Let’s face it: OEMs are losing their positions as industry innovators.
The automotive sector is captured by global digitalization, and the rapid merge of car manufacturing and tech innovations shows that software providers can take the lead over the industry.
Such trends as mobility and autonomous driving shape the new automotive ecosystem, confusing suppliers from various domains. While Gartner predicts 250 million connected vehicles on the road by 2020, and Deloitte research states that the next-gen drivers expect their cars to act as smartphones on wheels, OEMs and Tier 1 vendors can’t afford to lean back and watch what happens next.
It’s time to revisit strategic choices and respond to digital transformation.
Who Will Own the Road?
Software evolution is a key differentiator that makes many traditional approaches to automotive obsolete. That’s why the automotive domain is experiencing the emergence of new players and the growth of their influence on the market. As a result — intense competition between car manufacturers and software suppliers, in which the last take a serious lead:
Currently, OEMs are strategically one step ahead: people trust and buy from established car brands. But Silicon Valley startups and tech giants like Google or Apple tread on automakers’ positions. As consumers demand for a vehicle that will meet all their technology needs and wants, software vendors become the leading industry disruptors thanks to their solid tech background and customer-focused approach.
Technological companies outpace OEMs when it comes to customer-centric services and software-defined vehicles. But is it a verdict for automakers? OEMs need to tighten their cooperation with Tier 1 vendors to be on the same page with software companies.
What Can Tier 1 Vendors Offer to Stay at the Wheel?
The connectivity disruption brings not only new challenges but opportunities as well. Tier 1s should reconsider their business model accordingly and provide targeted solutions to focus on vehicle safety and deliver more value to consumers. Tier 1 suppliers that can offer solutions for over-the-air (OTA) updates, predictive maintenance, and V2X connectivity features will amp up OEMs position on the market.
After the extensive review of automotive reports on consumer requirements from top research agencies like McKinsey, Deloitte, and Bergen, Intellias found out that demands for safety dominate. Based on these findings and our independent research, we’ve outlined the roadmap for Tier 1 vendors to become successful complex integrators for OEMs. We offer you an extended whitepaper, which includes:
Challenges Tier 1 vendors face while becoming service providers for OEMs Key actions for Tier 1 vendors to implement a new business model Strategy for transforming the Tier 1 business model Solving the challenges of cost, competence, and scalability Three practical case studies describing Tier 1s overcoming the challenges they faced in their transformation
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