The innovation of autonomous cars / self-driving vehicles is really speeding up. Uber recently announced that they were starting to pilot self driving cars in Pittsburgh. Ford claims that by 2021 they will have a fully autonomous car. Lyft says that in 5 years autonomous cars will account for the “majority” of rides. Just last month the White House set out guidelines that leave the door wide open for regulations to evolve with (not against) autonomous cars.
Autonomous Cars Are The Future of Automotive
No matter how you look at it, one thing is clear: autonomous vehicles will be mainstream within years, not decades. Every segment of the automotive industry will have to evolve or else go the way of Kodak and Blockbuster.
I won’t focus on implications of autonomous cars like how ethical questions are answered or how cities can be transformed as a result of less parking spaces, but instead I’ll focus on the implications of how autonomous vehicles and ridesharing could change the global automotive industry supply chain.
How Self-Driving Cars Will Change the Global Automotive Supply Chain
- Car production could go down, while the need for durability increases. It’s estimated that cars are parked an average of 96 percent of the time, meaning that they are only driven 4 percent of any given day. In the future, with the ability for cars to be shared and available on demand, a car could be in use 96 percent of the time, meaning that less people will need to buy cars. This might be good news for some people as getting a car can be an expensive thing, as it’s not just buying the car but also getting the insurance for the car. If you have a car at the moment and want to try and save some money you can get cheap car insurance here. However, all parts of the car will need to be more durable to respond to increased utilization. This increases the need for even more stringent quality throughout products and organizations, like QAD customer Cascade Engineering.
- The design of cars will be fundamentally different. A self driving car will no longer need components like steering wheels and columns, gas / brake pedals, mirrors and traditional dashboards, etc. This means that the design of the car will need to be rethought. Entire companies will need to focus their design on a completely new product: the self-driving car. The focus of new designs could be more on entertainment (since drivers won’t have to drive). We may not need seats (made by companies like QAD customer Lear) to face forward since watching the road won’t matter (unless you’re prone to motion sickness).
- Cars can include more advanced materials and luxury features. Since certain components will no longer be part of a self driving car, and given that durability will become more important, and people will now use cars differently, materials can also be rethought. For example, carbon fiber is an advanced, man-made material that typically is much lighter and stronger than commonly used alloys, but also usually more expensive. With reduced costs of omitting certain components needed in the car, costs can be put to more advanced (like carbon fiber) and even luxury features that certain car price points wouldn’t have contained previously. This could be big growth for companies like QAD customer Plasan Carbon Composites which traditionally focuses on higher priced cars like the Chevrolet Corvette.
- Focus on car service aftermarket parts will increase. Inherent in the more miles driven per car, routine, proactive and technical maintenance is going to become even more important – remember software is a huge part of self driving cars. As parts will increase over time, if you’re involved in businesses such as second-hand car dealers and mechanics to breakdown recovery firms and valet-parking services, you could look into something like motor trade insurance, which means that businesses and their staff are covered when driving or working on their customers’ vehicles or those that the company owns. It keeps you and your company protected. More emphasis by automotive suppliers can be put into replacement part sales to service already existing vehicles versus building new vehicles (since production will go down). This will no doubt lead to growth from QAD customers who provide aftermarket parts. So, if you’re looking into buying a used Nissan 350z for example, you’ll probably find that aftermarket parts will increase within years to come, making it quite a hard decision to make if running a used car will be far more expensive. Another issue that might arise with self driving cars could be insurance policies. With so many insurance policies available to drivers, there is a lot that needs to be changed to fit around autonomous cars especially when it comes to car insurance. There already many insurance companies that allow you to compare the different policies they have for their auto insurance services. You can visit an insurance comparison website to find out more about different insurance policies. However, for autonomous cars you may want to search online to find out more about insurance companies that can shine a light on how they will handle self driving cars should accidents come to light.
- Industry standards and best practices will become even more important. As the quality of parts gets even more focus, due to durability needs, the relationships of material flows through tiers of suppliers and supply chain management processes will get even more scrutiny. Standards like MMOG/LE will be an even bigger focus for automotive suppliers looking to gain a competitive advantage.
Where does QAD stand in all of this? Much like the automotive industry evolution underway, we also have to evolve our solutions to meet changing manufacturing requirements. We know that our solutions must be agile and flexible to support our customers. This is why we constantly work with customers and engage industry leaders like AIAG and Odette to learn where the best practices will be required for quality and delivery, how to manage risk, and how technologies such as IoT, Industry 4.0 and Smart Manufacturing will be leveraged to navigate through this rapid change. We’re confident that as things change in the global automotive supply chain, we’ll be right there with our customers.
What other implications can you think of for global automotive suppliers? We would be interested in your comments below with what’s missing.