Digital Transformation in Automotive Industry – Strategies to survive and thrive

While the whole world has been impacted by the COVID-19 pandemic, the globally integrated automotive industry is facing the severe and swift impact of this contagious pandemic. Disruption can be felt in the form of:

• Hindered supply of parts from China,
• Large scale manufacturing interruptions across Europe
• The shutdown of assembly plants in the United States
• Low consumer confidence all over the world

Here are some facts and figures depicting the worsening situation of the automobile industry all over the world.

• The automotive industry in the United States experienced a sharp drop in demand in March 2020: vehicle sales were down 38 percent year-on-year.
• EU-wide production losses due to factory shutdowns amount to at least 2,195,430 motor vehicles so far. This figure includes passenger cars, trucks, vans, buses, and coaches. *
• At least 1.1 million jobs in the European automotive manufacturing sector have been affected by the outbreak of the Coronavirus. *

*European Automobile Manufacturers’ Association (ACEA)

Essential steps towards recovery – Are you fast enough?

The automotive industry needs to quickly reestablish itself by applying some of the advances in digital technologies to be resilient. Contactless operations, big data, predictive analytics, augmented reality, chatbots, automated procedures, etc. are the need of the hour. Some of the early adopters are already reaping the advantages of the much-needed transformation. Here are some examples of brands striking while the iron is hot.

• Lamborghini recently launched its new vehicle model through an augmented reality event.
• Tesla delivered (contact-less) over 88,000 cars in Q1 2020 in China.
• The maker of car parts Marelli has introduced blockchain technology in April 2020 for making transactions and operations more efficient and reliable.

Further, we have discussed how various technologies can make a difference and help different sectors of the automotive industry.

Digital Transformation for the unhindered continuation of manufacturing operations

For high efficiency and productivity, the automobile industry is operated by rigid and optimized production schedules. Due to lockdown in various states, many automobile companies had to postpone the launch of upcoming models. For example, On April 7, GM announced postponing the launch of updated models – Chevrolet Equinox, Silverado, and Bolt EV, as well as the GMC Terrain, Sierra, and Cadillac XT4 in the US to the year 2022.

Automated manufacturing systems will help in reducing the requirement for manual labor and physical contact with humans. Some other generic advantages of the digitalization of manufacturing processes include accuracy, production visibility, better inventory management, safer work environment, and enhanced efficiency.

The automotive industry also needs to cut costs by depending on data analytics in manufacturing and other departments. The predictive analysis specifically ensures the machine-related issues are fixed in their infancy. This minimizes downtime, costly repairs, and unnecessary power consumption. All these benefits translate into cost control. Big data analysis also reduces indirect costs of automobile manufacturing, something the companies tend to ignore. This includes utility bills, paper printing, and various administrative tasks.

Digital Transformation to streamline the supply chain management

The supply chain is also governed by pre-planned schedules based on the demand projections. If the manufacturing unit has a smart digital recovery plan, then it can further reduce the impact on the supply chain.

In the current scenario, vehicle manufacturing companies need to redesign the conventional systems to accommodate unpredictable demand environments. Embracing the (IIOT) Industrial Internet of Things is not a choice anymore. It has become a necessity. This can help in preparing shock protocols for the future and accelerate the shift whenever emergency protocol needs to be activated.

Big data, the internet of things, and connected ecosystems can help in evaluating the risks and create full transparency. This will lead to faster communication from source to all points along the supply chain. This will allow everyone to prepare, adapt, and respond effectively.

Revive your sales with Digital Transformation

US car sales for March have fallen by more than 39% YoY to approximately 1m units. In terms of volume, the biggest losers are Chevrolet followed by Toyota, Nissan, and Honda. In Europe, the situation is still critical. New vehicle sales have fallen by almost 70%.

Automobile industry runs on a dealership model in most of the countries and states. Companies need to assist the dealers and help them with the adoption of the latest digital technologies. Direct sales are also one of the upcoming solutions for the automobile industry. It reduces the touchpoints. Improvement in digital channels for search and booking is crucial.

Dealerships also need to strengthen their existence on comparison portals for generating leads. A contactless sales process that meets health and hygiene requirements can also help in bringing back the confidence of consumers.

Test drive through Virtual Reality

With the help of virtual and augmented reality, companies can provide ‘test drive’ experience to the customers without them visiting the actual store. They can buy a vehicle directly from a dealer or a company. A mobile app can be designed to create a virtual showroom where potential customers can browse the catalog, try multiple features, and experience a test-drive using AR/VR.

Image Source: MediaPost

They should also consider utilizing simulated events platforms like Lamborghini. This can be a good replacement for trade shows. In the post-crisis stage, prices are expected to fall as dealers will need to reduce their inventories.

Digital transformation and its impact on customer service

Inexpensive ways to provide customer care

Money plays a very vital role during any form of crisis. The automobile industry is no different. Automation of customer support channels through AI technologies can curb the expenditures for the automotive industry. Moving to automated processes for customer support ensures 24×7 availability to the customers and reduces dependency on the manual workforce.

A lot of companies were already going through digital transformation when the pandemic hit them. However, Covid-19 has made us realize that digital customer support and experience is not just an add-on feature. It needs to be efficient and reliable.

They may choose to stay connected with customers via different digital channels. Mobile applications with chat and push messages and social media are the two most popular ways to engage with customers.

Providing post-sales maintenance and customer satisfaction

As this virus is highly contagious, more drivers prefer services where they do not have to get involved in the maintenance and repairs. Providing this level of customer care or experience is not possible considering the state of the current automotive industry. A high level of manual participation is required for any vehicle to be serviced. Neither the interaction nor the service is technically advanced enough. To achieve the required level of the streamlined process, automotive companies need to develop subscription-based virtual services.

Predictive analysis is another area that can optimize customer support and secure the loyalty of customers. BMW is already working on satisfying its premium customers through its IBM SPSS software. The software detects errors in the automobiles earlier and optimizes the processes through big data analytics.

FACTS (Field-data Analysis for Customer Satisfaction) is a competence center by BMW Group that analyzes huge chunks of data. The insights from this massive data are utilized to influence customer satisfaction. Similar technologies could transform the customer satisfaction levels of other vehicle manufacturers.

Customer delight through chatbots

The customer service industry has witnessed a drastic evolution with the introduction of chatbot development. A lot of companies already have highly functional mobile apps with chatbots.  The advantages of using it include:

• Personalization of the experience without interruptions
• Better self-service experiences
• Multi-language support
• Around the clock support

Chatbots have already proved to be extremely useful, still, a lot of enhancement and progress is required to fill the gap in the automotive industry.

As per the survey conducted with automotive manufacturers, almost 70% of the companies are in some stage of implementing chatbots, and over 50% have definitive plans to implement it within the next 3 months.

Need for faster Digital Transformation

The challenges that the automotive industry was facing during the pre-COVID-19 era have turned into a crisis. Those players who adopt digital evolution at a snail’s pace might find it challenging to survive even when the pandemic is over. Conversely, the early adopters are expected to reign the arena in the long term.

Take an example of a Chinese automotive firm Geely. The company received 10,000 bookings within a month after introducing contactless delivery using drones and other latest technologies.

Conclusion

The current situation is the testing time for the automotive industry, and there is an urgent need for a closer partnership between the automotive company & technology solution providers. The industry needs to adopt the digital transformation at each level.

Above mentioned Digital product engineering solutions will reap long-term benefits for each stakeholder – manufacturers, suppliers, employees, and customers.

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