The increasing shift towards Level 4 and Level 5 autonomous cars will lead to a paradigm shift in the automotive TierX industry. The car driver will be able to enjoy more „free time“ with L4 and complete leisure time with L5. Therefore, the whole customer attention will move to the car interior – opening up new business models and challenging the current positioning of interior TierX suppliers at the same time.
The automotive interior market will change radically
- New interfaces to the car user - creating “living environments”, driven e.g. by haptic, sensitive materials
- Stronger aspiration of the car user in terms of “green” materials (e.g. vegan, renewable)
- Value add will increasingly come from functions and services, not interior components itself
- Single components will commoditize
- Solution-based approach, value creation after SOP
- New business models and revenue streams with higher margins will evolve
Moving towards L4/L5 autonomous cars, the “car experience” will undergo a tremendous paradigm shift in the upcoming years
Shift in global market segmentation towards interactive, renewable materials
- Shift implies more electronics and infotainment components in the car interior, but also a range of interactive elements
- Passengers will interface in various forms with the car interior: using touchscreens, voice interaction, surfaces which give tactile feedback, projected and holographic information
- The materials used will be more diverse than ever to fulfill the functional and regulatory requirements: from recycled plastics to natural fibers, bio-degradable, anti-microbial, vegan leather, etc.
- Integration of functionalities in materials and surfaces (veneers, ceramics, textile fabrics, glass and composite materials) will lead to replacement of switch and button interfaces
- Longterm, with the advent of truly autonomous driving, the interior will become a flexibly arrangeable living- and working space
Global interior market forecasted to grow by +5.6% p.a., while value is shifting towards electronics/infotainment
Profit pools will attract new players with customer access
- New players enter the mobility ecosystem (mobility service providers and software players), monetizing their end customer access
- Margin pressure towards OEMs and Tier X suppliers of commodity, non-intelligent components
- With evolving ADAS technology, advanced silicon players have entered the value chain, enforcing Tier X suppliers into consolidation, diversification and component assembly/integration plays
New players from outside of the current automotive value chain will occupy up to 30 – 50% of the future profit pool
Automotive suppliers need to act fast and rethink their current positioning to stay competitive
- Decide on integration complexity with high margins vs. price competition from single components
- Get closer to the customers and embrace their wants & needs – B2B as well as B2C. Think in solutions rather than in products
- Rethink current capabilities while drafting the target picture – leverage networks and partnerships
- Don’t be late: the market consolidation is already happening, transformation of the own company will take rather years than months due to its radical shape
Automotive supplier need to chose their positioning to stay competitive
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Dr. Gunther M. Wagner
Digital Portfolio Management
Solution & Program Delivery