“Vehicle manufacturers have to use the power of data to get inside customers’ heads.” - Dieter Becker, Global Head of Automotive, KPMG International
Automotive sector CEOs know that if they can’t meet their customers’ needs, the competition will. According to the findings of the KPMG Global CEO Outlook Survey, with 86 percent of automotive CEOs concerned about the loyalty of their customers, it appears getting it right isn’t an option, it’s an imperative. It’s why many CEOs in the automotive sector are throwing their support behind new innovations and new technologies. Auto CEOs indicate that spurring innovation is a critical challenge; almost half say fostering innovation is one of their strategic priorities for the next three years, while 36 percent have made a related priority to increase their speed to market.
Technology disruption and innovation go hand-in-hand in the automotive sector. In a sector where 86 pecent of CEOs are concerned about customer loyalty, 70 percent are concerned about new competitors disrupting their business model and 67 pecent concerned about keeping current with new technologies – there’s little doubt that innovation must supersede the status quo if auto companies are to be successful.
Many automotive sector CEOs understand this innovation imperative. From developing more efficient and alternatively fueled vehicles to creating a seamless user experience by integrating everything from mapping tools and satellite entertainment to remote start functions into vehicles – auto companies are competing to discover the next stage of auto evolution. The pressure on companies is enormous. It’s likely why 42 pecent have made it a priority to foster innovation over the next 3 years, while 36 pecent have prioritized increasing speed to market.
With the rise of connected vehicles (e.g. remote ignition, automatic brakes, smartphone connectivity), the automotive industry must face a challenge that has not been a challenge historically: hacking. The in-vehicle technologies meant to create a seamless user experience may themselves be used to compromise vehicle safety and handling. Auto companies face a steep learning curve associated with identifying and mitigating cyber-security risks – one they must steer if they are to provide the innovations their customers want while maintaining their brand integrity.
Auto CEOs recognize how important cyber-security is becoming. While some companies have already taken action to pre-empt cyber-security breaches – even more plan to take action in the next 3 years: 66 pecent plan to hire a cyber-security consultant, 63 pecent plan to change external processes, 55 pecent plan to upgrade their current technologies and almost 50 pecent plan to hire a cyber-security executive or team. For many, the success of these cyber-security initiatives could be as important to their sustainability as any new customer-focused innovations.
With 86 percent of auto CEOs concerned about the loyalty of their customers, it’s no wonder many are focusing their strategy on fostering innovations aimed directly at answering their customers’ demands. Auto CEOs know that if they don’t provide what their customers want – their competition will. But understanding customers isn’t easy. 22 pecent of CEOs in the automotive sector believe the biggest barrier to innovation is shifting customer dynamics – significantly higher than the 16 pecent of CEOs globally who see it as a barrier.
The challenge is that customer evolution is not expected to slow anytime soon. Auto CEOs are coming to recognize this – along with the role emerging technologies can have in helping them shape, track and measure customer opinion. If auto CEOs can understand what customers are saying and can engage them in the right conversations, they can focus their corporate innovations and new technology investment where they will have the biggest impact.
This is where data and analytics (D&A) will be essential. Already, 32 pecent of CEOs say their company is considered a leader in the use of data and analytics. But with 51 pecent saying that they use D&A fairly effectively, there appears to be room for improvement.