Automakers to earn $3.5 trillion from digital services by 2040

Automakers to earn $3.5 trillion from digital services by 2040

Auto makers to earn $3.5 trillion over next two decades from digital services

The transition to vehicles defined by their digital services, including safety, comfort, handling and entertainment features, promises to generate significant new revenue streams for the automotive industry. Over the next two decades, digital services could generate up to US$3.5 trillion in additional revenue for industry globally.

However, while automakers are investing billions of dollars in digital services, these services generate only about 3% of global automaker revenue today, which is not enough to cover the huge investment.

To monetize digital services, carmakers need to overcome two key challenges. First, despite efforts to digitally transform parts of their organizations, most are still not tech-savvy. To keep up, companies will need a strong digital core that collects and distributes relevant information, providing accurate insight into rapidly evolving customer preferences. In fact, we believe that the winners will be those who develop the digital core and take advantage of its full potential, where it allows for continuous innovation. ,

Second, most auto industry executives do not have a clear plan to monetize digital services. They need to address several important questions: Do they build the services themselves or buy them from third parties? Which services will resonate with new and existing customers? Which one will synergize better with the brand? And how do you determine the price of the services? Should they be sold via subscription, in bundles, or perhaps individually? This report examines the various avenues to successfully monetize digital services.

Automakers to earn $3.5 trillion from digital services by 2040
Automakers to earn $3.5 trillion from digital services by 2040

facing the challenge

To create value through digital experiences, most automakers will need cultural and process changes. It starts with a strong digital core, which enables companies to extract more timely and relevant information from consumers and turn that information into competitive advantage.

To enable the kind of collaboration that can propel an automaker to a leadership position, team members from the C-suite to front-line staff will need to develop new capabilities in software, design and innovation . This includes breaking down silos and supporting cross-functional roles to spark innovative new connections.

Vehicle manufacturers must also decide whether to develop their own digital services, which require significant financial investments in technology and other capabilities, or whether to integrate third-party digital platforms into their vehicles. Each option has its benefits and its challenges. Whichever option they choose, a well-thought-out monetization model is critical to increasing consumers’ willingness to pay for digital services.

We have identified five key parameters that can guide automakers in the process of defining their monetization approach:

  1. Consumer price sensitivity: How sensitive is the relevant consumer segment to price?
  2. End-to-End Experience Control: Today’s in-car experiences are no longer limited to the vehicle, but can be extended to include interfaces to external infrastructure and ecosystems.
  3. Competitive intensity: Consumers will determine whether a digital service is attractive based on other available options.
  4. User base size – Businesses with a large customer base are able to make preferential deals with third parties because they offer higher profit potential.
  5. Hardware attractiveness: Bargaining power increases when automakers provide an attractive environment to third-party companies for their digital services.

The race to grab the price is on

The new digital automotive world is upon us, and with it comes the opportunity to earn vast new revenue pools. But the engines are revving and this is no time to be sitting on the starting line. If automakers can’t turn software into a profitable business, they risk losing the race to new players from tech giants to auto entrants using their core competencies as software companies to aggressively target this space. take the risk of Automakers must act quickly to decide where and how they will play in the digital services space, or risk being left behind.

Carmakers are at a crossroads. They must carefully consider their next move and the strategic control points within the SDV platform. SDV Forum. This is essential for creating new business models that allow OEMs to monetize new digital opportunities and guarantee the future of their businesses.

OEMs are under no illusion that they face hurdles ahead, but this is no time to stand still.

Success will be rewarded to those makers who drive change not only in the products they make, but in their entire environment. And be agile and digital companies, strongly focused on creating and delivering unique user experiences, ready for the imminent future.

Accenture Research (2022)

By sharing this article you can help spread the value to other people looking for this type of information. If you value the work we do for you in our Valenciacars and find it useful, we would like to ask you a great favor: please share the article on WhatsApp, Facebook, Twitter and in your other networks.

So automakers will earn $3.5 trillion over the next two decades from digital services.






Leave a Reply

Your email address will not be published. Required fields are marked *