Automotive the way we see it

AutomotiveConnect: Driving Digital

 To respond effectively to disruptive changes in worldwide
consumer behavior and expectations, OEMs need an innovative,
technology-enabled approach. Within this new approach,
Capgemini’s focus on Connected Customer, Connected
Vehicle and Connected Insights plays an essential role, helping
companies to improve customer experience and achieve
profitable growth. Putting the customer at the heart of everything
the company does will build a mutually beneficial connection with
the customer throughout the lifecycle of interest, purchase,
ownership and repurchase.

We are very close to a radical change in our industry.’’

Michael Gorriz, Daimler

2 AutomotiveConnect: Driving Digital

The automotive industry is facing
disruptive change
The automotive industry currently looks healthy, with the world car fleet expected to
double by 2030, mostly as a result of growth in developing markets. However, the
industry is also on the verge of disruptive change and needs to prepare.

This change has several elements, mostly relating to evolving expectations on the
part of consumers. In emerging markets, consumers have quite different expectations
from developed countries – but things are changing fast in established markets too.
Many younger consumers no longer aspire to own a car. Urbanization, congestion
and pollution will encourage people to prefer mobility services such as carsharing,
ridesharing or multimodal transport packages.

When people do buy cars, they want a different purchasing process and a more
interactive relationship with OEMs and dealers, throughout all phases of the customer
lifecycle: interest, purchase, ownership, repurchase. On average across the industry,
almost 40% of consumers will switch to a different brand the next time they buy a car
– something that wouldn’t happen if the relationship was right.

Consumers also have different expectations of the car itself. They want vehicles that
can streamline their lives rather than giving them extra work or interrupting what
they’re doing. A driver expects to be able to continue conference calls in the car. The
office or family home should be notified when the individual is about to arrive so that
parking spaces get allocated and heating systems turned on.

Capgemini’s belief that the industry is about to transform is supported by industry

leaders. For example, Martin Winterkorn of VW said recently at the Geneva Auto
Show: “Our sector faces a disruptive change... Those who are not willing to change
will not exist in the future.”

Consumers are saying the same thing. Capgemini’s 2014 Cars Online1 study found
that today’s consumers want highly personalized products and services, information
that’s relevant, accurate and timely, and OEMs and dealers who are accessible,
responsive and proactive in delivering value-added services and content. The study
Capgemini’s Cars highlights that for today’s driver, in-car technology is more important than driving
Online study has been performance. So are low gas consumption and protection of the environment.
informing the industry
More personalized communications at all stages are expected, and the current
about the consumers’
buying experience is not perceived as optimal. These trends are even more
viewpoint for over pronounced among the 18-35 age group, as well as in growth markets like Asia.
15 years. (There are other regional variations. For example, seamless telematics services
between mobile phone and vehicle will be especially important for Asia.)

Capgemini’s research with the Massachusetts Institute of Technology (MIT) over

several years, together with our collaborations with companies in sectors such as
retail, demonstrates the enormous advantages that accrue to organizations that
embrace the digital economy and restructure around the customer. This is equally
true for the automobile industry. Disruptive change opens up business opportunities
to add value for consumers and increase profitability for OEMs.
1
Capgemini, Cars Online 2014 – Generation Connected, 2014
www.capgemini.com/cars-online-2014 3
Companies are not yet ready to make
this disruption into an opportunity
The automotive industry is not yet positioned to meet this challenge. By and large,
it is still working with a 100-year-old model based around car production. Although
some companies are starting to change their model, most efforts to date have
focused on the way products are designed, produced and sold. Now the companies
need to focus instead on customers’ digital lifestyle, and on providing innovative,
targeted services throughout the customer journey.

Even though the industry has made efforts to get to know consumers, it has not
Most efforts to date really succeeded. Someone going to buy their eighth car of a given brand for their
have focused on the 70th birthday is still liable to be asked by the dealer, “Is this the first time you’ve
bought this brand of car?” The local pizza company has more information about your
way products are buying habits and can often provide better customer service. Online websites let you
designed, produced track delivery of a small package from store to door, whereas the automotive industry
has difficulty sharing logistics information about your very expensive new car.
and sold. Now the
companies need to Vehicles themselves need to change as well. Today’s cars have a huge amount of
computer power on board, but in many senses they are still unintelligent. Every time
focus on providing you get in your car you typically have to adjust the seats, mirrors, music and air
innovative, targeted conditioning – and so do other drivers in the family. Even though you do basically
the same journey daily, the car cannot anticipate your routes. After several years of
services throughout ownership, the car does not become attuned to you as its owner, or get updated, for
the customer journey. example with new apps.

The industry also needs to improve its ability to combine information about vehicles
and consumers to produce insights that can be acted on. When a tire needs
replacing, for example, the OEM ought to be able to notify the driver and direct them
to a nearby garage with a special offer. Companies should also be able to predict
when a consumer will be looking to change their car, and what sort of car they will
want to buy. The supply chain should be demand-driven, and not reactive as it is at
present – more vehicles should be built to order and fewer built to stock.

4 AutomotiveConnect: Driving Digital

How companies need to respond
What the industry needs to do has been summed up by Dieter Zetsche of Daimler
at the launch of Mercedes.me: “We want to listen to the consumer and learn.” This
translates into a number of actions that companies need to take.

Above all, companies need to put the customer at the center of everything they do
throughout the customer lifecycle, using customer management to eliminate the silos
that exist today in finance, marketing, sales and service functions. Mobilization and
Companies need, collaboration tools like Capgemini’s Advanced Solutions Environment (ASE) can help
above all, to put the to make this happen, and are ideally suited to digital innovation where the requirement
needs to evolve rather than be defined up front.
customer at the center
of everything they Companies must offer customers what they’re interested in, and communicate in the
way they prefer, individualizing the offer for each customer. This requires a significantly
do throughout the better understanding of the consumer than companies have today. By bringing
customer lifecycle, segmentation down to the micro level, companies can provide the right channel, for
the right consumer, at the right time – especially important in growth markets and for
using customer today’s younger consumers: the group Capgemini calls “Generation Connected”1.
management to In addition, companies need to find ways to make the car an extension of the
eliminate the silos that home, office and club. This means enabling communication between consumers,
exist today in finance, cars and buildings, and between different vehicles. Highly Intelligent Driving functionality
will become mandatory, so a group of friends in separate cars can be guided to a
marketing, sales and meeting place, and – further into the future – in a convoy of trucks on a motorway, only
service functions. the front vehicle will need a driver. The car will evolve over time and during the years of
ownership, and come to fit its owner’s needs more closely.

Changes like these will necessitate improvements to the Human-Machine Interface

(HMI) plus high levels of security. New control methods based on voice recognition
and gesture will appear.

Data, too, will be crucial. Companies need to start treating data like the new
oil powering this industry. Like oil, data can be difficult to find and expensive to
extract, but becomes a hugely valuable asset once refined. The industry currently
collects little usable customer or vehicle data, but this will change dramatically in
the years to come. A lot of work needs to be done to agree issues around data
management, data ownership, analytics and exploitation.

In addition, a new disruptive CRM approach is needed, with data shared between
OEMs and dealers. Companies also need to work with customers, who own their
data, and whose interests must always be at the heart of the business.

Finally, companies need to shift the development mode away from traditional waterfall
approaches and towards agile, iterative development. To give customers what they
want, companies need to be flexible about the direction of development, and try out
different ideas. Customers are likely to change their mind about what they want (as
can be seen from the changing fortunes of BlackBerry, Nokia and Apple in the world
of mobile devices) and companies have to go with that change. Adapting to this
model will challenge the change management skills of OEMs.

1
Capgemini, Cars Online 2014 – Generation Connected, 2014
www.capgemini.com/cars-online-2014 5
 Cars Online 2014 proves that Generation Connected has a big appetite for content. Access to
and interaction with OEMs and dealers is expected by consumers who want the right content
delivered via multiple touchpoints and channels in every phase of the customer lifecycle.

Preferred touchpoints throughout

customer lifecycle
INTEREST PURCHASE
Brochure/product info 87% Offer for financing 69%
Configuration 80% Trade-in offer for your current vehicle 75%
Detailed pricing info 91% Offer for service contracts 69%
Schedule test drive 71% Offer for additional options & accessories 70%
Opinion on test drive 51% Updates on car production 57%
Get financing/leasing info 69% Updates on car delivery schedule 77%
Event invitation 51% Meet the service team 54%
Interact with other owners 53% Welcome pack 71%
Interact with automotive experts 57% Opinion on purchase 58%

INTEREST PURCHASE

REPURCHASE OWNERSHIP

REPURCHASE OWNERSHIP
Warranty reminder 75% Sign up for owner club 43%
Warranty extension offer 68% Interact with other owners 50%
Financing reminder 61% Brand magazine 57%
Financing extension offer 53% Sales offers and promotions 62%
Repurchase offer 62% Service reminder 76%
Repurchase offer based on driving behavior 57% Get service appointment 73%
Repurchase offer based on customers like you 50% Opinion on service 57%
Seasonal offers 64%
Personalized offers based on driving behavior 55%
Personalized offers based on customers like you 49%
Recalls 72%
Capgemini Cars Online 2014 – Generation Connected, 2014
www.capgemini.com/cars-online-2014 Make a complaint 78%

6 AutomotiveConnect: Driving Digital

How can this response be implemented
in practical terms?
The industry needs to turn a model that’s been honed over decades to produce excellent cars into one that is truly customer
centric. This will require radical change to virtually every part of the business.
Based on analysis of this industry change, Capgemini has established three focus areas under the heading of AutomotiveConnect:

• Connected Customer: In order to put customers at the heart of everything they

do, companies must interact with them effectively at each touchpoint throughout
the lifecycle (see figure on page 6). In this way, it becomes possible to establish
a connection between customer and brand, and recruit the customer as a
powerful advocate.

• Connected Vehicle: To make the car into “another node on the network”, as
customers want, companies must think not about selling a car but about forging
a lifelong relationship. Cars need to learn about their drivers, and provide services
proactively in line with those drivers’ needs, wants and desires. This creates
intimacy and makes the customer more loyal to the brand. (The concept also
works for multimodal transport packages since the OEM can make the customer
profile available to any vehicle.)

• Connected Insights: Companies can gain competitive advantage by applying

analytics to customer and vehicle data, producing insights to enable the features
and services discussed above. In this way, companies can build consumer loyalty,
reducing the likelihood of defection to another brand. Sharing customer and
vehicle data should benefit everyone concerned: OEMs, dealers and consumers.

These focus areas are interdependent. Customer knowledge needs to be embedded

in the vehicle; companies won’t get insights unless the customer is willing to share,
and the vehicle can’t help unless it’s linked to individual drivers.

Next steps
The changes discussed above have huge potential to benefit both OEMs and consumers. They can satisfy the aspirations
of Generation Connected and make life less stressful and more productive for all consumers. For OEMs, they can forge a
lifelong connection with customers, not just increasing the likelihood that someone will repurchase the same brand of car
but also promoting a mutually valuable relationship, with sales of complementary products and services, throughout the
ownership phase.

However, these changes involve enormous and potentially risky change for the industry. The industry should be treating
growth markets as incubators and test grounds for new ideas. These markets are ideal for this purpose because they are
not burdened by history, and relish innovation. Consumers there already expect the buying model to be changing, and are
receptive to trying out the latest ideas.

7
 Automotive the way we see it

For more information

please contact:
Kai Grambow
Global Automotive Head
kai.grambow@capgemini.com

Nick Gill
Chairman, Automotive Council
nick.gill@capgemini.com

Markus Winkler
Global Automotive Head, Capgemini Consulting
markus.winkler@capgemini.com

About Capgemini
With almost 140,000 people in over 40 countries, Capgemini is one of the world’s foremost providers
of consulting, technology and outsourcing services. The Group reported 2013 global revenues of
EUR 10.1 billion. Together with its clients, Capgemini creates and delivers business and technology
solutions that fi t their needs and drive the results they want. A deeply multicultural organization,
Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and
draws on Rightshore®, its worldwide delivery model.

About Capgemini’s Automotive practice

Capgemini’s Automotive practice serves 14 of the world’s 15 largest vehicle manufacturers and 12 of
the 15 largest suppliers. More than 5,000 specialists generate value for automotive companies every
day through global delivery capabilities and industry-specifi c service offerings across the value chain,
with a particular focus on Connected Customer, Connected Vehicle and Connected Insights.
For more information: www.capgemini.com/automotive

Learn more about us at

www.capgemini.com

The information contained in this document is proprietary. ©2015 Capgemini.

All rights reserved. Rightshore ® is a trademark belonging to Capgemini.