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July 26, 2023

How automakers can upshift into the future

The way we buy, drive and maintain vehicles is changing rapidly — automakers will have to rethink mobility to remain relevant.

Unprecedented technological advancements. Shifting consumer preferences. Increasing environmental awareness. It’s an understatement to say the automotive industry is changing at a rapid pace.

It’s impossible to predict precisely what the automotive world will look like in five years. But we’re confident that the industry, which for more than a century has innovated to bring consumers the freedom of mobility, will continue to do so — even if tomorrow’s transportation solutions look very different.​

Breakthroughs in technology, materials science, and engineering are continuously reshaping the industry — a process further amplified by the urgent need to address climate change and embrace sustainable transportation solutions. For example, ride-sharing platforms, and micro-mobility solutions will augment traditional ownership. From the customer experience to the vehicles themselves, to changing societal views on transportation, automakers will need to be nimble and proactive ​to retain their leadership role.

While nobody can foresee the future with certainty, original equipment manufacturers (OEMs) can and must prepare for it. Here are some of the emerging shifts we’re discussing with clients:

Culture and society​

With Millennials (those born between 1981 and 1996) well into their peak earning years, and Gen Z (those born between 1997 and 2013) establishing careers and considering big-ticket purchases, OEMs can’t afford to ignore younger consumers’ values as they relate to cars.

These youthful customers are tech-forward. They prioritize sustainability, efficiency and convenience over muscle and styling. They see their vehicle as a tool that enables their lifestyle — the on-the-go urbanite, the up-for-anything weekend warrior and so on. They demand vehicles that offer a range of high-tech features and services. And they’re more likely to embrace alternative transportation modes to reduce both the cost of ownership and their environmental footprint.​

  • From performance to features: Many young consumers look first at a vehicle’s innovative digital feature set. Driver assist, automation, sensors, connectivity, entertainment, navigation, voice control and more are being constantly innovated to satisfy these car buyers.

  • From status to lifestyle: Today's buyers express their individuality and fuel their passions through their vehicle choices. From adventure-seeking off-roaders to eco-conscious electric vehicle (EV) buffs, these consumers view their automobile as an extension of their personality, unique interests and deeply held values.​

  • From ownership to mobility-as-service: Young people are driving less and are slower to pursue their driver’s licenses. For some, traditional car ownership has been augmented or replaced by car-sharing, ride-hailing and micro-mobility options (e-bikes, Segways, etc.) among others.​

Technology and connectivity

When new tech paradigms emerge, people make sense of them by relating them to what they already know (thus “horseless carriages”). While the next generation of cars will borrow heavily from the look and feel of their predecessors, they may be quite different: moving physical-digital platforms that enable new experiences in communication, productivity and entertainment.

With advances in connectivity, autonomous driving and immersive technologies, next-generation vehicles will offer unparalleled levels of personalization, adaptability and convenience, redefining consumers’ perception of mobility.​

  • From ride to experience: The nature of car journeys will be transformed, with vehicles serving as playrooms, classrooms, offices, etc.​

  • From repair to patch: The industry is witnessing a shift from traditional repair methods to over-the-air updates and patches. This transformation, which will accelerate, means software solutions hold the key to enhancing performance, functionality and user experience.​

  • From roads to networks: The Internet of Things is creating a world in which cars, infrastructure and buildings are seamlessly connected. This integration could significantly enhance efficiency, safety, and convenience. For example, cars will communicate with traffic signals to optimize traffic flow, and with other vehicles to prevent accidents.

Purchasing and financing​

The vehicle purchasing and financing landscape is undergoing a significant transformation, and this will continue. In some regions, traditional dealership visits are being replaced by online platforms, enabling customers to browse, customize and purchase vehicles remotely. Financing options are becoming more diverse and flexible; they now cater to a wider range of budgets and lifestyles, offering consumers the freedom to change vehicles more frequently.​

  • From dealerships to marketplaces: Online vehicle marketplaces are disrupting the traditional dealership model with an experience that many consumers find more streamlined and user-friendly. With experience growing more important — some studies find it as critical as the product itself. We believe OEMs that embrace this move toward marketplaces will ultimately improve overall customer satisfaction by offering more flexibility in shopping and buying experiences.

  • From dealer-only to DTC: In the US today, OEMs with existing franchise agreements are unable to sell directly to consumers (DTC) due to the Automobile Dealer’s Day in Court Act. Many states have their own similar laws. However, Tesla has made progress; it’s now selling DTC in most states. For OEMs, the DTC landscape bears close watching and preparation.​

  • Appointments to care plans: Smart diagnostics, digital vehicle platforms and innovative financing models are creating a new era of repair and maintenance. Automakers should be key players in instituting a more proactive, data-driven, personalized approach to keeping cars roadworthy by continuing to develop embedded diagnostic and communication systems. This will facilitate a seamless, timely maintenance experience.​

Politics and regulation

Like all industries with 20th-century and older roots, automotive has seen myriad political and regulatory challenges. This trend is not slowing down by any means. And it’s not just watchdogs and regulators pushing for change; consumers increasingly want products that are sustainable and ethically sourced, even if it means paying more.

OEMs that lead the way in adopting these models and practices will avoid being caught flat-footed by changing regulatory regimes. At the same time, they will set the standard for innovating under emerging constraints—an essential survival skill for modern businesses.

  • Emissions to externalities: EVs do nothing to address the impact of microplastics on the environment; the supply chains that support EVs still depend on the mining and processing of minerals such as lithium and cobalt, and their production requires the same energy and resources used in internal combustion-powered vehicles. In coming years, automakers must prepare for EVs to face more regulatory scrutiny.

  • Disposal to circularity: Governments, regulators and businesses are pursuing “circularity” as a core value. Within this paradigm, resources are conserved, and waste minimized, through design, reuse, repair and recycling. For makers of complex goods like automobiles, this circularity journey has just begun.

  • Car-centricity to multimodality: Policymakers and urban planners are embracing a diverse array of mobility options to lessen private cars’ impact on cities. This shift is reflected in transportation policy, and OEMs must adapt to these new priorities.​

While coming challenges are numerous, the auto industry has a proud history of adapting to myriad consumer demands and regulatory environments. OEMs must press forward in that spirit.

To learn more, visit the Automotive section of our website or contact us.

This article was written by Kate Haynes, Associate Director, and Maya Oczeretko, Director, in Cognizant’s Automotive CX practice.

Cognizant Insights Team

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