The global automotive industry has been under threat from digital and technology-native disrupters like Tesla for some time. But are traditional automotive manufacturers about to lose the fight if they do not speed up digital innovation and focus on creating a leading customer experience ecosystem?

I think the massive shakeup in the automotive industry will continue, and only those manufacturers with an amazing app experience will win. Here's why:

1. The Perennial Physical-Digital Connection Problem Is Getting Worse

Forrester’s research in its Automotive Customer Experience Index highlights that manufacturers are continuing to struggle to connect the dots between the digital experience (pre-purchase research primarily) and the physical dealership experience (e.g. visit a dealership for a test drive).

However, in terms of the overall customer journey, this really represents only a part of the interactions car owners have with a manufacturer. Customers today expect to not be treated like new customers at every point of interaction they have with a brand.

In automotive, these touchpoints include car financing, often through the manufacturers’ financial services team, servicing, warranty and similar subscriptions or extras, down to having electric charging points installed at home, and more broadly the whole customer onboarding experience.

Too many of these elements require often cumbersome, human interventions. Just think about the last car you bought and trying to figure out what the various buttons do on your dashboard without having someone explain it to you at the dealership.

Related Article: How IoT, Automotive, and SmartTV Are Changing the Digital Customer Experience

2. Siloed Organizations Lead to Siloed Customer Data and Experiences

Many of the traditional automotive manufacturers tend to separate purchase, finance and service organizations, leading to inconsistent customer experiences, and high-cost in-person interactions (for manufacturers these are the most expensive).

Too often the impact the different siloes have on the customer is overlooked. A lack of a clear single customer vision is also enhancing an already broken experience.

Many companies, including in automotive, are investing in customer data platforms (CDPs) today, and the benefits are clear:

  • Move operational tasks online and lower cost-to-serve significantly, backed up by customer data and insights.
  • Focus on high-touch and high-impact personal interactions.
  • Bridge the divide between physical and digital interactions where dealers could access website, configurator behavior data to create high-value POS visits for a customer supported by AI and ML in real-time.

3. Beyond the Car Manufacturers

Despite only limited new car manufacturers launching and scaling to compete with the traditional OEMs (Original Equipment Manufacturers) so far, the competitive landscape for manufacturers goes beyond their own kind:

  • Technology companies like Apple and Google are investing heavily in automotive technology, and Amazon through Zoox in autonomous vehicles.
  • Mobility companies (Uber, Lyft, or Grab in Asia) and Mobility-as-a-Service from disrupters like Gogoro (Taiwan), GetAround (US) and ShareNow (Germany) which has had over 3 million customers already.

VW has only recently announced a major investment in technology to be “more ambitious” against tech players like Apple and Tesla.

Ultimately, though, the ecosystem car manufacturers operate in will become more and more complex, and it remains to be seen if automotive and mobility companies are successfully navigating these challenges.

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Related Article: The State of IoT in 2022

4. Create an Open Data Ecosystem in Automotive

We are already witnessing changing consumer preferences around ownership and a culture which seems to be shifting to a shared car ownership and subscription-based models. McKinsey thinks that “up to one out of 10 cars sold in 2030 potentially being a shared vehicle.”

Especially in the electric vehicle and car sharing space, we will undoubtedly see innovative pay-per-mile usership-based models. And much like disrupters in other industries (food delivery anyone?), these innovators will own customer data and make the monetization of data a core part of their business model.

Certainly in Europe it is predicted that we will see something like an open data directive for car manufacturers, potentially similar to the Payment Services Directive (PSD2) which may require companies to open their products (cars and apps) for third party services and technologies.

Opening access to data and technology for third parties will of course require additional security considerations in an industry which transports people, to secure and protect both car systems (from hacking, for example) and personal data from being compromised.

Those car manufacturers who haven’t yet prioritized data access between their own systems at a minimum are already late to the game.

5. Why Are Apps at the Center of Customer Experience?

Those manufacturers which can create an open digital ecosystem and serve up a seamless App-based experience for their customers are going to dominate the market going forward.

We all have too many apps already. However, the banking app has replaced the physical branch in many countries and in certain age groups and demographics already. For automotive the app has the opportunity to be just as significant.

A single, connected app should allow you to see your car finance account, book your car in for service, provide you with a car health check, locate and pay for parking, utilize smart city connectors, find those EV charging points, and let you select those “Best Road Trip Songs” playlist.

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