The automotive experience reimagined
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The automotive
experience reimagined
1
Rising expectations around Within weeks of the pandemic’s start, $1,321.74 billion in 2020—was being tipped to
sustainability, new definitions of luxury three of Japan’s largest carmakers—Nissan increase at a compound annual growth rate
and digitally-enhanced vehicles are Motor Co., Mitsubishi Motors Corp. and (CAGR) of 9.3% this year and at a CAGR of 8%
set to change the way people think Mazda Motor Corp.—had put 20,000 to $1,988.72 billion by 2025, according to one
about cars forever. Now is the time for of their workers on temporary leave.4 In survey of the global passenger car market
the automotive industry to reimagine Germany, meanwhile, COVID-19 compelled published in February 2021.7
products, services and experiences that an estimated 95% of automotive-related
deliver against customers’ new values, companies to put their workforces on part- Now, as OEMs look ahead to a future beyond
wants and needs. time schedules during the shutdown— the pandemic, the time is right to reimagine
and people who were temporarily laid off the role of cars in our daily lives for good—
Connectivity, autonomous vehicles recieved a substantial amount of their pay reestablishing their value and rebuilding the
and electric and shared driving are four government-subsidized.5 emotional infrastructure and relationships
megatrends that had been disrupting humans have with them.
the automotive industry—causing Lockdowns and social distancing measures
unprecedented technology and business used to stem the spread of COVID-19 also It’s a shift that can be likened to the humble
model transformation—for a while.1 Then a sped up important shifts in consumer horse evolving beyond simply being viewed
global pandemic magnified these pressures, behavior that were already set to have a and used as a functional “beast of burden.”
forcing organizations to rethink many significant impact on original equipment In the same way, people will expect more
aspects of how they do business. manufacturers’ (OEMs’) futures. of their cars in the future—more safety,
more experience, more flexibility and more
COVID-19 quickly devastated industry Conscious consumption, shopping local and integration into our daily lives beyond simply
growth by almost instantly stalling consumer e-commerce have all grown significantly being a mode of transportation.
demand. In the U.K., sales of new cars were over the past year and the acceleration
down 50% year-over-year by the end of the of these trends are set to continue.6 While Moving forward, OEMs need to organize
first national lockdown, in June 2020.2 And by just a year or two ago attentions were fixed the whole business around the delivery of
February 2021, British new-car registrations on convenience and simplicity, now it’s all exceptional experiences, which is what we
for that month had slumped to the lowest for about rapidly evolving priorities around call the Business of Experience. It means
a February since 1959.3 sustainability and redefining notions of rewiring the customer-facing functions of the
“ownership.” organization: marketing, commerce, sales
On top of this, there was widespread and service. The Business of Experience is
disruption to supply chains in an industry A year from the start of the first lockdown, an approach that allows organizations to
all about “just in time” production, global automotive sales were starting to rally. become customer-obsessed and reignite
networks and lean inventory. their growth.
The global passenger car market—valued at
2
Here, we identify four opportunity areas. Yet to date, many services and offers have As a result, people feel torn between wanting
Each is significant and important in its struggled to deliver against what change to embrace greener lifestyles and not
own right. Combined, they represent a demands, creating a perception that singular wanting to forgo the daily convenience of
reimagination of the whole automotive and one-sided solutions are not up to the private mobility. They want everything at the
domain. This is the time for OEMs to job because personal mobility is just too same time and they expect OEMs to expand
take innovation seriously and holistically complex, too contextual and too diverse. their offerings accordingly.
reimagine the automotive experience in
line with technological progress and human Meanwhile, consumers’ expectations Meanwhile, cars are taking on new roles in
change. continue to rise—especially around people’s daily lives. Increasingly, they’re being
sustainability. People want more from their reconsidered in terms of both functionality
1. New sales experiences cars, and they want the companies behind and usage. And as cars become more
2. Change for good: The road to zero them to deliver more, too. connected, flexible and adaptive, they’re
emissions offering many of the features of a home
3. From lost time to prime time: Cars as OEMs need broad-based openness and away from home.
experience platforms courage to leave the beaten track and
4. Software-defined vehicles: From embrace the era of technology in order to Business trends:
predictive personalization to rebuild automotive from the core. They need
individualized interaction to integrate personal, shared and public OEMs need to rethink their entire business
transportation infrastructure into a seamless around people’s new demands and respond
experience that adapts to the different needs to the value created by digital experiences.
Radical change of consumers. And they must address a set
driven by realism of underlying, accelerating trends that fall
into two broad categories.
To do this, they need to scale flexible digital
capabilities across both their main business
and the entire value chain—from new points
Human trends: of sale and payment models to logistics,
The automotive industry has long been
production and product innovation.
powered—and characterized—by change.
People are reluctant to accept compromises
From shared mobility to carpooling and
around mobility—a necessary part of modern Challenged by new entrants, new digital
communal mobility, there has been a
life and society—and they are often blind to disruptors and new partnerships, incumbents
massive shift in how people move from point
the contradictions that exist. For instance, also need to embrace agile software delivery,
A to B. Now, the industry stands on the brink
on one hand they strive for the luxury and fast iteration cycles and constant expansion
of a radical change in attitudes toward car
flexibility of owning a car, on the other of digital services as areas of growth.
ownership.
hand they’re increasingly demanding more
sustainable mobility solutions.
3
Striving for
a holistic view
What’s needed now is nothing less than a will be paved with electric options, circular
reimagining of the automotive industry’s production and new models of shared
foundational building blocks to explore mobility, going from one-time purchases
completely new areas of value and expand to total cost of ownership. Meanwhile,
the range of experiences in the daily lives of expanding the car into a more versatile tech
their customers. device will turn it into a true life companion.
It’s too easy to focus on incremental areas of Understanding how the decoupling of
improvement. Instead, what’s needed is an software and hardware can help us wrap
understanding of mobility as an integrative consumers in a software bubble that moves
layer of working, living, social experiences with them from vehicle to vehicle will create
and health. This understanding will offer a whole new paradigm.
progressive OEMs the opportunity to
redefine their value propositions, set new OEMs that have high ambitions for human
industry standards and reimagine the future experience and embrace this kind of
of mobility. meaningful innovation will grow and sustain
their mission while leading a positive shift
New digital sales experiences will make in the automotive domain. They’ll need to
choosing and buying cars as smooth as the be ambitious, because radical expectations
drive itself by offering radical transparency demand radical ideas.
and letting people experience the vehicle
in a virtual setting. Reimagined physical
touchpoints will evolve from singular options
to interconnected points that support and
elevate the digital experience in the offline
world.
As we move into new frontiers of
sustainability, the road to zero emissions
4
Experience Reimagination
Automotive - The new sales experience
01
The new sales experience
When buying a car, customers What’s going on
want a digital-first experience The automotive sales model is primed for
that combines the flexibility change.
of virtual product interaction Today, almost 90% of customers use online
with the convenience of channels in the early stages of their decision-
making journeys. While previously customers
buying online and the personal visited dealerships on average eight times
consultancy of a dealer. before deciding what vehicle to buy, today
With the use of e-commerce the average is somewhere between one and
two times.1
and expectations of brand
experiences driven to new
heights by the pandemic, now
is the time to reimagine the car
sales experience.
5
Experience Reimagination
Automotive - The new sales experience
Meanwhile, many large original equipment On top of this, the plethora of information
manufacturers (OEMs) expect to achieve and reviews available online had flipped the
25% of global passenger car sales through symmetry of information between dealers
online channels with their trading partners and buyers on its head.
by 2025.2 In the world’s largest auto market,
China, digital sales are expected to account Yet despite all this, the quality of the car-
for 10% of new vehicle sales by 2025 and buying experience was falling short.
43% by 2035.
Then came COVID-19, and some important
Yet currently, most of the automotive aspects of the automotive sales experience
industry’s established OEMs still rely on a were highlighted. The first is the value of
traditional sales model. Typically, this involves the digital experience in choosing and
an OEM selling its cars to an independent buying a car, which was magnified during
dealer—with the dealer playing a central role the pandemic—a time when traditional real-
in pricing, marketing and sales—then the world showrooms were forced to close.
dealer selling direct to the consumer.
Volkswagen and FAW’s joint venture virtual
New players such as Tesla, NIO and Canoo, showroom in China, for example, attracted
however, are now challenging established 2.5 million customer views at its peak. More
OEMs and their dealers with a direct than 2,000 Volkswagen dealerships are
customer approach that offers convenient presenting the current model line-up via
sales and mobility experiences.3 And OEMs livestreams.4
are starting to design new, more customer-
centric sales models in response. During 2020, car brands including Mercedes-
Benz, Honda, Volkswagen and BMW
Before 2020, digitization was evolving the car launched online portals and embarked on
sales experience and expectations around it. an accelerated digitization of consumer
touchpoints. Mercedes-Benz, meanwhile,
It was clear that selling cars online wasn’t launched a host of remote customer
as simple as putting inventory on a website initiatives under the umbrella theme Merc
or offering a sleek configurator, and that from Home, which used digital tools to boost
digital experiences that empowered and ease of purchase.5
entertained were needed to transport people
from browse to buy.
6
Experience Reimagination
Automotive - The new sales experience
The second issue raised by COVID-19 was
the importance of OEMs meeting customers’
rising expectations of the quality of the
experiences associated with buying a car—
expectations raised by the high-quality
experiences provided by brands in other
industries where digitization was more
advanced.
When it comes to buying a car, customers no
longer just want to be inspired and informed
online. Increasingly, they want a digital-first
experience that combines virtual interaction
with the car with the convenience of buying
online, plus the personal consultancy of a
dealer.
What’s next
Further, they expect all related experiences—
from digital brochures all the way through to The current sales model is likely to remain Deserted showrooms have left lots full of
after-sales—to be joined up. in place for some time. However, the time is cars and salespeople idle at a time when
right for OEMs to accelerate their efforts to COVID-19 has accelerated people’s desire
Now, as OEMs assess the lasting impact tackle its many shortcomings. for many more products and services to be
of shifts in consumer behavior caused by delivered to them at home.
the global pandemic, the stage is set to Among the most important are an
address the shortcomings of the traditional unsatisfying customer journey caused by The relationships the sales model fosters in
sales model and pave the way for new sales limited online options; an inconvenient its present form are also lacking.
experiences. purchasing experience and insufficient
channel alignment; inconsistent pricing, The fact that customers visit car dealerships
which results in intra-brand competition; infrequently—when they’re shopping for
and little engagement between OEMs and a car or for a service or they’re “locked in”
customers, which limits OEMs’ access to with a particular dealer or OEM—makes
customer information and so the capability the customer-dealer relationship purely
for truly data-driven sales.6 transactional.
7
Experience Reimagination
Automotive - The new sales experience
Further, car buyers are spending less time misaligned digital and physical sales vehicles (EVs)—the sales of which are now
shopping and spending fewer days in experiences can leave people feeling predicted to grow by 22% by 2026—as EVs
market—during which time they are visiting shortchanged. need less aftercare.10
a smaller number of dealers and making
their purchasing decisions more quickly.7 The All too often a customer who has configured Yet while many dealers admit that new car
knock-on effect of this is reduced time for a car online is either unable to access the sales are not profitable for them and want
dealers to build relationships. additional information they need or test drive to change business models, they struggle
the precise desired car once they visit the to change due to capital investments, fixed
Finding new ways to engage with customers dealership. sales territories and OEM relationships.11
more effectively—be that more personalized
advertising or more convenient interactive At the same time, it will be important to Looking ahead, further pressure to change
sales journeys online—is an obvious continue to evolve physical touchpoints the current sales model will come from the
opportunity. and their role in customer decision- growing sales of EVs—which typically last
making and the sales journey. Some 70% longer and have less wear and tear—and
Meanwhile, the limited contact OEMs have of consumers find the concept of a brand rising subscription usage models, such
with their end customers impacts the experience center appealing, research by as Canoo’s mobility in exchange for a
relationship between the brand and the Cox Automotive shows.9 Boutique-style city membership fee proposition.12 This will need
customer. center locations for brand experiences such to be balanced with the sale of services and
as Tesla Stores, Audi City Cyber Stores and experiences.
Customers don’t really want to negotiate Mercedes-Benz Visionary Stores are a few
on price, research shows. When asked, 81% examples of new retail formats.
prefer fixed transparent prices, for example,
yet they do want a physical, visceral The case for change is further strengthened
interaction with the car as part of the sales by how challenging it has become for
process: 77% of consumers still want to buy dealers to turn a profit on new car sales as
in a physical store.8 competition erodes their margins.
Then there’s the disconnect that often Another challenge associated with the
exists between the digital and physical existing model is that dealerships make more
components of the car-buying customer profit from aftercare service than the sale
journey. With the majority of customers of the asset. This revenue pressure will only
starting their car-buying journeys online, increase, however, with the rise of electric
8
Experience Reimagination
Automotive - The new sales experience
Opportunities for reimagination
Tesla’s touchless delivery experience, In India, Renault has trialed mobile
meanwhile, involves test-drive vehicles left showrooms, for example,16 blending
1. Meeting customers in parking lots at Tesla locations, each with convenience with the tactile nature of car
where they really are its unique QR code posted in the window.
Interested parties scan the code, enter
buying.
their information and get started on a test With a mobile showroom, the dealer can
drive without talking or even seeing a Tesla draw on a larger pool of cars to bring
2020 brought many changes to the retail employee.15 the closest car a prospective buyer has
experience, especially when it comes to configured online to their home for a
what consumers will venture out for and It will also be important for organizations safe and convenient test drive. With the
what they expect to be delivered to their to respond to habitual changes and meet opportunity to touch and feel different
homes. Anxiety about health and safety will customers where they can be found now: at vehicles and options seamlessly delivered
ease over time. Yet many shifts in behavior home and online. This will require a seamless to their door, the disconnect between the
and expectations now look likely to endure integration of the digital channel with the online and physical experience for the buyer
beyond the pandemic. physical, which will continue to have an is closed.
important role to play.
It will be critical for OEMs to learn lessons In the U.S., a number of dealerships are
from the pandemic. New digital retailing While customers browse and increasingly testing similar models in response to the
tools drove process efficiencies and shop for their mobility online, there will still success of new entrants. Carvana, for
achieved higher buyer satisfaction, for be important physical touchpoints. And it will example, has innovated with its car vending
example, improving the automobile buying be important that these physical touchpoints machines, multi-story structures holding
process during the prolonged downturn.13 don’t feel like starting from scratch or an dozens of cars where buyers pick up their
interruption of the process. online purchases. It’s operated using a
Early in the pandemic, FCA UK launched special oversized coin the buyer puts into the
Car@Home, a service that allows dealers Dealers need to take on new roles in machine, and out comes their car.17
to sell vehicles and communicate with the experience and have full access to
customers remotely via videoconferencing.14 customer data, preferences and choices in Finally, nearly half of drivers want after-
It also introduced a chat function across order to amplify the user’s experience, not sales services to be integrated seamlessly
all of its brand and retailer websites so, just merely complement or fulfil it. In this way, into their daily lives, saving them the time
like visiting a showroom, customers on disconnected and separate points of sales and effort of having to go in person to
the website can engage with their retailers will turn dealerships into locations people a workshop or dealer service location,
in real time, receiving engaging, relevant use to explore their personalized mobility. according to internal Accenture research.
information when they need it.
9
Experience Reimagination
Automotive - The new sales experience
2. Experience concierges
Today’s car dealer plays the role of sales Dealers need to double down on their
point and gatekeeper to vehicle ownership. profitable service business but not restrict
But what if their role evolved to being a this to pure car service.
purveyor of experience?
Some dealerships already invite existing
As Experience Concierge to all our mobility and prospective customers to track days
experiences, a car dealer or OEM could to test the full potential of a car in a safe
create more reasons for authentic customer environment. Such experiences are often
interactions and develop longer-term limited due to cost, however, which means
relationships based on trust. The opportunity opportunities to experience the car in a more
is for them to play a greater role in helping immersive way are missed.
consumers experience the car and truly feel
what it would be like to own that vehicle. If a dealer were to help a customer arrange
a night on the town—organizing dinner
Mercedes-Benz’s User Experience team set reservations, a show, perhaps even an
three goals for the development of its in-car overnight stay as part of an elongated test-
voice experience: drive experience—the customer could have
a deeper, richer experience of what owning
1. Allow drivers to talk as naturally as they that car could really feel like. The dealer,
would to another person. meanwhile, could collect commission for the
2. Support more types of queries than third-party referrals they’ve aligned to the
typical voice services. interests of that customer.
3. Integrate voice more naturally into the
overall in-car experience so users can Rethinking how dealerships create
seamlessly switch between voice and experiences in which the car plays an
touch control.18 important part can help drive car sales,
improve dealers’ margins and provide
customers with more emotional connection
than achievable with a 30-minute test drive.
10Experience Reimagination
Automotive - The new sales experience
3. Partnering to evolve
the dealer model
New entrants such as Tesla have proven that BMW is using a collaborative digital
the direct sales model has benefits for both experience management platform to solidify
the OEM and the customer, starting with relationships with its dealers and customers.
the lower cost of sales. Traditional OEMs Dealers and manufacturers collaboratively
are encumbered with an existing dealer cultivate relationships with the customers
network, however. This means that they need they seek, using consent-based marketing
to evolve the role of and relationship with and advanced analytics to engage with
dealers over and beyond simply running pinpoint accuracy.20
small pilots.
Further, the company has used customer
OEMs have an opportunity to partner with data to create relevant digital experiences
dealers and move from a wholesale model that have resulted in higher levels of online
to a retail model where they may finance the conversation.21
dealer inventory, reducing dealer costs or
subsidizing online advertising costs. Evolving the dealer model to a retail model
will also help reconnect the customer
Ford, for example, partnered with dealers directly with the OEM and stabilize or fix the
during the pandemic to offer new vehicle sale price. To achieve this, OEMs will need
home delivery. Those who agreed to to invest in central customer management
participate were offered incentives for systems and help evolve the financial model
completing the entire purchase process to fix pricing and mitigate discounts, creating
online.19 an opportunity for dealers to maintain their
current 1-3% margins.
11Experience Reimagination
Automotive - The new sales experience
4. Customer Taobao shopping platform, which attracted 4
million viewers in April 2020.23
ambassadors
Chery, meanwhile, launched its new Tiggo
7/7 PRO model exclusively via livestream,
Borrowing from different consumer sales generating more than 7,000 sales leads,
models will unlock other opportunities. according to official data.24
A satisfied customer could become a
customer ambassador who shows off their
own vehicle in return for a small commission—
5. Data transparency
something some enthusiastic Tesla owners
have been willing to do for free. This model Customers are demanding greater
would reduce costs and create an authentic transparency around how their data is used
connection between consumers. It could also by organizations. These organizations need
help new customers by connecting them with data—and more of the most useful data—
relatable people with whom they can discuss to develop the new value-added, more
vehicles and product features. personalized and relevant offerings customers
now expect. A rich area to explore sits where
Chinese EV company NIO is leveraging its these two needs collide.25
many customers, who pride themselves
on their loyalty to the brand, by building Inspiration can be found with the data-
online communities of satisfied customers focused start-ups that have already emerged
to encourage them to act as sales in this space.
representatives. Existing owner referrals
accounted for more than 45% of its cars sold Cloud-based software start-up Otonomo,
in 2019.22 for example, helps companies capture and
monetize connected car data by harnessing
Other brands are partnering with social media and anonymizing it for use to create apps
influencers to leverage their followings and to provide services like EV management,
generate sales leads. For example, Tesla usage-based insurance or subscription-based
worked with the Chinese online celebrity Wei fueling.26
Ya to present the brand’s models, specs and
prices in an hour-long video stream on China’s
12Experience Reimagination
Automotive - The new sales experience
CarDr.com provides artificial intelligence-
powered transparent and comprehensive
6. Recharging
used-car inspections.27 It benefits dealers by drivers and cars
enabling them to accurately appraise trade-
ins and existing used-car inventory, as well as
detect odometer and VIN fraud. It benefits With the rise of EVs, the time it takes to
buyers by giving greater transparency into the charge their batteries and the number
health of a used car. of charging stations mean there’s an
opportunity for dealers and OEMs to
The experience of buying a used car is often integrate charging into customers’ daily lives.
overlooked. Yet it’s growing in importance
due to sustainability concerns, and it’s ripe for Imagine if during the time that the car
reimagining. was charging, a customer could grab their
favorite Starbucks coffee, access some salon
As with new cars, much information services and even plan their weekend with
concerning used cars has been an on-site Experience Concierge? Done well,
democratized. Yet with critical data still such services could be not only a reason to
trapped in OEM and dealer systems, pockets visit, but possibly even more compelling than
of opaqueness remain. Systems like Carfax simply fueling the car.
already provide some level of transparency.28
Now, community-generated insight models
are also evolving.
One example of this is the bringatrailer.com
community—a rich set of aficionados who
regularly dissect images of cars put up for
auction to offer counsel and confidence to
potential bidders around issues that can arise.
Many of those providing these insights have
actually owned similar vehicles so speak from
experience.
Community-generated validation models like
this are cost effective and can help build trust
for OEMs.
13Experience Reimagination
Automotive - The new sales experience
What automotive
leaders can do next
1. Experiment and pilot By building a centralized database to better
retrieve and analyze customer data, an OEM
Small-scale pilots are a useful starting point, can cut siloed data waste.
and many brands are already trying to do
some or all of these things in markets like 3. Bridge the divide
Scandinavia and South Africa.
Customers want a digital-first experience
To pilot moving from a wholesale to a retail that combines virtual product interaction
model, start a dialog with dealerships to with the convenience of buying online and
change the commercial model by finding a the personal consultancy of a dealer. So, find
middle ground. ways to bridge the existing digital-physical
divide.
To explore potential for creating experiences
that allow a customer to feel what it’s like to Create new experiences around taking
own a car, take inspiration from Airbnb-style products and services to where customers
experiences—a long weekend camping in a are: in their homes. Take inspiration from
Subaru Outback, for example, or a racetrack online used-car dealer Carvana, a new
experience bringing people together to test- entrant already doing this—with showrooms
drive a high-speed, high-performance car. located wherever its customers are, from
living rooms to mobile devices—to prove the
2. Create direct relationships with model works.29
customers
Today’s car dealers are the middlemen
between OEMs and customers. But what
if OEMs built more direct relationships
or provided the glue between the digital
channel and the dealerships, like a customer
relationship management (CRM) system that
builds one view of the customer?
14Experience Reimagination
Automotive - Change for good:
The road to zero emissions
02
Change for good:
The road to zero emissions
When it comes to sustainability, What’s going on
the automotive industry doesn’t Consumer demands have driven sustainable
have a great track record. But automobile solutions to become a matter of
survival for the industry.
at a time when consumers
don’t just want change but are Globally, 66% of car buyers consider
sustainability when deciding if and what to
demanding it, organizations buy.1 On top of this, there’s pressure from
have a powerful opportunity governments on manufacturers to support
to take the lead in driving the sustainability initiatives. Norway, for example,
now plans to raise the per-ton carbon tax
sustainability agenda forward from $95 to $240 by 2030 to help reach its
through the products, services climate goals.2
and experiences they create.
15Experience Reimagination
Automotive - Change for good:
The road to zero emissions
Momentum for change is building. And However, if the automotive industry is to Whatever the solution, it will need to match
with nearly 40% of people worldwide open truly maximize value to society and the people’s lifestyles.
to innovative e-mobility solutions, the environment, it needs to adopt circular
pressure is on automotive original equipment economy practices—or a so-called “circular The most effective strategies will involve
manufacturers (OEMs) to change and car” approach. exploring a variety of smart tools and options
adapt—fast.3 to adopt more sustainable life choices,
What’s next progressively shifting toward more ethical
The road to zero emissions is paved with and ecological options along the way, so that
innovation and it’s being powered by A circular car approach means the efficient it fits seamlessly into people’s everyday lives.
electricity. Electric vehicles (EVs) are one part use of resources and public goods and
of the solution, and many manufacturers are measuring success in terms of the ability
moving toward EV fleets. The share of total to provide mobility and reduce carbon
EV car sales is now predicted to be 10% by emissions and non-circular resource
2025, increasing to 28% by 2030 and 58% by consumption.8
2040, though predictions vary by region and
by OEM.4 This starts from an organization’s business
model and extends across car production
Ford, which is on track to fulfill its through distribution to miles driven.
commitment of an $11.5 billion investment Achieving circularity is not a one-time effort,
in electrification through 2022, recently however. Instead, it’ll require collaboration
doubled its commitment to $22 billion across the automotive ecosystem over the
and extended the timeline to 2025 while years and decades ahead.9
also investing an additional $7 billion in
autonomous vehicles.5 This will be a major priority for OEMs in the
coming years.
BMW plans to double its fully EV sales this
year, which already accounts for 15% of its Because people like convenience and
sales in Europe.6 Tesla led the race in 2020 want greater sustainability, a significant
by ramping up production to just under opportunity lies in new sustainability
500,000 full electric vehicles by the year’s solutions that are pragmatic enough to
end.7 survive the flow of daily life.
16Experience Reimagination
Automotive - Change for good:
The road to zero emissions
Opportunities for reimagination
1. It’s electric
EVs are a great start for the industry to Yet the batteries that power EVs have a
become less of a catalyst for climate change, way to go, which is why many brands are
with research now proving that EVs reduce investing in research and development into
emissions. battery manufacturing that can achieve truly
clean energy solutions.
For some years, it was suggested
that emissions produced during EV Chinese EV giant BYD and Japan-based
manufacturing combined with the electricity Toyota, for example, are now partnering for
needed to power the vehicles once on the EV battery R&D. Stellantis and Total/Saft
road made EVs bigger polluters. But in 53 have created joint venture Automotive Cells
of 59 global regions—making up 95% of Company to do the same.13
the world—EVs and electric household heat
pumps produce fewer emissions and are In Germany, Opel has created a
better for the environment than fossil fuel refurbishment center near its production
alternatives, according to a recent study.10 plant for end-of-life batteries. This paves
the way for second-life use by creating a
OEMs are stepping up. Daimler is now charging point from used battery packs and
working toward having an electric or hybrid by recycling spare parts to return to the first-
version of each of its models by 2022. life battery cycle.14
Volkswagen has pledged to achieve the
same by 2030. General Motors, meanwhile, Such initiatives prove that investing in a
recently announced it will only sell zero- cleaner power source positions the entire
emission vehicles from 2035 on.11 industry for success. They also help in setting
standards beneficial to all regarding topics
such as charging and payment regulations
and grid integration, which is essential for
ensuring sufficient infrastructure.
17Experience Reimagination
Automotive - Change for good:
The road to zero emissions
2. The circular economy
The automotive industry’s philosophy activities. With the re-factory, we are also
on the value chain has already shifted reaffirming our industrial footprint in France
fundamentally—from “take-make-waste” and are working with our unions to maintain
linear production and consumption models the jobs that were originally dedicated to car
to “reduce, reuse, recycle.”15 Yet though EVs manufacturing.”
are leading the charge, they alone cannot
save the day. Circular economy strategies have the
potential to reduce carbon emissions per
With projections suggesting that EVs will passenger kilometer by up to 75% and non-
account for 28% of all car sales by 2030, circular resource consumption by up to 80%
sustainable success will also depend by 2030, according to Accenture research.19
on achieving a true circular economy.16
This means leveraging circular economy With cars increasingly bought online and
strategies to transform products, as well as flexibly subscribed to for shorter time
the way the products are used. periods, revenue streams are shifting
toward the use phase, and the drive toward
To move from sustainable ambition to circularity is slowly picking up speed. Already,
reality, there are four main transformation most automotive materials are recyclable.
pathways to increase circularity: energy Meanwhile, more and more cars are being
decarbonization, material circularity, lifetime built to last and to be repaired.
optimization and utilization improvement.17
These are all important aspects of circularity.
“Renault has long been dedicated to making But more work will be necessary to
its business model more circular,” said Jean- fundamentally reimagine the value chain
Philippe Hermine, Renault’s vice president, to minimize lifetime carbon emissions and
Strategic Environmental Planning.18 resource consumption.
“Extending vehicle lifetime, providing a
second life for parts and recycling, as well as
new innovations, will be at the core of these
18Experience Reimagination
Automotive - Change for good:
The road to zero emissions
3. Redefining luxury
Today, 88% of consumers look to brands to compressed timber product made from a
help them be more environmentally friendly sustainably harvested rattan called karuun.22
in their daily lives.20 Delivering on this is
therefore quickly becoming essential for a Volvo Car Group’s EV sub-brand Polestar,
brand’s future success. But when it comes to which is exploring materials ranging from
cars, going green goes far beyond greening flax to recycled bottles and fishing nets,
a car’s power source. has a state-of-the-art manufacturing plant
in Chengdu, China. The plant showcases
Eco-conscious consumers expect to see every aspect of the brand’s sustainability
change from the inside out. Considering focus—from improved efficiencies in energy
that the materials and manufacturing expended in its factories to the wellness of
burdens of a new vehicle can account for its employees.23
anywhere from 6% to 25% of its lifetime
carbon footprint, both can have a material Using new materials can also increase the
effect on sustainability.21 energy efficiency of vehicles by saving
weight, which is becoming even more critical
OEMs need to drive holistically sustainable as battery technology matures. “Our material
solutions across the supply chain, and with can cut the weight of interior panels by up
their innovative use of more environment- to 50%,” said Per Martensson, chief sales
friendly materials, luxury auto brands are officer at Bcomp—the Swiss supplier of a
leading the way. flax-based composite Polestar is using.24 “So,
we reduce the plastic content drastically, and
Mercedes-Benz has incorporated a host of we increase the performance.”
new materials. For example, Dinamica—a
sueded fabric made from recycled plastic
bottles and clothing fibers—is used for
covering seats. On floorboards and
dashboard trim Mercedes-Benz uses a
19Experience Reimagination
Automotive - Change for good:
The road to zero emissions
What automotive
leaders can do
1. Give innovation the backing it deserves circularity. And this framework should raise
industry ambition from merely doing less
Innovation is a top priority. In fact, 71% of harm to building a truly sustainable global
automotive executives believe that the stakes economy.
for innovation have never been higher.25 So,
it’s imperative that multifaceted innovation Remember, sustainability starts with design—
is not only funded but incorporated into a not just product design, but also all the
brand’s core operation. different design components that go into
creating mobility solutions.
Think beyond the hunk of metal that is the
car to see how you can innovate within 2. Walk the walk
the production process: in the factory,
along the supply chain, in your approach It’s essential that OEMs act, rather than
to partnerships—for example, collaborating simply pledge, to make the world better and
with other organizations you might consider that they’re transparent about what they do.
competitors.
Today’s consumers—younger groups
As technology continues to evolve and new especially—want positive actions on
materials are uncovered, it’s a smart move to sustainability from brands, not just words. In
invest in strengthening research partnerships fact, 87% of Generation Z are worried for the
with ecosystem partners and third-party environment and the planet, and 90% believe
organizations. Combining powers is key to companies must drive action on social and
unlocking new insights and know-how, as environmental issues.26
already seen in the race to better battery
production for EVs. However, true success
lies in agreeing upon a common framework
for guiding and measuring progress toward
20Experience Reimagination
Automotive - Change for good:
The road to zero emissions
For OEMs this means viewing everything ten biggest automakers are working to drive
they do through a sustainability lens. sustainability through the supply chain, is a
This should begin with the source materials great example of this.29
OEMs use—questioning what they’re made
from, how they’re produced, how long Car brands must go the extra mile in creating
they’ll last, if they’re recyclable, or at least a more sustainable tomorrow. This could
biodegradable, and so on—and extend even mean investing in helping strengthen a
to engaging with industry bodies and city’s infrastructure for charging or becoming
governments to find effective ways to enable more engaged in the design of smart cities.
EVs to be on the road.
Toyota, for example, recently rebranded
Be transparent. For instance, develop itself as a mobility company with a focus on
strategies that enable increased data developing new technology to change the
transparency and information sharing with way people move.30 Then in February 2021, it
other players along the automobility supply broke ground on the construction of Woven
chain up to, and perhaps including, joint City—a prototype city of the future that’s
standards.27 being built from scratch at the bottom of
Mount Fuji in Japan.31
3. Widen your horizons
As well as being home to an initial 2,000
Sustainability doesn’t just mean better for the residents, Woven City will be a living
environment—it’s also better for the greater laboratory where Toyota can test the latest
good. OEMs should, therefore, ensure smart technologies.
sustainable mobility strategies that also
address the need to benefit communities.
Partner with others to meet and then
exceed people’s growing sustainability
expectations—like EV software companies
Hubject and ev.energy did to simplify home
and public EV charging.28 Consider public-
private partnerships. And partner with
competitors for the greater good. The Drive
Sustainability partnership, where the world’s
21Experience Reimagination
Automotive - From lost time to prime time:
Cars as an experience platform
03
From lost time to prime time:
Cars as an experience platform
Cars no longer just get us What’s going on
from point A to B. Today, they Not so long ago, the car was simply how
act as a charger or hot spot, we got from one place (and experience) to
another. The time spent riding in them was
an office, a place to relax, or effectively wasted. However, this has been
even an entertainment venue. totally upturned by technology, especially
connectivity.
With cars now valued not just
for convenience but also their Today’s vehicles are becoming an extension
safety (over public modes of of our homes. Increasingly, cars are seen as
another valued member of our digital device
mobility), the time is right to family—much like an Alexa or iRobot vacuum
upscale ambitions for what the cleaner—they’re a way for us to connect with
our lives at home even while we’re away.
future in-car experience can
and should be.
22Experience Reimagination
Automotive - From lost time to prime time:
Cars as an experience platform
BMW has been leading the way for years touchscreen. The car’s dashboard goes way What’s next
with BMW ConnectedDrive.1 This digital, beyond providing car information—rather,
connected “drive-o-tainment” and services it’s a concierge that helps drivers navigate While varying degrees of connected vehicles
suite allows the user to control in-car everyday life.4 currently cruise the roads, forecasts suggest
comfort, entertainment and security, and an installed base of 700 million units of
also manage multiple facets of their daily Much like our phones, car dashboards connected vehicles by 2030, with all new
life—from configuring at-home devices to now go far beyond their initial use. And cars being connected from 2020 and
booking services—all while on the road. when connected with mobile devices that beyond.6
help us control our lives at home—such as
Subsequently, BMW brought on board Alexa or Nest—the ability to incorporate a Historically, connectivity and integrated
key strategic partners to expand home’s functionality into a car’s functionality flexible software platforms limited adoption.
ConnectedDrive’s connected services and promises a whole new world to explore from
experience ecosystem. Particularly notable is behind the wheel. With the advent of 5G, Android-based
its integration into Tmall Genie, the first smart car platforms and Apple Play integration,
voice assistant developed by China’s Alibaba Benefits to the user range from optimizing for example, automotive industry original
AI Labs.2 errands with shopping and pick-up equipment manufacturers (OEMs) will
functionalities to feeling confident in develop new ways vehicles can increase
General Motors’ GM Marketplace, the conducting meetings on the go, knowing productivity and build value over and above
industry’s first in-car commerce platform, you can check on home from miles away. their transportation capability.
is the next step in brand experiences for And people’s appetites for this in-car
customers. It connects users with the brands functionality are growing. All of this creates the ideal environment for
they love, providing offers and discounts, the automotive industry to reimagine the
loyalty programs, restaurant reservations, In the long term, cars will offer the biggest in-car experience and upscale ambitions for
parking spot bookings and a curb-side opportunity for 5G Internet of Things and, by what its future can and should be.
concierge for retail pickup and orders to go.3 2023, the automotive industry will become
the largest market for 5G IoT solutions,
Meanwhile, in the U.S., Fiat Chrysler Gartner predicts.5
Automotive has introduced Uconnect
Market, a commerce platform that facilitates
services like ordering food conveniently,
finding the nearest gas station, or making
dinner reservations using the vehicle
23Experience Reimagination
Automotive - From lost time to prime time:
Cars as an experience platform
Opportunities for reimagination space. In fact, just as the home’s role in an Opportunities will also arise from OEMs
array of our daily activities has grown, so too partnering with third parties that are already
will we see the car’s role extended. One-fifth doing voice-activated services well in other
1. Car as extended of British motorists used their cars as a spare sectors. The key will be not building bespoke,
living space room over the first half of 2020, according to
a Skoda study.11 Alternative uses ranged from
siloed gardens that might limit future options
while broadening the array of aspects of
catching up on work to watching TV, taking a daily life their customers can control from
nap or creating a play space for kids. inside their car.
Before the pandemic, consumers were
spending more time at home.7 Then, as we Airo, a concept car from London-based The question for OEMs, then, is: What new
were forced to engage with more of the Heatherwick Studio for a Chinese-built green products, services and experiences can they
external world from inside our personal car, includes flexible interior features easily create around the car’s new role as extended
spaces, this shift was further accelerated in reconfigured to suit different needs. These living space?
2020 by COVID-19. include a dining table and swivel chairs and
reclining seats that can convert to a double
Today, the home is the place where most bed.12
of our experiences in work, health and
play reside—not just for now, but for the Voice-activated services—increasingly used
foreseeable future. Some 43% of people who in a growing number of homes via smart
had never worked from home pre-COVID speakers like Echo and Alexa—and the
now say their preferred working pattern potential to integrate them more deeply
post-pandemic would involve working from across home and car are important parts of
home at least once a week, our own research this opportunity.
shows.8
Mercedes-Benz’s bespoke in-car voice
Among employers, there are now indications technology system, Mercedes-Benz User
that many businesses may never go back Experience (MBUX), is one of the most
to traditional ways of working. Unilever9 intelligent voice assistants on the road.13
and Nationwide10 are among those to have MBUX is a concierge in the dashboard
recently confirmed plans to change post- that caters to a wide range of driver and
pandemic working patterns. passenger needs. By leveraging a variety of
biometric technologies, it also provides a
Our spending more time at home has given new level of personalization and security that
our cars the chance to shine as an additional are quickly accessed using voice.
24Experience Reimagination
Automotive - From lost time to prime time:
Cars as an experience platform
2. It’s game time 3. Safe and sound
Many have talked of the potential for a For years, in-car safety has been about
new world of in-car entertainment once airbags, crumple zones and driver assistance
autonomous cars become an everyday systems. Then customers’ health and
reality and drivers become passengers with safety concerns changed as a result of the
extra time on their hands. pandemic.
But why wait? The in-car entertainment Today, physical safety features remain just as
experience is already ripe for reimagining. important. But we’re now more likely to see
There’s plenty of scope to create more our cars as safety bubbles that can protect
immersive experiences for passengers, us from an invisible virus more effectively
which is what Holoride is now doing. than shared public transportation, for
example.
Holoride’s mission is to turn vehicles into
moving theme parks.14 By combining real- Chinese automaker Geely Auto, whose
time vehicle data with XR, it offers a dynamic parent company owns high-end brands
backseat experience that matches every Volvo Cars and Lotus, announced in February
movement of the car to turn each ride into 2020 that in response to the coronavirus, its
a thrill. By harnessing the data and idleness forthcoming Icon electric SUV would feature
at hand to create experiences ranging from an N95-certified air purification system
gaming to educational tours, it’s transforming that could “isolate and eliminate harmful
dead time into time well spent. elements in the cabin air,” including viruses.15
But what about beyond the pandemic? How
could OEMs evolve health and safety within
the car further and make it more enjoyable?
Smarter cars mean smoother rides and the
promise of relief from motion sickness. In
fact, advanced driver assistance vehicles
showed a 27% reduction in bodily injury claim
frequency and a 19% reduction in property
damage frequency, according to a report
from LexisNexis Risk Solutions.16
25Experience Reimagination
Automotive - From lost time to prime time:
Cars as an experience platform
What automotive 2. Remember: 1 + 1 > 2
leaders can do next From fleets to app development and beyond,
the key to future industry success lies in
OEMs’ ability to form partnerships that
1. Empower autonomy supersede their past collaboration efforts.
In a complex system of emerging tech, it’s
Autonomous vehicles will create many only logical that companies look to third-
opportunities to connect to adjacent areas party collaborators. While the past was about
like wellness, entertainment, and beyond. secrecy, the trend toward multiparty systems
To prepare, OEMs need to actively provides a shared data infrastructure
experiment in these spaces and start to enhance trust, transparency and
understanding consumer needs in a much collaboration—even among competitors.19
wider context than just getting from point
A to B. And they need to partner up across The benefits of sharing data extend beyond
industries to make it happen—following the outcomes and efficiencies. Sharing data
example set by the likes of Waymo or Cruise also contributes to a more connected
for their development of self-driving cars.17 society and, in the case of advanced driver-
Toyota’s e-Palette self-driving vehicle was assistance systems (ADAS), safer and more
developed with partners like Amazon and satisfied consumers.
Uber.18
3. Think big, act bigger
In the future, mobility needs to reach beyond
automotive partnerships: Think big. It’s time to think bigger than the sale of a is neatly demonstrated by Turo, which is
Imagine restaurants sending a car to pick single car as a main objective. capitalizing on rental car companies slashing
you up for a truly door-to-door experience, their fleets during the pandemic with its app
dealers sending cars to your door for a Nearly half of all drivers in a multicountry that enables private car owners to rent out
test drive and many more multilayered survey of 7,000 consumers said they would their private vehicles.21
experiences. consider giving up vehicle ownership in favor
of autonomous mobility.20 To keep customers in the future of
autonomous mobility, experimenting and
OEMs need to fully commit to embracing dabbling in ideas now isn’t enough. OEMs
alternatives to the ownership model. need to start positioning mobility services as
The power of thinking big and acting bigger a valid alternative to car ownership.
26Experience Reimagination
Automotive - Software-defined vehicles:
From predictive personalization
to individualized interaction
04
Software-defined vehicles:
From predictive personalization
to individualized interaction
As OEMs shift their business What’s going on
model from product-focused The automotive industry has pivoted
to software services, business from hardware creation to software
optimization. Not so long ago, the car was
is no longer “as usual.” a feat of mechanical engineering. Today,
Software-defined vehicles not it’s a connected machine that has a lot
in common with a consumer electronics
only require new production device.1
approaches and ways of
working, but also a paradigm Car buyers no longer base their purchasing
decisions on horsepower and unique seat
shift in how drivers and innovations. Instead, in-car technologies
passengers experience vehicles have become a primary consideration for
consumers when buying a car, an Accenture
and what they can do above survey on connected vehicle solutions
and beyond transportation. shows.2
27Experience Reimagination
Automotive - Software-defined vehicles:
From predictive personalization
to individualized interaction
Digital services are what matter. Some 59% In China, now the world’s largest car market,
of buyers consider a car’s connectivity Shanghai Automotive Industry Corporate
in their purchasing decisions—a huge and Alibaba have a strategic alliance to
opportunity for the connected car industry.3 jointly manufacture cars with an internet
connection. Both Dongfeng and Changan
Empathetic car interiors are already a reality. automobile manufacturers, meanwhile,
Such interiors respond to an individual’s have technological agreements with Huawei
in-car experience and preferences using an Technological Co. Ltd.5
array of sensors to pick up nonverbal as well
as verbal cues. But they don’t just enable an In short, the industry has undergone a
enhanced in-car experience today; they also fundamental shift, creating a desire for
pave the way for far greater personalization new business models and new driving
in the near future. experiences based not on buying and selling
a car, but on mobility services.
New technologies have driven OEMs to Never has it been more critical for OEMs to
rethink the way they design, manufacture optimize their digital capabilities and plan for
and distribute cars from the ground up, new connected automotive experiences and
across both the supply chain and the the smart mobility services that lie ahead.
customer journey. They have increased
the availability and value of data, fueling
the evolution of a new generation of more
tailored and responsive propositions and
services.
Meanwhile, the ability to update your car
over the air (OTA) is driving software-centric
OEMs such as Tesla—an early adopter of the
capacity to push OTA software updates to
its vehicles, which it first did in 2012—to the
top.4
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