Data is the fuel of every future business model and the car will become a gigantic data-generating engine

Cars will become gigantic data-generating engines

Data is the fuel of every future business model and the car will become a gigantic data-generating engine: KPMG International report forecasts

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A new report from KPMG International projects that a car’s interaction with people and surrounding environment will make it a gigantic data-generating engine—and this data is the fuel for future business models.

Dieter Becker, KPMG’s Global Chair of Automotive comments:

“Automakers’ future business models will have to reflect needs and preferences that vary significantly depending on the application (commute, leisure time, etc.), the market (developed or emerging) and the customer group (business executives, college students, etc.). The focus will be on the individual customer, and automakers will have to gear their overall package towards providing customized products and services at every touch point.” 

The KPMG report highlights that automakers are at an important crossroads: do they want to be mere metalsmiths—leaving the field to innovative players to compete for data at the customer interface; or will they evolve into grid masters—where they expand their business model beyond creating vehicles to directly serve the customer with highly individualized vehicle-independent products and services, both in and out of the car, throughout the entire lifecycle.

Using data to generate new and scalable revenue streams

A recent KPMG survey of auto industry executives found that most seem to be aware of the value of data. However, they are lagging behind in terms of implementation with only 18 percent claiming they have concrete strategies in place to effectively use their data1.

Becker comments: 

“Automakers need to realize that it is not alone the Internet of Things that will be key to successful future business models, but rather the ‘Internet of Behavior’. In the future, the car will just be another hardware device in an ecosystem of connected mobile and immobile data rooms. Behavioral data will enable the generation of scalable, sustainable revenue streams.”

Premium manufacturers are at an advantage in the competition for vehicle and customer data

Customers in the future will become more and more aware of the value of the data they are generating at every stage of their life. New business models of the traditional automakers should aim for incentive and trust systems where customers are willing to provide their data and receive valuable benefits in return (monetary or non-monetary). 

However, not all of today’s automakers will have the ability to develop into customer and service-oriented grid masters. Premium manufacturers are at an advantage thanks to the trust enjoyed by strong brands. But those manufacturers from the mass-market and low-price segments may be forced to surrender the customer interface to new competitors from the IT sector. 

Release-ability is the key

The product development process of a ubiquitously connected car is becoming a massive consideration for automakers. The integration of additional service-oriented functionalities that support customers throughout a cars lifecycle might only succeed if automakers implement a  flexible, decoupled research and development (R&D) process and freeze periods between car-dependent and car-independent hardware and software features—and a key to rapidly responding to future customer expectations.

Becker concludes:

“All in all, the future undoubtedly requires a shift in the mindset of today’s automakers. If this shift takes place, I have no doubt that the automakers of the future will not only provide excellent products and technologies, but also act as the ideal companion for their customers throughout the entire lifecycle.”

A copy of KPMG’s report “Metalsmith or Grid Master: The automotive industry at the crossroads of a highly digitalized age” can be found at www.kpmg.com/automotive

About “Metalsmith or Grid Master: The automotive industry at the crossroads of a highly digitalized age”

This study is the result of intensive, insightful workshops and interviews, with leading professionals from the international automotive industry and participants from related industries.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

For more information, please contact:

Carolyn Forest

KPMG International

+ 1 416 777 3857

cforest@kpmg.ca

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