As the vehicles on the road today become more complex and inundated with software, there are added risks for vehicle hacking.
So many vehicle manufacturers are trying to separate the safety systems from the infotainment systems to reduce the risk of being able to hack into a vehicle. But it is a growing concern that will only get worse, Terlep said.
How to cope
OEMs need to transform from a vehicle manufacturer to data services and customer technology companies. They need to understand that connected cars are not a product, but a set of technologies that will change their business model. They need to be prepared to transition from ICE to EVs and realize that many new vehicle prices are too high for some consumers. Mobility as a service also needs to be a focus, Terlep said.
New car dealers will be fighting a quick decline of operating profits, direct-to-consumer retailing and online vehicle purchasing. Mobility as a service and vehicle subscriptions will challenge the traditional vehicle ownership model. The growing transition from ICE to EVs will force changes in vehicle inventory, and an increase in ADAS and AV technologies will also have an impact.
To fight back, dealers must continue to focus on repair and collision services. They will need to consolidate to maintain profitability and continue to implement web, mobile and VR technology. The creation of centralized parts, service and collision locations instead of having them attached to dealerships will help to improve profitability. Virtual test drives and test tracks will also be important to differentiate, Terlep said.
Insurers face five major disruptions: new insurers; new insurance products and pricing; new insurance processes; new technologies; and new distribution models. There have been many new entrants into the insurance market offering newer, more flexible insurance coverage plans. New insurance offerings include cybersecurity insurance, product liability insurance and infrastructure insurance, among others, and not all companies are on board. New pricing models are also entering the market, including do-it-yourself pricing, a la carte/package pricing, set your own price and peer pricing models. New processes include the use of mobile photo estimates in the claim process, despite some industry objection.
Insurers will need to establish more real-time, interactive relationships with their customers and reinvent their marketing and distribution plans with more intuitive, interactive communication tools and channels. They will need to build expertise in big data and new business models, among others.
Collision repair shops will face at least five disruptions: the digitization of the automobile; the digitization of business; digital intermediaries; M&A and consolidation and remote technician services. Shops are not being compared to other shops down the road; they are being compared to other companies using digital services, and they must be able to compete. Insurers, OEs, third-party websites and others all serve as intermediates between the consumer and shops and can be very disruptive.
Suppliers need to decide on their growth strategies and explore alternate sales, branding and pricing strategies. They need to develop additional sales channels, increase online presence and add second or third price lines and brands. “In my opinion, buy or sell,” Terlep said. “Grow or go.”
Suppliers need to determine either a growth or exit strategy, get digital, specialize, become part of something bigger, continue to invest in recruiting, training, tools and equipment, or get out, Terlep said.
10 disrupter action items
- Understand your customer
- Think BIG!
- Create a culture of change
- Acquire knowledge to become a disrupter
- Recruit and hire disrupters
- Develop and communicate a clear, compelling and passionate vision
- Leverage new technologies
- Prepare for pushback and failure
- Look for opportunity in the chaos
- Look for the “blue water"