Note: Based on present ability of suppliers to deliver services to networked vehicles of the future.

 

We can see from this figure, given the core competencies and abilities to provide services now, that many suppliers are unable to breakout of their niche and provide a broad range of services. This means that a JAPA (Joint Venture, Alliance, Partnership and Acquisition) strategy needs to be embarked on in tackling the networked vehicle market. Acquisition is a risky strategy for any company to undertake in any industry, but purchasing a company from outside your remit has added danger. Partnership and alliance led strategies would appear to be the most applicable. Acquisitions should only be used to add small innovative technologies or plug holes that partners are unable to deliver. Figure 1.2 shows that an insurance company could quite easily establish partnerships with companies across the service industry to deliver modular services to vehicle owners, this could include fleet owners as well as individuals. However, the appropriateness of an insurance company delivering one-stop-shop type services to the vehicle market would be determined by trust and one of image. Individuals are more likely to choose a brand they trust can deliver on promises or is simply sexy. Fleet management owners are likely to take a more business view of possible service providers, and not based on more peripheral reasons.

There is the possibility of new companies entering the market to supply integrated services to the vehicle market, however this is likely to be a result of companies merging core competencies through alliances, headed up by a new brand. Figure 1.2 also indicates the possibility of car manufacturers choosing to enter the integrated service provision market. However, this could lead to some alienation in the market between suppliers and customers, for example an insurance company may provide preferential rates to a particular car brand and loose contracts with customers owning other vehicle brands. Some vehicle manufacturers may choose to develop subsidiary service provider companies and tackle this market as a separate business opportunity, in addition to the production of vehicles. This action could result in many known vehicle manufacturers, for example Toyota, providing one-stop-shop type services to other vehicle brands.

 

Changes to the Vehicle Industry

Value Chain The introduction of telematics to vehicles will result in all companies attempting to deliver services beyond their remit. In addition, these companies will need to add to their skill sets in supporting and delivering services to networked vehicles, so all service providers will have to start implementing migration strategies now in order to meet this change in market demand. For example garages and repair companies will need to be able to repair and support the increasing amount of electronics in vehicles, this could include controllers, communication or entertainment systems.

The emergence of networked vehicles may finally make car pool and car sharing feasible and cost effective. Up to now many trials have quickly lost user appeal and soaring costs have resulted in abandonment. The addition of intelligence, the ability to track demand and the introduction of better planning tools could see the emergence of car-pooling in urban areas. This option could be applied to hybrid fuel or electric vehicles, providing an option for people that would otherwise opt out of owning vehicles, or the more environmentally aware amongst us. Similar technology being using by fleet management companies could be utilised and perfected for this application.

Changes will continue to occur within the vehicle industry, more suppliers in the industry will come under margin pressure, parts of the services industry is likely to come under the same pressures that vehicle manufactures have come under, this will become more apparent as vehicles become more reliable and require less attention. Vehicle service provider companies, from whatever background, will need to look for new revenue streams and they will all fight for the same money pool. The companies that are able to move up the value stack will be in the best position to unlock revenue potential of the vehicle and vehicle services market of the future as shown in figure 1.3. (Click here for Fig 1.3 - The Value stack).

This figure shows that the breadth of services delivered to vehicles will expand. New services will appear, together with transferral of services from other areas, for example people may start receiving all their telecommunications services through a company supplying their car with communications connectivity. The figure also indicates how the development of the networked car will touch a wider market audience. As the servicing industry adds value to customers, and absorbs revenue, they will need to continue to innovate and differentiate in order to bring more value to the customer etc. it is a perpetual cycle. Some aspects of the networked vehicle are available now and demanded by the market, however the true impact and accessibility of networked vehicles is still years or maybe decades away.