Automotive Digital Business Models

Authors

Johannes Berking, Dr. Andreas Nienhaus,
Oliver Wyman, Hamburg

Summary

Making a splash in the digital revenue pool requires a great digital strategy.

The many disruptions that threaten to entangle the automotive industry all have one thing in common: Digital roots. From connected cars to autonomous driving to the Internet of Things and new mobility services, they depend on levels of digital proficiency few industry players have achieved. Worse, many automakers still lack comprehensive digital strategies for truly addressing their customers’ “connected life” needs, even as a range of tech-savvy attackers are intruding on territory once reserved solely for industry incumbents. While many of these attackers are concentrating on
core areas like vehicle electrification, city mobility and autonomous driving, still more excel at content provisioning, online commerce, home automation and other tangential but potentially lucrative plays.

Most automotive companies have underestimated the relevance of establishing the right organizational setup early in their digital endeavors and thus currently face major implementation hurdles. Automakers should consider organizational issues up front in the digital business model planning process. That means involving the functional departments as needed (“transform the company”), partnering with third parties when internal capabilities are lacking, setting the right priorities on key lighthouse reference business models, and finding the right balance of freedom for digital business while still employing key corporate assets and capabilities to the maximum extent possible.

Additionally, capturing profitable business opportunities in the digital space will require automakers to change their approaches in fundamental ways. Where in the past they could effectively “go it alone” while relying on key Tier-1 suppliers for needed innovations,
thriving in the digital world requires innovative ways of working. Companies need to develop ecosystems of partners, establish multi-speed capabilities and totally rewire their product development processes. While accomplishing this will not be easy,
the industry has few other options: Those slow to make the switch will soon find themselves overmatched by players that take the lead in this critical transformation and are willing to face the significant investment needs implied in such fundamental change.

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