Google’s little robot cars have had a few bingles. Apple won’t even admit that the hundreds of automotive engineers it’s hired on the open market, or poached from Tesla, are at work on an iCar. But from Detroit to Shanghai, Silicon Valley is already either driving or disrupting the car industry.
The disruptive effects of connectivity, digitalisation and electric vehicles have shot to the top of the key trends identified in this year’s KPMG survey of car industry executives, including automakers, suppliers, dealers and financial services providers. Just last year, auto executives were focussed most intently on growth in developing markets — building cheap cars and selling lots of them to the emerging middle classes of China and India. In a head-spinning turnaround, seven of their top 10 likely disruptors are now sourced from the tiny digital enclave on the US west coast.
Drivetrain developments like Elon Musk’s pure electric vehicles — soon to arrive in a much more affordable mid-market option — the increasing popularity of hybrid petrol-electric cars and the inevitable coming of the self-driving car might seem logical picks for the things most likely to keep an old school car maker up at night. But it’s the intangible threat of ones and zeroes that seems to have caught fire in their imaginations — and it’s burning like the petrol tank on an old Ford Pinto.
Of the 800 execs surveyed by KPMG, over half rated “connectivity and digitalisation” as an extremely important trend; so important when taken with other digital disruptors like Uber’s plans for “mobility as a service” (who needs a car when you have the app) and the tech giants’ iron grip over both customer data and big data, that nearly a third of respondents rated the chance of “major business model disruption” as being “extremely likely”. Another 54 per cent thought the odds of major disruption to be “somewhat likely”. All up, 82 per cent of industry execs thought it a fair bet that Silicon Valley would eat their lunch given half a chance.
Of particular concern was the likelihood of getting locked out of their own cars. With both Apple and Google forcing their way into the dashboard, Ford, GM, Toyota and friends have finally woken up to the potential downsides of any deals. Just as the world’s telcos have become dumb pipes for data, cars might end up as dumb boxes filled with smart data. Of particular concern: that car makers could lose control of the relationship with customers who come to see their vehicles as mere extensions of whichever operating system they’ve committed to. Old school car nuts might have thought Ford vs Holden was what holy war looked like, but Android and iOS could give them a masterclass in branded jihad.
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