Xapix @ WEF 2018 How to create novel automotive business value

The automotive industry is changing big time—disclosing a variety of opportunities to create novel business value. In order to do so, automotive companies have to focus on four key areas as well as novel technologies.

This blog post is part of our presence at the World Economic Forum 2018: This week, Xapix CEO Christian Umbach is attending WEF 2018 in Davos, Switzerland, to engage with business leaders from across the globe and to discuss this topic, the future of mobility.

Outlining the context of the changes

These days, an increasing number of individuals does not own cars anymore. Some studies link this fact to younger generations (for example this one), whereas other analysts think that a bigger process is in progress (see WSJ for further information). At Xapix, we have conducted our own original research with academics from Harvard Business School to learn more about where the automotive industry is headed.

For the study, we’ve conducted a series of interviews with industry experts, who outlined the bigger picture of the car as a product offering as follows: Driven by the popularity of ridesharing services, mostly linked to its convenience and easy accessibility, but also because it seems to better fit people’s modern and on-the-go lifestyles, vehicle ownership overall is shifting toward short-term ownership models. Cars will more and more be booked for individual segments, which leads to the fact that when it comes to cars, the measuring unit won’t be the car’s lifetime anymore—but an individual trip.

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The implications of short-term car ownership

This process forces car manufacturers to think and act less traditional and more like mobility service providers. What seems like a logical consequence following enhanced customer demand represents a major shift with regard to corporate strategies in the automotive industry, because the effects are far-reaching. This shift is already visible today: Industry leaders like Volkswagen invest heavily in ridesharing platforms, no longer only facing other car manufacturers as their competitors, but also completely novel service offerings like Uber.

Finding and creating novel automotive business value

Once commercial fleets of shared (or even autonomous) cars as part of an integrated mobility service offering will be on the road in great quantities, individuals will experience and use cars in a completely new way: As a customer of such services, one will be able to configure every single aspect of the trip (and the experience) ad libitum, from the type of car over the amenity offering to the specific (micro-)services. What is more, the service of transportation will be integrated with other service offerings (provided by service partners).

This new situation also calls for new ways to create business value for automotive companies. Gone are the days where only features and a pure product focus could become competitive advantages. Stakeholders in the automotive industry should focus on the following four key areas:

1. Streamlined monetization of data

Currently there’s very limited data standardization, which means that partnerships for automotive services have to be negotiated individually—a dealbreaker seeing that novel service offerings require hundreds of partners instead of only a few.

2. Automated curation of data

Focusing on automation can help business scale their partnering capabilities significantly, for example through programmatic evaluation of potential partners.

3. Privacy & regulation

Automotive businesses have to step up their game when it comes to data privacy and regulation: They are becoming major data handlers.

4. Reduced cost of partners

The establishment of common standards will reduce the cost of partner integration, leading to greater transparency and uniformity.

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Leveraging new automotive business opportunities through technology

One technology to help automotive businesses in focusing on the four areas mentioned above, while at the same time creating new business value and competitive advantage in the novel competitive landscape are APIs (external data sources). Focusing on the use of APIs, automotive companies can distribute data on a large scale, easily integrate with hundreds of partners, and reduce transaction costs significantly. Xapix offers a software that gives businesses the ability to create cost- and time-efficient smart connectors between existing and new IT systems, bridging the gap between current offerings and future ambitions, thus facilitating the development of new service offerings or even enabling their creation in the first place.

Learn more about this topic

Read our full featured article on the future of automotive business models on Agenda, the official blog of the World Economic Forum: Visit WEF's Agenda.

For access to the full automotive white paper, including our comprehensive research findings, please visit the following link: Xapix Automotive White Paper.

To learn more about Xapix, click here.