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Industry news | Analysis of the eight trends of the furure automobile industry r

Time: 2020-01-08 Source:

The automotive industry and experts agree that the following four trends will strengthen and accelerate each other's impact. At the same time, the automotive industry is mature enough to make disruptive changes possible. Although it is generally believed that the disruptive changes affecting the whole industry have begun to take shape, there is no consensus on how these trends will affect the automobile industry in the next 10-15 years. To this end, we put forward eight major viewpoints of "2030 automobile revolution", aiming to predict the changes that the automobile industry will usher in, and the impact of these changes on traditional automobile manufacturers and suppliers, potential new market participants, regulators, consumers, markets and industrial value chains.

Some commentators believe that the auto industry is declining, but our claim is that its development is actually accelerating because of the emergence of new revenue streams, including shared mobility, data connectivity (shared) services, and the global macroeconomic growth brought about by the growing emerging economies.

1. Driven by shared travel, Internet services and performance upgrades, the revenue of the automotive industry will increase by 30%, or $1.5 trillion, due to the new business model.

The revenue of automobile industry will increase greatly, and it will diversify in the direction of on-demand travel service and data-driven service. This will increase car sales by an additional $1.5 trillion in 2030, equivalent to a 30% increase. In the same period, the traditional automobile sales, after-sales products and service revenue will reach US $5.2 trillion, 50% higher than US $3.5 trillion in 2015.          

Intelligent interconnection and automation technology will make the car more and more a platform for drivers and passengers to enjoy novel media forms and services in the journey, or to engage in other personal activities in the free time. Innovation, especially the speed of software based system innovation, will require the car to have upgradeable functions. With the growing popularity of short-term shared travel, consumers will always understand the progress of technology, which will further increase the demand for upgradeable performance of private cars.

2. Although people are increasingly turning to sharing travel, car sales will continue to increase, but only at a low growth rate of 2% per year

Global total vehicle sales will continue to grow, but by 2030, the growth rate will be 2% from 3.6% in the past five years. This is mainly due to the macroeconomic impact, as well as the growth of car sharing and online car hailing and other travel services.           

 A detailed analysis shows that the densely populated areas with high car ownership in the long term are the fertile land for these new travel services, and many cities and suburbs in Europe and North America belong to this type. New travel services may lead to a decrease in private car sales, but this decrease may be offset by an increase in the sales of shared vehicles, which are more frequently used and consumed and need to be replaced.           

 Another factor contributing to the growth of global car sales is the good momentum of macroeconomic development, including the growth of global middle-class consumers. As the growth of mature markets slows down, the growth of global automobile sales will continue to rely on emerging economies, especially China, while different product portfolios.

When we consider the growth potential of industry change, consumer preferences and behaviors are a good starting point. We believe that technology driven disruptive trends are likely to fundamentally change the relationship between consumers and cars.

3. The travel behavior of consumers is changing. By 2030, one out of every ten cars sold will be shared cars, and customized travel solutions based on user needs will have a larger market.

Changes in consumer preferences, tightening regulatory measures, technological breakthroughs and other factors have led to major changes in personal travel. More and more people use multiple modes of transportation to complete their travel. Goods and services are delivered to them rather than acquired by them. As a result, a variety of on-demand travel schemes will complement the traditional car sales model, especially in densely populated cities where private cars are not encouraged.           

Today's consumers use cars as an all-around tool, both for commuting and family outings. In the future, they may want to be able to flexibly choose the best way to travel for a specific purpose and choose through smart phones. We have noticed some signs that the importance of owning a private car is declining: in the United States, the proportion of young people (16-24 years old) with driving licenses has declined from 76% in 2000 to 71% in 2013, while in the past five years, the use of car sharing services in North America and Germany has increased by more than 30% every year.           

 The new habit of consumers choosing customized solutions for different purposes will give birth to special cars for specific purposes. For example, there are already millions of cars dedicated to online car hailing, which have high usage, strong performance, the ability to accumulate extra mileage, and higher passenger comfort. This is just the beginning.           

 As a result of consumers' shift to diversified travel options, by 2030, one out of every ten cars sold will be shared cars, which will reduce private car sales. This means that 30% of the new vehicles sold come from shared trips. According to this trend, by 2050, perhaps one out of every three cars sold will be a shared car.

4. The city type will replace the country or region and become the market segmentation dimension that determines the travel behavior, that is, the speed and scope of the automobile revolution.

To understand the future business opportunities, we need to examine the travel market from a more detailed perspective than in the past. Specifically, these markets need to be classified by city type, mainly depending on population density, economic development level and prosperity. In all of these segments, consumer preferences, policy and regulation, the availability and cost of new business models will vary significantly. For example, in a big city like London, owning a car is already a burden for many people, mainly because of the congestion charge, lack of parking space, traffic congestion and other factors. On the contrary, in rural areas, such as Iowa, private cars are still the preferred mode of transportation so far.            

Therefore, the city type will replace the traditional method of segmenting the travel market from a regional perspective and become an important indicator of travel behavior. By 2030, New York's auto market will likely be more similar to Shanghai's than Kansas's.

Autonomous driving technology and electric power transmission are attracting numerous people's interest and have long-term development potential; however, the extent of its diffusion in the next 15 years will depend on whether a series of obstacles can be overcome.

5. Once technical and regulatory issues are resolved, 15% of new vehicles sold in 2030 may be fully autonomous.

Fully autonomous vehicles are unlikely to be commercially available by 2020. At the same time, advanced driving assistance system (ADAS) will play an important role in helping regulators, consumers and enterprises prepare to gradually replace drivers with automobiles.           

The listing of ADAS has shown that the main challenges to faster market penetration are pricing, consumer awareness and safety / security issues. As for technology readiness, technology companies and start-ups may also play an important role in the development of autopilot cars. Regulation and consumer acceptance may be another obstacle to autopilot. However, once these problems are solved, the self driving car will bring great value to consumers (for example, the ability to work on commuter Road, or the convenience of using social media or watching movies on the road).            

Fully automatic driving will gradually increase to 15% of the total passenger car sales in 2030.

6. The feasibility and competitiveness of electric vehicles are enhanced; however, the acceptance speed of consumers is significantly different in different regions

Stricter emission regulations, lower battery costs, more universal charging facilities and higher consumer acceptance will create new strong impetus for market penetration of electric vehicles (hybrid, plug-in, battery electric and fuel cell) in the next few years. The speed of consumer acceptance will depend on the interaction between the pull power of the purchase, which is driven in part by the total cost of the vehicle owned by the individual, and the driving force of regulation, which will vary significantly at different regional and local levels.           

 By 2030, electric vehicles could account for 10 to 50 percent of new car sales. The highest acceptance rate will be in developed, densely populated cities with strict emission regulations and consumer incentives (tax breaks, special parking and driving privileges, preferential electricity prices, etc.). In small towns and rural areas, low level of charging infrastructure and high dependence on long-distance driving will result in low sales penetration.           

 With the continuous improvement of battery technology and cost, these local differences will be reduced, and electric vehicles are expected to gain more and more market share from the traditional automobile market. With the cost of batteries likely to fall to $150 to $200 per kwh in the next decade, electric vehicles will have cost competitiveness with traditional vehicles, which is the most important catalyst for market penetration. At the same time, it is worth noting that a large part of electric vehicles are hybrid vehicles, which means that even after 2030, the internal combustion engine will still occupy a place.

7. In a more complex and diversified industry pattern, existing manufacturers will be forced to compete in multiple fields at the same time and cooperate with competitors.

While other industries, such as telecommunications or mobile / mobile, have been disrupted, the automotive industry has so far seen only a few changes and integrations. For example, in the past 15 years, only two new companies have appeared on the top 15 list of automobile manufacturers (OEMs), while ten new companies have appeared in the mobile phone industry.

The transformation from travel industry to service industry and the entry of new companies will inevitably force traditional automobile manufacturers to compete in many fields. Travel service providers (such as Uber), technology giants (such as apple, Google) and specialty vehicle manufacturers (such as Tesla) add complexity to the competitive landscape. Under the pressure of constantly reducing costs, improving fuel efficiency, reducing emissions and improving capital efficiency, traditional automobile enterprises will feel more urgency. It is possible to transform their market positioning in the changing automobile and travel industry, which may lead to the merger of existing enterprises or the emergence of new forms of cooperation.           

 In terms of the development of another subversive industry, software strength is increasingly becoming the most important differentiation factor in the industry, involving many fields, including ADAS / active security function, intelligent interconnection and information entertainment system. In addition, with the development of Internet of vehicles technology, automobile manufacturers will have to participate in the new travel ecosystem due to technology and consumption trends.           

Another change enough to change the rules of the game is that software competition is becoming a major factor in industry differentiation. The program code of modern automobile may have as many instructions as the control system of outer space navigation. Software will be used to deliver many features and services, including mobile services, advanced security, location-based services, on-board content, remote analysis and so on. Extensive cooperation in technology and services will accumulate more user base, reduce costs, and provide more value for customers. This cooperation will also make the Unicom ecosystem more stable. Automakers must have a strategic vision to decide which parts of the Unicom ecosystem they must take control of to benefit from and prevent the vehicle itself from becoming a commoditized content platform. However, with the increasing connectivity between vehicles and the world, automobile manufacturers have no choice but to join the new mobile ecosystem generated by technology and consumption trends.

8. New market entrants will first focus on some profitable market segments and activities around the value chain, and then further explore more areas.

Market diversification will bring opportunities for new enterprises. They will first focus on some parts of the value chain, only for specific and profitable market segments, and then expand. Although Tesla, Google and apple have shown great interest at the moment, we think they represent only the tip of the iceberg. More new businesses are likely to enter the market, especially cash rich high-tech companies and start-ups. These new entrants from outside the industry also have greater influence on consumers and regulators (i.e. to stimulate interest in new forms of travel and lobby for favorable regulatory measures for new technologies). Similarly, some Chinese automakers, which have recently seen impressive sales growth, may use the current industry shuffle to play a significant role globally.

The existing automobile enterprises can not predict the future of the industry. But they can take strategic measures at this stage to shape the development of the industry. In order to win the inevitable shuffle, the existing enterprises need to take four strategic measures:

① Meet uncertainty:

In order to succeed in 2030, automobile enterprises must transform towards new market development trend, explore alternative and supplementary schemes of traditional business model, and explore new out of industry business model and its financial and consumer market feasibility. This requires automobile enterprises to have strong planning ability and flexibility to identify and expand new excellent business models.

② Using partnerships:

The automotive industry is transforming from peer competition to a new competitive interaction, partnership and open and scalable ecosystem. To succeed, car manufacturers, suppliers and service providers need to form alliances or participate in ecosystems - for example, explore cooperation on the infrastructure of self driving cars and electric cars.

③ Driving transformational change:

As innovation and product value are increasingly defined by software, automakers need to adapt their skills and processes to meet new challenges such as software led definition of consumer value, cybersecurity, data privacy and continuous product upgrades.

④ Reinvent value proposition:

Automobile manufacturers must further differentiate their products / services and transform their value proposition from traditional automobile sales and maintenance to integrated travel services. This will make it in a more favorable position in the global growth of automobile industry revenue and total profit, share the revenue and profit growth brought to the global automobile industry by the new business model including online sales and travel services, and catalyse new business opportunities between the core automobile business and the new travel business model.           

 Challenges and opportunities coexist in the future of the automotive industry. In order to become the leader of change and profit from the subversion brought by new entrants, our four priority decisions highlight the importance of making strategic decisions for existing enterprises now. The auto industry is far from entering a recession. In fact, we believe that its most glorious moment has not yet come.

Reprinted from McKinsey