MEGATRENDS USA 2013: Conformation or flexibility?

Strategy by sector was the core theme at Automotive Megatrends USA 2013

Every industry decision is dominated by one big question: how can an OEM give consumers what they want? At Automotive Megatrends USA 2013, two experts from different sectors presented their views on conforming to standards already set and being flexible to suit the market and profit margins.

Follow the leader

In the realms of connectivity, consumers expect in-car features to match what they are used to on their consumer electronic devices. However, these expectations are not based on what other OEMs offer, but on what has already been seen on tablet computers and smartphones, said Matt Jones, Vice President of the GENIVI Alliance. Looking to the future, consumers are unsure of what features they will want in-car, but they do know that their expectations will be based on what is already available in the app store.

This striking statement seems somewhat at odds with the tech industry ethos of driving innovation to new frontiers. However, to meet consumer desires, Jones said, automotive OEMs should develop hardware that is easily customisable and can be updated to be in line with what is available in the consumer electronics industry.

The most important requirements coming from OEMs are almost opposite to this conformity: OEMs still must maintain differentiation, have a strong USP and reduce the time from development to market launch, as well as the total cost of ownership – all while maximising profits. The traditional route of getting locked into proprietary hardware is therefore not compatible with flexibility.

The GENIVI Alliance’s work attempts to satisfy both business and customer demands: its aim is to build relationships between industry bodies that have traditionally been closed and non-collaborative. Citing the Alliance’s diagnostic data, Jones pointed out that, in reality, there is no need for – and certainly no consumer interest in – numerous proprietary technologies delivering the same thing. The automotive industry needs to take inspiration from personal computing where, in most cases, software and hardware operate independently of each other.

Adapt to survive

Under the hood, powertrain players are taking a much more open approach to development. Consumer desires tend to drive the industry mostly through actual internal market movement, rather than customer preferences from outside trades.
“We believe that there are markets and customers for all different types of fuels, and those fuels and those customers exist in different regions…So we have to be flexible, which is the key,” said Mike Tinskey, Director, Vehicle Electrification and Infrastructure, Ford.

Citing electric powertrains as an example, Tinskey commented that, although media hype has turned to focus on electrification’s false start, the market has “doubled essentially in the past year”. When hybrid vehicles were first launched, it took around eight years for these cars to gain around 2% of the total US market. Between October 2011 and October 2012, hybrids, plug-in hybrids and electric vehicles accounted for 4% of car sales.

Although not a dramatic change, it is exactly what Ford expected: “It’s minor growth, it’s becoming more of a mainstream product, and that product is essentially allowing others to start understanding and accepting plug-in hybrids.”

According to Ford data, interest in hybrid vehicles has gone up 23%. Plug-in hybrids have fared very well too, with one person in four willing to consider purchasing, thanks to high efficiency and low operation costs.

Ruth Dawson

This article was first published in the Q2 2013 issue of Automotive World Megatrends Magazine. Follow this link to download the full issue

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