider of personal mobility? The car must become a unique platform for a customer’s personal experience if so. If they prefer to spread the risk, they should take products to market that can be bought and integrated by other mobility suppliers, involving themselves as part of an end-to-end mobility solution where the car may be only one link in a chain.
• Build agility into your core. Current OEMs in the automotive industry rely on a mix of CAD, ERM, MES, sales and service management. Such silos will not work in future. A connected and integrated set of core systems will be required to lower the costs of change and speed up response times to market stimuli. A move to SAP S/4HANA builds in flexibility, reduces the tech burden by removing multiple interfaces, and connects the value chain from one end to the other.
• Get connected. This is already much more than an afterthought in vehicle design. Vehicles will become mobile work or leisure centres, or both, and car designers and manufacturers must be working with connectivity partners from the very start.
• Choose your partners carefully. In choosing who to work with when building a solution to future-proof their operations, automotive OEMs need to consider carefully whether their prospective partners have the industry knowledge, proven capacity to deliver on connectivity, and sufficient SAP knowledge to bridge the IT-OT divide.
The market is going to be very different for the automotive industry, and soon. The sooner OEMs update their core systems to be ready for that future, the better.
Vadim Zimberg, SAP global offering lead for Automotive