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Business Model Transformation

Business Model Transformation: New-Age Automotive Ecosystem

Disruption is an accepted norm in the automotive industry. Digital transformation, which has been on the sidelines, is now the mainstream disruptor in the automotive industry. There has been an evolutionary change in the way people use automobiles.

It used to be a physical game – the feel of the engine, the touch of the fine metals, but now it is changed. People now want digital features in their automobiles. They want increased connectivity, IoT, wireless solutions, and every other possible feature to elevate the customer’s expectation to new levels.

Technology is the one constant that encompasses several aspects of the automotive value chain — from design to manufacturing and distribution to retail.

Among the clutter of technological infrastructure that will set new benchmarks for customers’ expectations in the automotive world, connectivity and artificial intelligence combined with oodles of customer data will drive the future of automotive investments.

Whether it is the affluent class or the middle class, the automotive purchase has always remained sentimental. People have, time and again, despite having safer, newer, and more refined ways of buying a car or a bike, have always preferred the traditional buying experience.

Whether it is the AR/VR experience on a mobile phone or taking an immersive test drive at a virtual booth on an iPad, the customer experience has not improved in the automotive sector.

It is a pity because when you compare people’s traditional buying purchase habits, people have moved on to greener pastures when it comes to shipping on mobile for clothes, shoes, and jewelry.

Although the irony is that when people want to buy an item of clothing or accessory, they go to their nearest mall and check out the item before they go online and find the closest alternative or the same item of clothing or accessory at significantly much lesser price.

On the contrary, people who want to buy a car will spend a significant amount of time online researching and gathering all sorts of information only to ditch the last touchpoint in the digital purchase ecosystem by going to the nearest dealership.

If potential buyers are not closing the deal online, the automotive industry must not assume that digitization does not add value to the automotive ecosystem and that they are better off being traditional — as that is where the sale usually ends.

What the automotive industry must ask is what is it that they are doing wrong and what is it they can do to get the people to close the loop digitally.

Challenges in automotive transformation

There are serious challenges in tackling digital adoption technologies across autonomous vehicles, navigation, manufacturing, maintenance, marketing, and sales.

The problem with the automotive ecosystem business model transformation is that almost all industry digital initiatives are centered around technology and elevating the customer experience to gain a competitive edge.

The automotive industry has its fingers in many pies. A change in manufacturing with digital technologies will bring forth questions concerning the welfare of the planet regarding environmental hazards.

To invest new technologies in the automotive industry original equipment manufacturers (OEMs) want to understand the climatic effects, cash flow, and risk management. The automotive business focuses on efficiency.

Therefore, any investments that can improve sales efficiency, improve supply chain processes, and enhance customer experience will take precedence for OEMs.

A 2020 Deloitte Global Automotive Consumer Study reported that 71 percent of consumers were willing to pay over USD 500 for a vehicle with advanced safety in Germany.

In contrast, in China, only 39 percent of consumers were willing to pay extra for advanced safety features.

Likewise, in the US, 75 percent of consumers were unwilling to pay more than 500 dollars for advanced infotainment features in their cars, whereas in India, 57 percent of consumers were unwilling to pay for advanced infotainment features in their vehicles.

Current automotive trends


We are all concerned about our planet. It is safe to say we have done enough damage already. Now it is time to do the best we can. Electric cars offer that redemption.

CNN’s research shows that Volkswagen, the world’s largest car manufacturer, had predicted that electric vehicles could fully outsell gasoline-powered cars in eighteen years.


The demand for a connected ecosystem only keeps getting bigger. Infotainment technologies are growing at a rapid pace.

With cars understanding voice commands to calibrate the drive performance in sync with the wearing devices and driver’s personality, connected cars only keep getting better.

Vehicles that can execute over-the-air (OTA) updates like our phones receiving software updates will do well, as remotely updatable vehicles will be in demand in the next thirteen years. Tesla, a benchmark in the electric car market, not only pioneered wireless vehicle software updates but is successful in getting better at it by the year.


According to a very recent PolicyAdvice report, 43% of Americans do not feel safe in an autonomous/driverless car. The same report also shows that 55% of small business owners in America are sure of having a fully autonomous fleet in the next twenty years.

This indicates that while the public will slowly warm up to the idea of a car without a driver, businesses will be early in adopting driverless vehicles to handle business needs. But with 100 terabytes of data passing being exchanged across sensor systems and autopilot algorithms in a mere 8-hour shit, driverless cars are set to get better with each passing day.

Augmented/Virtual Reality

Augment and virtual reality have become a go-to for car manufacturers. Not only does AR/VR make the manufacturing process cost-effective and efficient, but it also helps improve standard automotive fixtures.

With service departments using AR tech to help reduce stress for workers, AR and VR platforms are versatile in providing more ease for manufacturers and customers in dimensions that would not have otherwise been not possible.

Digital commerce

In 2020, Amazon ordered 1,800 Mercedes electric vans. This is a direct result of the boost in online sales. Automotive brands are building a solid online buying experience for the customer that would enable them to buy a car online without never needing to set foot in a dealership.

Automotive companies are using social media to receive service requests and complaints. Chatbots and feedback/survey forms have improved customer service. ERP and CRM systems provide unparalleled visibility into the nooks and crannies of the value chain ecosystem.

There is an increase in the number of electric cars on the road. There is an increase in the range of electric vehicles available in the market today. With the increased demand for electric vehicles and the increasing range of electric cars, there’s also anxiety over range.

Range anxiety in electric vehicles is a big problem. The pending question is yet to be answered: should OEMs take responsibility for installing charging stations or should this fall under the government’s preview.

While B2C e-commerce has helped the automotive aftermarket industry, it has its shortcomings.

Even though there is an increase in spending for auto parts, low levels of digital maturity with manufacturers and OEMs and slowness in adopting the latest trends are impacting the B2C e-commerce solution, which is expected to help contribute towards the global automotive industry to grow to $8,921 by 2030.

The industry must prepare to offer accurate fitment data, inventory details, and provide an overall wholesome experience — where dealer experience and digital experience, and aftermarket experience should all be indistinguishable from one another — offering customers, vendors, suppliers, and dealers an unparalleled experience between and among each other.