Trust in autonomous vehicles rises, with traditional manufactures most trusted

27 March 2018 Consultancy.uk

Self-driving electric cars are said by manufacturers to boost both wellbeing and the environment, reducing wasted resources, emissions as well as high safety profiles. New analysis shows that spin from the likes of Elon Musk is paying off, as potential customers are decreasingly concerned around safety and increasingly keen on electric vehicles, although traditional automotive players continue to be the most trusted to deliver the technology is most countries.

Self-driving cars continue to see heavy investment from both incumbent OEMs as well as technology firms, including big names such as Google and Apple. The technology remains in its infancy, however, with various regulatory hurdles, technological barriers and consumer confidence being present to scuttle projects in the near term. Different opinions have formed around how long it will take for the technology to become ubiquitous, assuming no pitfalls are encountered, with optimists predicting a near-term revolution while pessimists see the development and implementation as taking decades.

The allure of self-driving cars remains strong, they promise at least, to significantly outperform motorists in terms of safety, reduce idle cars taking up city space, as well as create a new method to move people between a range of locations in an efficient and potentially cost-effective manner. Companies across industries are investing heavily in the technology, with estimates at $80 billion over the past three years.

Consumer who think self-driving cars are not safe

Recent news of the first death caused by a self-driving car experiment has created apprehension around responsibility, with difficulties increasingly in the hands of legislators around how best to treat the vehicles and the impact they have on society. A new report from Deloitte, titled ‘Great expectations’ looks at 22,000 peoples’ perception, across 17 countries, of the new technology as well as wider trust issues.

The most recent survey shows that consumers are considerably more positive about the technology in terms of the perception of safety. In all countries surveyed the number of respondents that think the technology will not be safe has fallen significantly since the previous survey. The Japanese remain the most concerned, however, with the percentage of consumers who think self-driving cars will not be safe coming in at 57% of respondents. The republic of Korea comes in second spot at 54% of respondents – the drop is from 81% in the 2017 survey.

In Belgium the number has fallen by 19% to 50% who think that self-driving cars will not be safe, while in the UK 48% say that they will not be safe, a drop of 25%. The people least concerned about the technology include Mexican, Brazilian and Chinese consumers, at 22%, 25% and 26% respectively in the 2018 survey.

Consumer preference for type of engine

Aside from a shift towards autonomous vehicle types, consumers are also increasingly interested in electric vehicles. The technology is developing rapidly, with estimates of an inflection point in sales in the mid-2020s. Electric vehicles will largely replace internal combustion engines (ICE), with considerably stronger performances related to environmental and health impacts.

In the latest survey, Chinese consumers – one of the fastest growing markets in the world – remain interested in some form of electric vehicle, particularly hybrids (40%) and battery electrics (16%) for their next vehicle. Italians too are keen on HEVs and BEVs, although to a lesser extent. Japanese consumers are also on the lookout for HEVs for their next vehicle (38%) or a BEV (9%). US consumers and South African consumers remain the keenest on ICE vehicles, although this could change rapidly as the economic story begins to favour electric vehicle technology.

Trust

The firm also asked respondents to identify the type of companies they trust the most to bring fully autonomous vehicle to the market – with traditional car manufacturers, new AV company/other or existing tech company relevant options.

Mike Woodward, UK automotive leader at Deloitte, said, “Two significant trends could move us closer to the tipping point: battery cost reduction and government regulation. The trend towards mandating electrified powertrains, not merely demanding increased fuel efficiency or better carbon footprints, lays out a ‘must-do’ path for car manufactures. As automakers simultaneously begin to partner on building out electric charging infrastructure and developing other value-added services that increase the convenience factor for consumers, electric vehicles could become a desirable alternative.”

Types of companies trusted with autonomous vehicles

In China, new AV company / other won out (53% of respondents), followed by traditional car manufacturers (28%). In India, meanwhile, existing tech companies were found to be the most often selected (41%) followed by new AV company / other (30%). Western Europe was more trusting of traditional manufacturers, with Germany  at 48%, the UK  at 51%, and France at 55%. The Japanese were the most keen on traditional players, at 76% of total respondents.

Public opinion is far from unanimous about the technology, however. A survey last year by Pew Research Center found that more than half of Americans would not want to ride in a driverless car if given the option and expressed some level of worry about such vehicles.

Further to this, it remains to be seen how these results, and Deloitte’s, will have been impacted by the news of a fatal collision involving an autonomous vehicle in Tempe, Arizona. The vehicle, which was part of an autonomous vehicle pilot by Uber, collided with a pedestrian wheeling her bicycle across a road, while the car’s attendant was seen to be distracted by something below the dashboard. The car did not slow down during its fateful approach of the pedestrian. 

With regards to the Deloitte study, meanwhile, the car was also sourced from traditional manufacturers. Toyota have since suspended all US tests of driverless cars, as have Uber.

Missy Cummings, a professor of engineering at Duke University wrote on Twitter after the accident in Arizona, "Hopefully Congress will take note and stop rushing to deploy this immature technology.”

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”