Auto Parts Asia — October 2017

AutoPartsAsia | OCTOBER 2017 | 53

do not want to own cars due to costs
and the inconvenience.

Automakers are starting to develop
their own ride-hailing and sharing
services. Ford will expand its minibus
ride-sharing programme, called
Chariot, to eight US cities by the end
of 2017. “Millennials are seeking
practical and functional products that
provide both capability and a sense
of personal style. As a result, they
want a vehicle that can be upgraded
as their lives change, and they expect
seamless integration of technology
in and out of the vehicle, including
to home and other devices,” Fiat
Chrysler said.

Autonomous Driving

Fully autonomous vehicles (AVs) are
unlikely to be commercially available
in the next few years. Meanwhile,
advanced driver assistance systems
(ADAS) continue to be developed
by the OEMs and tech giants like
Google, making the possibility of
fully autonomous vehicles to be
available by 2030. Some of these
technologies have existed
for some time, but they are
becoming more sophisticated,
said Richard Wallace of the
Center for Automotive Research.
“We’re moving on to higher levels
of challenges now,” he said.
ADAS will play a crucial role in
preparing regulators, consumers,
and corporations for the medium-
term reality of cars taking over
control from drivers.

Electrification

The sale of electric cars (EVs)
had a slow start, due to high
cost and “range anxiety”. Now
EVs are becoming increasingly
more viable and competitive in
the auto market due to longer
driving range, stricter emissions
regulations, lower battery costs,
widening infrastructure of vehicle
chargers and greater consumer
acceptance due to tax incentives.
With battery costs potentially
decreasing to USD 150 to 200
per kWh over the next decade,
electrified vehicles will achieve
cost competitiveness with
conventional vehicles, creating the
most significant catalyst for market
penetration. Advances in charging
technology, range, and awareness
will further improve the customer
value proposition. Hence, in 2030,
the share of electrified vehicles could
range from 10 to 50 percent of new
vehicle sales. Adoption rates will be
highest in developed, dense cities

with strict emission regulations and

consumer incentives (special parking

and driving privileges, discounted

electricity pricing, etc.). Sales

penetration will be slower in small

towns and rural areas with lower

levels of charging infrastructure and

higher dependency on driving range.

Connectivity

Automakers are ramping up their

connected car efforts for several

reasons. Internet connectivity in

vehicles allows car companies to

release software updates in real time,

which is extremely important during

a recall. Second, OEMs, government

agencies and insurance companies

can use data from vehicles to analyze

its performance and obtain valuable

data on how drivers use their cars.

Finally, more connectivity provides

more ways for automakers to cross-

sell their products and services to

customers. Tech companies will play

an increasingly important role in the

vehicle industry. For this dynamic

to work, vehicle makers will have

to learn how to cooperate and

collaborate with tech competitors.

The Future

Some industry observers think that

these trends may mark the decline

of some of the current players.

A paradigm shift to mobility as a

service, along with new entrants,

will inevitably force traditional car

manufacturers to compete on multiple

fronts. Mobility providers (e.g., Lyft,

Uber, Zipcar), tech giants (e.g., Apple,

Google), and emerging OEMs (e.g.,

BYD, Tesla) make the industry’s

competitive landscape more complex.

New market entrants are expected

to initially target only specific,

economically attractive segments

and activities along the value chain,

before potentially exploring further

fields. The current stakeholders need

to make strategic moves now to

shape industry’s evolution.

In order to get ahead of the inevitable

disruption, incumbent players should

prepare for uncertainty by anticipating

market trends sooner and to explore

new mobility business models as well

as their economical and consumer

viability. Traditional auto OEM’s are

already planning to the transition from

“hardware provider” to “integrated

mobility service provider.” Just as

today’s software companies are

keeping their products “relevant”,

auto OEM’s need to offer up-to-date

customer-focused user experience

with product differentiation.

The entire industry is undergoing

transformational changes, but

only those, who develop adaptive

organisations, leverage partnerships

and are prepared for the uncertainty,

will survive and grow.

NB: Photos are representational.