Hyperpersonalisation brings threat of commoditisation to lower end of market

The digital revolution is paving the way for ever more personalised experiences inside connected cars - not just privately owned connected cars, but also shared vehicles. The implications of these developments for wider concepts of vehicle value and commoditisation are huge. "Digital technology gives you the ability to craft your car and your direct digital experience in a more seamless way. Your identity can move from vehicle to vehicle," explained Mike Ramsey, Research Director at Gartner. This allows an individual stepping into a vehicle from a car-share scheme to immediately adjust the interior lighting, driving dynamics and seating position to his personal preferences. "Right now, it is possible for an occupant to adjust all these things by identifying himself on entry. This can automatically make any vehicle your vehicle," he emphasised. "Over time, as the experience of driving becomes more commoditised, what you experience inside - the entertainment you consume, the business operations you may want to perform in the car - will become more important than the vehicle." In fact, this 'hyperpersonalisation' could result in the commoditisation of the lower end of the vehicle market. In Ramsey's view, there will still be a role for the very upmarket, niche models but today's more affordable or value models will likely take a big hit to brand value. "The bottom of the market will be more oriented towards function, with a focus on return on capital by mobility services. Future cars are likely to be either very nice or very plain and utilitarian," he predicted. This will likely squeeze the middle market players, as people either push their personal choices upmarket or chose to not own a vehicle at all and use cars operated by mobility providers. For mass market brands, the pressure is on. "It definitely puts mass market brands in a position of making a decision about where they want to go. The likes of General Motors, Hyundai, Toyota and Ford need to ask themselves if they want to invest in the commoditised market or if they want to push upmarket and play with the German car companies. They have a decision to make," Ramsey told Automotive World. He notes that Ford has already expressed an interest in going after the commercial market, which makes sense considering its strength in commercial trucks and vans. "That's probably a good play for Ford," he noted. With General Motors, the decision could be complicated by the pull between its upmarket brands, such as Cadillac, and its large mass market presence. Volkswagen faces a similar problem, balancing a brand like Audi with several mass market brands that make up the bulk of its volume. At the same time, Ramsey believes that traditional car manufacturers face another threat to their current business models from the digital giants, which are playing a greater role automotive technology. How big that role becomes is up for debate, but Ramsey is betting on it becoming a starring one. "The car is becoming a mobile platform in a way it hasn't before. It is using much more software. The vehicle is a true IoT device," he commented. "For the past decade we have been putting our phone in the car and using it to handle many consumer-oriented duties, but cars will soon have that embedded in their systems. All these services we now employ by our phone will be available directly in the car. Once that happens, the car companies or the digital tech companies will be able to more seamlessly integrate in to the vehicle." For the heavy truck segment, the players don't face quite the same commoditisation dilemma or threat. "Heavy truck makers have always sold their vehicles to the same kind of consumer, a business looking for a return on investment. They are not selling their vehicles on whimsy or to people buying for brand cache," Ramsey pointed out. "Their focus going forward will still be on technology that lowers the cost of operations and increases efficiency. In many ways their business model isn't disrupted as much by technology."

Hyperpersonalisation brings threat of commoditisation to lower end of market

Some industry watchers predict that future cars will fall into one of two categories: upmarket luxury or plain and utilitarian. By Megan Lampinen

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