{"id":10238,"date":"2022-06-14T09:08:50","date_gmt":"2022-06-14T16:08:50","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10238"},"modified":"2022-06-14T09:13:20","modified_gmt":"2022-06-14T16:13:20","slug":"5-strategies-traditional-oems-are-using-to-compete-against-auto-tech-giants","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2022\/06\/5-strategies-traditional-oems-are-using-to-compete-against-auto-tech-giants","title":{"rendered":"5 Strategies Traditional OEMs are Using to Compete Against Auto Tech Giants"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10242″ img_size=”full”][vc_column_text]The automotive industry is under a siege of disruptions, and traditional auto suppliers are about to reach a make-it-or-break-it milestone\u2014but they aren\u2019t the only ones taking a big hit.\u00a0<\/span><\/p>\n

Traditional OEMs are scrambling to keep up with emerging automotive tech giants like Tesla and Rivian. In this automated, connected, electrified, and shared (ACES) automotive world, tech start-ups have had the advantage of agility, building their business around the specific needs of these new technologies.\u00a0<\/span><\/p>\n

Traditional automakers haven\u2019t been as fortunate.\u00a0<\/span><\/p>\n

With extensive global businesses and 30+ years of processes and systems in place, legacy automotive names like GM, Ford, and Chrysler must now find a way to pivot and steer their entire company\u2014from global offices and company culture to suppliers and stakeholders\u2014in a completely new direction.\u00a0<\/span><\/p>\n

So, what are they doing to keep up? And how can <\/span>you<\/span><\/i> take advantage of their challenges?<\/span><\/p>\n

5 Critical Strategies of Traditional Automakers<\/span>\u00a0<\/span><\/h2>\n

New automotive tech giants are flying past traditional automakers. Tesla is now worth more than five companies combined, and Rivian, a U.S.-based electric vehicle and autonomous technology company founded in 2009, cleared GM\u2019s $87 billion and Ford\u2019s $80 billion market caps when they went public in 2021 with a market value of more than $100 billion.\u00a0\u00a0<\/span><\/p>\n

Still, legacy automakers are not going down without a fight. Traditional automakers are pivoting their business models and strategic alliances to keep up with tech giants. Here are their top 5 strategies.\u00a0<\/span><\/p>\n

Monetizing Data<\/span><\/h3>\n

ACES vehicles require large amounts of hardware and software to operate\u2014and with that comes the generation of <\/span>massive amounts of data<\/span><\/a>. Today\u2019s vehicles are already producing significantly more data than a decade ago\u2014and soon, the average car will generate more than 4,000 Gigabytes per day. For perspective, the average smartphone user consumes around 2-5 Gigabytes of data <\/span>per<\/span><\/i> month, <\/span><\/i>and many companies have already created highly lucrative revenue streams from our phone data.\u00a0<\/span><\/p>\n

Automakers will have infinite possibilities to monetize from the individual vehicle data, be it through consumer subscriptions, third-party sales, product improvements, maintenance alerts and more.\u00a0<\/span><\/p>\n

Robo-Taxi and MaaS<\/span><\/h3>\n

Automakers recognize the value that level 4 (L4) autonomous driving technology will bring to public transportation. This is especially true for urban mobility, where densely populated environments make owning a car unrealistic in many cases. OEMs like Daimler, Volvo, Toyota, GM, BMW, Ford, and VW are taking advantage of this potential market shift by investing in <\/span>robo-taxi and MaaS<\/span><\/a> programs and products. This strategy takes three shapes: vehicle and fleet operations, the \u201cBoeing\u201d model and premium car builder.\u00a0<\/span><\/p>\n

Automakers will provide both the vehicle <\/span>and <\/span><\/i>the technology needed to power it in the first business model. They will own and manage the entire experience, collecting profits from both ends. In the \u201cBoeing\u201d model, automakers will focus on providing the vehicle and partnering with a third-party <\/span>MaaS<\/span><\/a> company to manage it. Finally, the premium car builder will take advantage of the luxury vehicle market by upselling the exclusivity of private car ownership in a ride-sharing-dominated market.<\/span><\/p>\n

Leveraging Blockchain Technology\u00a0<\/span><\/h3>\n

If you invest in cryptocurrencies, you are likely already familiar with blockchains. But blockchains aren\u2019t just for digital coins. <\/span>Blockchains<\/span><\/a> are distributed databases designed to increase privacy and information safety while disintermediating trades and transactions between users and third parties. Automakers are leveraging this technology to provide additional services to their consumers.\u00a0<\/span><\/p>\n

With blockchain technology, vehicle owners will be able to make secure automated payments, such as transferring money for electric charges, parking, insurance and more. Of course, many of these transactions would come with a small fee, much like current credit card merchant fees. Another potential blockchain use is in ridesharing. Removing the middleman, such as Uber or Lyft, could make it easier for people to connect directly with vehicles and drivers while still having a trusted and safe payment platform. It will also make shared ownership easier, as payments can automatically be split and deducted amongst owners.<\/span><\/p>\n

Insurance<\/span><\/h3>\n

The massive amounts of personalized driver data collected from each vehicle will make determining vehicle insurance rates more straightforward and accurate. With just a quick view, insurance providers can see average drive times, road conditions, traffic patterns, and driving behaviors for each driver and quickly calculate their risk profile. However, automakers also see the ease in this. They are exploring ways to cut out third-party coverage and provide their consumers with insurance policies directly from the OEM.\u00a0<\/span><\/p>\n

Providing <\/span>native automotive insurance<\/span><\/a> could enhance the consumer experience by integrating another vehicle ownership element into their monthly car payment, maintenance costs, etc. It will also give the OEMs an additional revenue stream with a low overhead cost. This business model can review the data they are already collecting from the consumer and develop a dynamic driver profile that will coordinate with monthly costs. It will also provide opportunities to pass along additional consumer benefits.\u00a0<\/span><\/p>\n

Online Sales Platforms<\/span><\/h3>\n

Dealerships are quickly becoming a thing of the past, as automakers like GM and Volvo are following the lead of Tesla, Neo, and other EV start-ups by ditching the dealerships in favor of direct online sales platforms.\u00a0<\/span><\/p>\n

Currently, dealerships serve as the middleman, purchasing vehicles from the automakers and selling them to consumers. However, with the growing ease and comfort of shopping online, automakers see an opportunity to forgo the dealers and sell directly to consumers through online sales platforms. Tesla, Neo, and other EV start-ups have already built online sales models, but traditional OEMs like GM and Volvo are catching on and ditching the dealerships.\u00a0<\/span><\/p>\n

Ford recently announced its \u201cModel e\u201d business model, which will accelerate its EV development and remove stock from dealers and position them as facilitators of the delivery of online orders.\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

Opportunity for Suppliers\u00a0<\/span><\/h2>\n

Automakers are racing against big tech companies who are more agile and more experienced in the new technologies. They feel the pressure to provide new, innovative solutions, and they simply can\u2019t do it all themselves. This creates a unique opportunity for suppliers and other outside players to develop solutions to OEMs\u2019 problems for lucrative long-term partnerships.\u00a0<\/span><\/p>\n

If done correctly, developing solutions will not only secure you a spot on the future supply chain but could also provide you with <\/span>additional revenue opportunities<\/span><\/a>. Since many of the automaker strategies involve creating and using data, developing technologies that capture the necessary information could open various options for how you can position your business model.\u00a0<\/span><\/p>\n

Companies like Mobileye, Bosch, and Aptiv have already caught on, providing automakers with massive discounts for permission to capture and sell the sensor data. They then sell this data to third parties, such as HD mapping companies, who then repackage and sell it back to automakers and consumers as a real-time subscription. So, instead of making their money off of the one-time sale of the part, they can cover the costs of the part and build an ongoing revenue stream based on data.\u00a0<\/span><\/p>\n

This is entirely different from traditional supplier models but is one that will provide suppliers with a unique competitive edge and the possibility for high revenue growth, even in <\/span>automotive<\/span><\/a> market downturns.\u00a0<\/span><\/p>\n

If you\u2019re ready to pivot your company, you\u2019ll need to build a strategy. Working with an automotive strategy consultant can help you discover <\/span>where you currently sit in the supply chain<\/span><\/a> versus where you want to be and help you build the roadmap you need to get there.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10242″ img_size=”full”][vc_column_text]The automotive industry is under a siege of disruptions, and traditional auto suppliers are about to reach a make-it-or-break-it milestone\u2014but they aren\u2019t the only ones taking a big hit.\u00a0 Traditional OEMs are scrambling to keep up with emerging automotive tech giants like Tesla and Rivian. In this automated, connected, electrified, and shared (ACES) […]<\/p>\n","protected":false},"author":60,"featured_media":10242,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[988,126,2199,7,2203,400,2202,1247,1454,2205,1414,2206,2207,2204,2201,2200],"class_list":{"0":"post-10238","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-featured","8":"category-manufacturing-trends","9":"tag-aces","10":"tag-auto-suppliers","11":"tag-auto-tech-giants","12":"tag-automotive","13":"tag-automotive-tech-start-ups","14":"tag-blockchain","15":"tag-competitive-strategies","16":"tag-data-monetization","17":"tag-evs","18":"tag-insurance","19":"tag-maas","20":"tag-online-sales","22":"tag-robot-taxi","23":"tag-traditional-automakers","24":"tag-traditional-oems"},"yoast_head":"\n5 Strategies Traditional OEMs are Using to Compete Against 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