KPMG: Convergence Of Consumer & Auto Technologies, Rise Of Mobility Services, Transforming The Auto Industry And Way We Live Our Lives

LOS ANGELES, Nov. 18, 2014 /PRNewswire/ -- How disruptive will the convergence of consumer and automotive technologies, and mobility-on-demand services be to the automotive landscape and consumers? According to new research published by KPMG LLP, the U.S. audit, tax and advisory firm, the automotive ecosystem and the way we interact with our vehicles is on the verge of a complete transformation.

In its latest whitepaper, "Me, My Car, My Life," KPMG's automotive practice suggests that the era of ubiquitous connectivity - the moment when you, your car and your life are one - has arrived. It will change the basic notions about mobility and revolutionize the way we think about and use our cars. That car is no longer just a way to get from point A to point B. In fact, it's not just a car: It's the control center for our mobile lives. As a result, the automotive industry is in the midst of a massive evolution.

"At this moment every aspect of the automotive business is changing: from how cars are designed, produced and built, to how they are marketed and sold, to the underlying economics," said Gary Silberg, national automotive industry leader for KPMG LLP and author of the report. 

"Not since the first automotive revolution has there been such massive innovation and displacement of the status quo, where we will see new players surge forth, some old players reinvent themselves and others totally left behind."

Silberg notes that this confluence of disruptive factors is creating tremendous challenges for automakers.

1. The era of the two-car family will likely decline. In fact, the argument for owning a car gets weaker by the moment. Spending approximately $30k for an asset that loses 11 percent of its value the minute you drive it off the lot and then sits idle more than 90 percent of the time isn't the most rational economic decision. Mobility-on-demand companies like Uber and Zipcar now provide compelling alternatives to ownership, especially in urban areas. With the potential shift in ownership demand, OEMs better update their economic models.
   
2. Enormous opportunities in new markets. Mature markets are becoming saturated, while new markets are emerging. History teaches that when people make it into the middle class, they go shopping for cars. In China, India and sub-Saharan Africa, millions, if not billions of new buyers are reaching that threshold. But the future won't look like the past, because just as these new buyers get ready to open their wallets, new alternatives to ownership are popping up and gaining traction.
   
3. Tame complexity or lose your customers. Some high-end cars now have more lines of code than fighter jets, and the complexity is wreaking havoc on production costs and new product launches. Vehicle recalls are at a record high, and customers are complaining vociferously about the design and usability of in-vehicle infotainment. The value of a car now resides in software and electronics - and how well they work together. Get it right or lose your customers.
   
4. OEMs are falling from the top of the pyramid. In fact, there isn't going to be a pyramid any more. The structure of the automotive ecosystem is changing fast. Designing and producing new vehicles have become far too complex and expensive for any one company to manage all on its own, and in the future, horsepower may matter less than processing power. The winning companies will be nimble, future-oriented – and prepared to invest in new technologies, new talent and new strategic alliances. This confluence of factors will forever change the way automakers view product development, the traditional automotive supply chain models, their customer sales and service models, and even their organizational structures.

Winners will be those who anticipate the market and deliver compelling, customized user experiences. Losers will be those who move too slowly, and/or fail to grasp the significance of shifting customer behaviors and preferences – both in delivering the right kinds of vehicles and customer experiences, and in mastering the development, launch and production processes. They will be swallowed up by complexity, cumbersome processes and their own complacency. And they will not have the economic or reputational resiliency to recover from catastrophic launch failures and product recalls.

KPMG has identified several areas that will be critical for companies to stay relevant and capitalize on emerging opportunities.

• Find New Partners and Dance: The structure of the automotive industry will change rapidly. Designing and producing new vehicles has become far too complex and expensive for any one company to manage on its own. The companies that thrive in the future will be those who are nimble, future oriented – and prepared to invest in new technologies, new talent and new strategic alliances.
  
• Become Data Masters: Know your customers better than they know themselves. Use that data to curate every aspect of the customer experience from when they first learn about the car, to the dealership experience and throughout the customer lifecycle. Having data scientists on staff will be the rule, not the exception. Ultimately, companies will need to use that data to create mobility solutions that capture consumers' attention, address their personal mobility needs, and make their lives better, more fun and more productive.
  
• Update Your Economic Models: Predicting demand was hard enough in the old days, when automakers did a major new product launch approximately every five years. Now, with the intensity of competition, the rapid cadence of new launches, and the mashup of consumer and automotive technology, companies will need new economic models for predicting demand, capital expenditures and vehicle profitability.
  
• Tame Complexity: It's all about the center stack, the seamless connectivity with nomadic devices, the elegance of the Human Machine Interface. The companies that create the best, most easily customized user experiences will be victors in the age of personalized mobility. These will be hard-won victories. Identifying or developing the right technologies (saying "no" when necessary), integrating those technologies into automotive grade systems and getting them to market quickly with no defects or recalls – that's a tall order.
  
• Create Adaptable Organizations: It will take a combination of new hard and soft skills to build the cars and the companies of the future. For many older, established companies, that means culture change, bringing in new talent, and rethinking every aspect of process and people management. Melding the rigor and discipline it takes to build zero-defect automotive grade machines in factories throughout the world with the free-wheeling culture of the most innovative high tech companies will be a challenge. But the winning companies will make it happen.

To access the complete whitepaper, "Me, My Car, My Life," please click here.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.

KPMG Automotive Practice
For decades, KPMG's Global Automotive practice has been recognized for its commitment to the industry. Through our international network of member firms, we have the global reach and experience to serve clients anywhere in the world. Our automotive practice includes professionals with the knowledge, experience, and skills to help our clients address their challenges, sort through today's complex business problems, and achieve their goals.

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SOURCE KPMG LLP

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