Jihiu

Digital Transformation of the Automotive Industry
Digitalization Spending to Grow Rapidly to $82.01 Billion in 2020
Global Automotive & Transportation Research Team at Frost & Sullivan
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March 2017
Contents
Section Slide Number

Executive Summary—Introduction to Digitalization in the Automotive Industry 3
Research Scope, Objectives, Methodology, and Background 25
Pillar 1—Digital Retailing 35
Pillar 2—Mobility as a Service 51
Pillar 3—Connected and Autonomous Cars 66
Pillar 4—Industry 4.0 88
Pillar 5—Connected Supply Chain 102
Competitive Analysis—OEM Activities in the Digitalization Space 116
Automotive Digital Transformation—Growth Opportunity Analysis, Conclusions, and
128
Recommendations
Appendix 137
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Executive Summary—Introduction to Digitalization in
the Automotive Industry
Return to contents
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Executive Summary—Key Findings
OEMs and Tier Is realized that digitalization along with IoT, technology partnerships, software capabilities, and
customized solutions will be the way forward for global automotive industry during 2016–2025.
Automotive Digital Transformation Market: Key Findings, Global, 2016–2030

Automotive digitalization focuses on five key pillars—the Connected Supply Chain, Industrial Internet of Things (IIoT)/Industry
1
4.0, Connected and Autonomous car, Digital Retailing, and Mobility as a Service (MaaS).
Growing digitalization initiatives and pilot projects with software-centric focus from automotive OEMs and Tier Is will increase
2
automotive IT spending from $37.95 billion in 2015 to $168.80 billion by 2025 at a CAGR of 16.1%.
OEMs digital transformation strategy roadmap is to currently develop digital services, and then move to Car as a Service business
3 model in the 2020s to then develop Mobility as a Service offering around 2025, and eventually position the vehicle as an element of
future connected living solution by the 2030s.
Connected cars, autonomous driving, and artificial intelligence (AI) are the key automotive use cases compelling OEMs and
4 Tier I suppliers to invest in IoT platforms (BMW‘s Open Mobility Cloud Platform and Volkswagen crossover platform are few of the
examples).
Data driven business models will accelerate Big Data analytics (BDA) growth to a CAGR of 35% from $524.4 million in 2015 to
5
$10.50 billion in 2025.
Technology companies and specialized startups will support OEMs and Tier Is on the digital transformation journey. Automotive
6
industry will strengthen its software capabilities through acquisitions and partnerships.
Over 1700 new digital startups are expected to disrupt the automotive industry with unique platform-based business models and
7
advanced IoT and AI capabilities by 2017.
Automotive Industrial IoT (Industry 4.0) spend is bound to increase at a CAGR of 11.5% from 2015 to 2025; from $12.30 billion
8
in 2015 to $36.70 billion in 2025.
Digital user experience, digital enterprise, connected living, smart mobility, connected cars, and autonomous vehicles
9 require software investments. Technologies such as cloud solutions, BDA, virtual reality(VR), cybersecurity, and blockchain will be
extensively leveraged for digitalization activities during 2018–2025.
OEMs will focus on front-end customer experience as well as build back-end capabilities including people, process, and
10
infrastructure. Digital retailing in automotive IoT spending will increase at a CAGR of 29.1% from 2015 to 2025.
Source: Frost & Sullivan
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The Five Pillars of Digitalization in the Automotive Industry
In 2016, digitalization underpins the transformation of business activities, process improvements, and the
development of new competencies and business models across five key areas within the automotive industry.
Automotive Digital Transformation Market: Five Pillars of Digitalization, Global, 2016
Digital Retailing Mobility as a Connected and Connected

Industry 4.0
service (MaaS) autonomous car supply chain
• Seamless customer • Integrated mobility • Connected living • Simulation • Value chain
journey • Journey solutions modelling disruption
• Integration between Planning • Self-driving cars • Cloud-based IoT • Intelligent
various platforms, • Smart payments • Driver/Vehicle platform fulfilment
sites, and apps • Sharing economy centric services • Cognitive • Responsive
• Omni-channel • Evolving new • Advanced HMI & manufacturing supply networks
retailing business models cognitive • Contextual • Smart logistics
• Future stores & technologies intelligence
showroom concepts
New Business Models Source: Frost & Sullivan
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Four Key Functional Areas Impacted by Digital Transformation
Digital transformation allows automotive organizations to effectively integrate core applications with internal
and external stakeholders.
Supply Chain Enterprise

Manufacturing Retail
Logistics Operations
• Highly configurable and • Enhance customer • Connected supply chain – • Sales forecasting –
flexible production experience of conventional cost reduction through Analytical models will be
operated by robots dealerships – leverage 3-D efficiently managed end-to- leveraged to predict vehicle/
• Real-time production configurators, augmented end process part sales at different levels
optimization through reality(AR), animations, etc. • Reduce lead times and (region to dealers).
integration with simulation • Develop innovative accelerate supply chain • Mobile applications and
techniques solutions leveraging Big transparency through portals across functional
• Predictive analytics Data analytics and SMAC continued partner system areas
through pattern recognition – converts data and leads integration • Brand management –
methods to sales • Supply Chain Modelling Digital strategy ensures that
• Encryptions in data • Personalized customer leveraging cloud solutions – customers have same
packets to enhance experience, incentive, and mitigate risks considering experience along all
security brand management are key various scenarios communication channels.
areas. eCommerce, virtual • Collaborative Product • Digital Workplace –
• Automatic capturing,
reality(VR), and customer development leveraging Organizational initiatives
modelling, and optimizing of
analytics are key enterprise-wide cloud from office space to
production systems
technology enablers. solutions individual teams
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Investment in Digital Transformation in the Auto Industry
In 2015, automotive industry investments in key focus areas hover around $19.57 billion. Growing
digitalization and advancements in technology will increase the investments to $82.01 billion by 2020.
Automotive Digital Transformation Market: Total Automotive IT Spending, Global, 2015–2020

2015 – Total Automotive IT Spending
In 2015, automotive I4.0,
37.95 Billion connected living and IoT, Big Data,
security, digital retailing, and
mobility spend accounted for 51.6%
of total automotive IT spending.
32.5% 9.5% 6.9% 1.4% 0.7% 0.6%
12.35 3.62 2.60 524.4 246.7 227.7

Billion Billion Billion Million Million Million
Connected Digital
Automotive I4.0 Security Big Data Mobility
Living and IoT Retailing
Percent of Key Automotive IT Spending
Others total $18.38 billion and include technologies and software such as communication services,
usage based insurance (UBI), over-the-air (OTA) updates, infotainment content, cloud computing,
data center systems, legacy system transformation, autonomous and self-driving technologies.
OTA—Over-the-Air, I4.0— Industry 4.0
Note: Some software/DBs serve more than one key area. For example, CRM is common for both Big Data analytics and digital retailing
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New Automotive Digital Ecosystem—Over 1700 new Digital Startups to
Disrupt Industry Supply Chain
OEMs and Tier Is will continue to partner with specific technology startups for digital project pilots in 2017.
HMI Cybersecurity OTA (Over The Air Update) AI Software
P2P Used Car Market Place Autonomous Algorithm Sensors Hardware
UBI (Usage-based Insurance) Autonomous Solution

VINILI
Blockchain Electric Vehicles HD Mapping
Autonomous Processing Aftermarket Telematics

VINILI

Mobility Integration V2V/V2X Driver Safety
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Snapshot of Major Automakers Investment and M&A Activity (2011–2016)
Majority of the investments or acquisitions have taken place in the mobility space. PSA Group invests in
Free2Move car sharing app developer in Europe. Free2Move bundles several car sharing options in an app.
Automotive Digital Transformation Market: Startups Snapshot, Global, 2011–2016

(M) (M) (P) (Analytics)
(EV) (P) (M) (M)

(C)
(MaaS) (M) (Analytics)
(M)
(M) (M) (Mapping)

(C) (T) (Sensor) • (Software)
(A) (M) (M)

MAJOR
AUTOMAKER
(T) (M) (Aftermarket)
INVESTMENT AND
M&A ACTIVITY
(B) (S) (M) (M)
(A) (M) (Aftermarket)
(M) (E) (Com) (Energy)
(M) (M) (HAD) (M)
(L) (M) (B) (Manufacturing) (Battery)
(M) Going myway (P) (M) (M) (Solar Power)

(Electric)
(M) (Electric Vehicle)
(Payment)
C- Connectivity, M- Mobility, P- Parking, EV-Electric Vehicle, A- Autonomous Source: Frost & Sullivan
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IoT Platform for the Automotive Industry
Automotive industry depends on fragmented IoT ecosystem in 2016.
Automotive Digital Transformation Market: Automotive IoT Platform and Value Chain, Global, 2016
IoT Platform IoT Value Chain

SERVICE ENTERPRISE
CHIP/ HARDWARE
CONNECTIVITY ENABLEMENT/ SYSTEMS
MODULE DEVICES
PLATFORM INTEGRATION
Amazon
Texas GM AT&T TeliaSonera Aeris Oracle
AT&T
Instruments Audi Verizon KDDI Numerex
Bosch Landis Gyr Sprint Docomo Kore SAP
Qualcomm Itron
Cisco Vodafone America Wyless Accenture
Bosch Telefonica Movie ClearConnex
Telit
Dell Honeywell Orange Iridium Integron Wipro
Novatel Cradlepoint Inmarsat
GE Kpn Jasper
Wireless Scansource ORBCOMM Cisco
Bell Telenor
Google Johnson
Telecom Lora Ericsson
Sierra Controls IBM
IBM China Alliance Huawei
wireless Siemens
GE Telecom Sigfox Alcatel-Lucent Salesforce
Intel
Intel Philips Telstra Weightless PTC
Microsoft Golden-i Rogers Eurotech
Oracle Atheer labs Telus Logmein
Apple Telit
Samsung Microsoft Gemalto
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Automotive OEMs—IoT Platforms
Connected cars, autonomous driving , Industry 4.0, and artificial intelligence are the key automotive use cases
compelling OEMs to invest in IoT during 2016–2018.
Automotive Digital Transformation Market: Automotive OEMs IoT Platform, Global, 2016–2018
Volks- AT&T
next- wagen LG Amazon Renault-
BMW IBM Audi Ford Alexa, Micro-
LAP (VW) HERE Nissan
Echo & soft
Wink
BMW ‘s Open • nextLAP’s cloud- • VW’s crossover • Integration of Ford • Renault-Nissan and
Mobility Cloud based IoT platform platform in SYNC Connect, Microsoft partnered
Platform and IBM will help Audi to collaboration with LG Smart City and to leverage next-
Watson integrate all IoT will provide the Voice Assistant generation
objects in the technical ability to App connected services
• IBM Watson sensors manufacturing plant offer unlimited and innovative
will be integrated such as Robots, • Amazon's cloud-
access to smart digital experience
into BMW cars Tablets, etc. based voice service
home and location- powered by
leveraging Production and includes playing
based services. Microsoft Azure’s
personalized user logistics data will audios, adding items
cloud platform.
experience. be stored on the • RIO platform for to shopping lists,
platform. commercial vehicles and controlling • Personalization,
• BMW’s Open
provides information Alexa-enabled smart improved vehicle
Mobility Cloud • Implement complex on real-time traffic home devices. experience, and
platform will production and and routing for remote monitoring
integrate various logistics processes • Amazon Echo
systems such as trucks. HERE is the provides voice are the key factors
significantly faster, location intelligence underpinning the
smart homes, car, more flexibly and control access
and any smart provider for VW’s between the car and connected
cost-effectively RIO platform. experience.
devices used by optimize them home.
customers. holistically with
intelligent algorithms
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Automotive Digital Retailing—Vision 2020
OEMs will aim for becoming a pioneer in digital customer experience. Strong focus on CRM and analytics will
enable OEMs to increase percentage of leads from digital initiatives by 2020.
Automotive Digital Transformation Market: Automotive Digital Retailing, Global, 2014–2020
BEFORE 2016 VISION 2020
• Digital Marketing – Contextual

• Reimagine customer journey from pre-sales
marketing, mobile apps,
through sales to aftersales.
content marketing, etc.
• Individual apps from pre-sales • OEMs and ecosystem participants will
to warranty. develop online and offline touchpoints.
• Piecemeal approach to make Create an enhanced omni-channel customer
Activities enhancements across experience.
customer journey.
• Redefine showroom experience focusing on
• Lack of dealer investments in economics and regional markets (Audi city
technology. concept will not suit for all regions).
• Lack of integration between
platforms, mobile apps, and • Capability building at dealerships – Focus on
websites. front line sales and service followed by
• Adapt to emerging business dealership principals and digital consultants
models across other industries. leveraging AI, VR, gamification, etc.
Challenges • User interface and customer
experience differ across • OEMs will build eMarketplaces to retail cars,
various platforms. parts, and provide service aggregation
platforms.
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What Digitizing the Retail Environment Enables
Digital showrooms enable seamless customer experience, increase lead generation, and improve customer
retention rate. In 2014, Audi city, London recorded 70% increase in sales compared to a conventional showroom.
Automotive Digital Transformation Market: Retail Network Digitalization, Global, 2016
INTRIGUE INTERACT ORGANIZE TRANSACT MANAGE

Attracting customers Interactivity creates Structure client Offer customers Operational
is more than having opportunities to interactions with seamless, hassle free management of entire
online presence; it influence shopping preapproval and process flow towards process from dealer
requires coordinated decisions and offers empower customers to ownership of vehicle and OEM perspective,
strategy to deliver controllability of user initiate deal finalization and discounts while complete online and in
most relevant experience: through financing building trust store visibility:
information through: • Adaptive layouts tools: • ID verification • CRM + dealer
• Search engine • Payment estimator management
• Car configurators • Online registration
optimization systems
• Info: Video, chat • Pre qualify for credit • Discounts
• Adaptive & financing • Parts and service
Advertising • Augmented/virtual • Realistic used car
• Trade in value • Consumer insight
• Social reality capable trade-in value
engagement, and • Ecommerce • Sales and
• CRM platform marketing analytics
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Automotive Industry Digitalization Underpins Aftermarket Evolution
The future garage will be incorporating technology at various levels, working around an engaging digital
experience, evolving into a truly connected space.
In-store • Use of tablets with latest diagnostic software installed

Capabilities
• Vehicle identification number (VIN) lookup capabilities to
track down past repair history
• Augmented Reality based applications for service aid
• OBD II-based real-time diagnosis capabilities
• Data logging provisions
• AR, 3-D printers, Wearables
Value-added
Store Web Site
Offerings
• Website optimized for different search • On-call assistance
engines and platforms (desktop/tablet/mobile) • Mobile servicing options
• Detailed service offerings listing • Subscription-based service options
• Highlight value-added offerings • Female friendly staffing and store
• Chat pop-up layout
• Appointment scheduler • Over the air real-time repair status
• Repair cost calculator updates
• DIY corner • In-vehicle interfacing for service
appointment updates and scheduling
• Listing on service aggregators
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Connected Cars and Autonomous Vehicles—Trends
Self Learning Cars, V2X advancements, advanced connectivity focusing on security, and industry collaboration
towards software platforms and technologies are the key trends during 2016–2025.
Self Learning to enable $78.6 billion revenue opportunity by 2025

Four levels of self-learning cars are expected to evolve with various levels of data availability. By 2025, level-4 self
1 learning cars would require over 600 million miles of data. OEMs are developing self learning cars through partnerships
with technology companies. Technology companies such as Google, Apple, and NVIDIA are developing self-learning
software with level 3 and level 4 capability for licensing potential.
V2X Communication
2 Japan remains one of the advanced V2X markets, with America set to follow suit with the 2017 Cadillac CTS, the first
DSRC equipped car in North America. However, the DSRC mandate in America still hangs in the balance.
2G Telematics subscribers to be left out in the cold—5G and Satellite Broadband Gain Attention
North America, Korea, and European telecommunication service providers may discontinue services to 2G subscribers;
3 this may prompt a rise in retrofit telematics solutions. Earlier last year, BMW NA discontinued BMW Assists for customers
with expiring contracts and offered retrofit solutions to the rest.
Increasing Mergers & Acquisitions focusing on technology and software

Tier Is, OS providers, and chip manufacturers prefer to acquire skills rather than develop them in-house. This trend is
4 driven by digitalization followed by accessibility and urgency to remain competitive. For example, Samsung decided to
acquire Harman and Qualcomm acquired NXP Semiconductors in 2016. Intel decided to buy 15% stake in HERE in
2017.
SmartDeviceLink (SDL) to Compete with Apple and Android
Toyota and Ford have joined hands to build an open source infotainment framework forming consortium with other
5 manufacturers that include Mazda, PSA, Fuji Industries, Suzuki, Elektobit, Luxoft Automotive, and Xevo. SDL allows
infotainment systems to connect to smartphone apps providing customers with connected experience.
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Connected and Autonomous Cars—Growing Software Dependency
More OEMs such as Volvo, JLR, Ford, GM, VW, Toyota, and BMW will actively invest in AI platforms by 2018.
Applications
• Context-aware Services
• RTOS: Android< QNX, GENIVI
• Parking Reservation and
Payment
• Real-time Crowd Source based
Apps Algorithm based Modules
Autonomous Cars
• Auto Parking • Algorithm-based Warranty

• Auto Safety • Predictive Services
• Auto Routing/Navigation • Algorithm-based Vehicle Pricing
• Autopilot • Algorithm-based Insurance
• Artificial Intelligence 3 • Predictive Maintenance
• Context-aware Algorithms
2 4
Market Enablers
Communication
• Regulatory Involvement
• VC Investment in Vehicle 1 5 • V2V Communications
Security • SOTA and FOTA
• Vehicle Recalls • Intelligent Wireless FOG
• M&A and Consolidation Gateway
• Vehicle Security Breaches • Vehicle Data Broker
• Pro-active Vehicle Data
Collection
• ECU Consolidation
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Data Monetization—Direct and Indirect Revenue Opportunities
In 2016, while OTA, HMI, and connected services accounted for direct revenue streams, cost savings from Big
Data analytics added to the total ROI model.
Automotive Digital Transformation Market: Automotive Data Monetization, Global, 2016
Connected Data Optimizing

UBI, tolling navigation feedback for emergency
and tax /intermodal OEMs assistance
navigation resulting in providers
better R&D services
Geo Predictive Truck Improving road
fenced Maintenance platooning infrastructure
solutions
services for transport
authorities
Connected Early stage Coaching
Stolen Vehicle recall
navigation tracking and driver
reduction based on their
theft protection and software Driving style
updates
Over the air Reduction on
updates warranty costs
Mobility
Add ons
FMS solutions
Solutions and content
delivery
DIRECT REVENUE OPPORTUNITIES INDIRECT REVENUE OPPORTUNITIES
DATA
MONETIZATION
AVENUES
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Product as a Service—Connected Cars
Mobility and Software as a service are expected to account for major part of revenues by 2025.
Service experts and Introduction of new

TRADITIONAL MODEL
customer care models such as pay

centers for recurrent per hour/minute, pay
revenues as you use, pay per
mile
Product sales Maintenance and Upsell premium features Risk and revenue sharing
spare part sales operation fees lower customer care costs linear revenue model
NEXT?
AS
Normal Product sales and Predictive analytics on the A SERVICE
spare supply – Traditional products to reduce the MODEL
model customer care costs
VALUE ADDED MOBILITY AS A VALUE ADDED VALUE ADDED

SERVICES SERVICE SERVICES SERVICES
• Extended maintenance • Renting and sharing • Over the air updates, • Test equipment for
and warranty packages models, eHailing security and Big Data automotive
analytics • Tire as a service/Battery as a
• Connected services: • Fractional ownership
service
Navigation and • Smart parking • Infotainment OS,
• Infotainment module as a
Infotainment Telematics platform service
• Integrated transportation
• Vehicle upgrades via OTA modes • HMI tooling services • Accessory as a service –
• Usage-based insurance • Autonomous software Aftermarket – Lights and
• Packaging with connected Horn
• Smart payments services and personalized packages
• Car as a service –
content • Cloud services Autonomous and Traditional
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Roadmap Towards Integrated Mobility is Digital
The services of journey planning, booking, payment, and reconciliation are needed to truly enable integrated
mobility. This encompasses several well-established industries, and presents significant opportunity.
Automotive Digital Transformation Market: Integrated Mobility Roadmap, Global, 2016
Integrated Mobility
Journey Planning Booking Payment & Reconciliation
Multi-modal planning of Booking of transportation Facilitating payment for

journeys via smartphone or web modes via technology platforms, transportation services and
platforms (business model: including referrals from third clearing/expense management
usually advertising or parties (business model: direct (business model either
commissions) revenue or commission) commission or service fees)
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OEMs Moving Towards Car as a Service (CaaS)
A number of automotive OEMs are shifting towards offering mobility services to make up for the loss incurred
in their vehicle sales as such services are targeted in reducing the number of cars on road.
Drive yourself business models Be driven Business Models Smart Parking eMobility
Corp.
One Two CS/Flexible Bus/
Way Way P2P Leasing/ Ride Taxi Bike Shuttle Integrated Parking P2P Delivery
OEM CS CS CS Rental sharing Hail sharing Transit Mobility Mgmt. Parking Charging Services
Own Initiative (either through Through Strategic Partnership Collaboration without Only Services and products that are currently operational are considered.
subsidiary or by themselves) VC arm with investment investment Past pilots and future launches are not considered. Source: Frost & Sullivan
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Industry 4.0—The Four Functional Facets
Off-the-shelf and industrial robots with minimal maintenance have been the key drivers for robot adoption
across the automotive production value chain.
Automotive Digital Transformation Market: Industry 4.0 Functional Facets, Global, 2016
Industry Supply Chain The Industry 4.0
Services 2.0
Convergence: IT-OT Evolution Business Ecosystem
The cross-pollination of Exploring newer The dawn of the future The advent of advanced
ideas, technologies, and avenues for service factory is set to disrupt ICT technologies will
processes between the innovations such as existing supply chain promote new inter-
worlds of information cloud-based service networks. Digitalization relationships and
technology and platforms, and and increased interdependencies,
operations technology evaluating potential for connectivity are set to giving way to
will form the crux of the new profit centers; disrupt and realign unexpected business
fourth industrial opportunity analysis for existing value-chain collaborations and
revolution. ICT technology in networks in future. partnerships in future.
services
IT-OT = Information Technology-operational Technology; ICT = Information and communication Technology

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Digitalization in Manufacturing—Automotive Industry 4.0 Approach
Digitalization and smart connections will increase productivity and efficient resource utilization. In 2015, Ford
reduced 70% injuries in production line by deploying ergonomics technologies—motion capture and 3-D printing.
Automotive Digital Transformation: Digitalization in Manufacturing, Global, 2016–2022
Digitalization of the
Industrial Mobility Digital Data Security
Factory
The Four Essentials for the Auto Industry 4.0 Approach
Cloud Computing Big Data and Enterprise-wide Smart Logistics

Advanced Cybersecurity Need: Unified
Need: Migrate from
capital intensive Analytics Need: approach for
approach to a more protocols, standards,
Need: Predictive, Comprehensive end- and systems across
cost-effective preventive, and to-end security that value-chain networks
business model prescriptive analytics includes plant level, for improved
for processes and enterprise level, and efficiency
minimizing extended/distributed
Contextual operational Design/Simulation
networks
Systems/CPPS bottlenecks and
Protecting Industrial Need: Minimal lead
Need: HMI related inefficiencies with
networks that are the times, prototypes,
tools to support data from disparate
backbone for minimal raw
tasks and simplify sources such as
unifying materials, and
complex processes ecommerce, social,
communications custom products –
– Wearables infotainment
3-D printing, robots
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Conventional (Current ) vs. Digitized (Future) Supply Chain
Automotive connected supply chain is all about transparency across the supply chain and leveraging Big Data
and analytics to maximize efficiency, throughput and value creation across the supply chain.
Automotive Digital Transformation Market: Conventional vs. Future Supply Chain, Global, 2016–2022
Tier-n Vendor
Who will In- Out- How is it

bound bound
OEMs
benefit? Vendor/ What is the OEM Plant
done?
OEM Stores
outcome?
The entire value chain Achieved via

will benefit from a Enables full visibility of sensorization of
connected supply chain. product movement inventory and cloud-
The larger and more across the supply chain based common platform
complex the supply enabling demand-driven for information sharing
chain the greater the production and reliable and collaboration across
benefit from adoption delivery of the correct the supply chain to
of digital product, to the correct improve efficiency,
manufacturing place, at the correct quality, speed and
strategies for achieving time, in the correct reduce cost
better fulfillment rates condition and quality, to
and return on assets the correct customer Source: Frost & Sullivan
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Recommendations to Automotive OEMs
OEMs digitalization strategy must include vehicle digitalization, organization digitalization, and future mobility
concepts in addition to targeting new business models—focus on time to market and security.
Automotive Digital Transformation Market: OEM Recommendations, Global, 2016–2022
Hire a Chief Digital Establish an Innovation Consider country specific

Officer Function along Lab focused on creating digital retailing strategy
with an associated digital solutions as well as for new/used cars in
budget and team a digital-focused venture addition to aftermarket
(benchmark BMW) capital fund and servicing
Focus on building
Developing digital
Incorporate IIOT in capability in digital
connected lifestyle
the development of customer experience
solutions targeted at a
new factories focusing on regional
premium customer base
markets
Focus on creating CaaS and Evaluate potential for

MaaS business models. Fintech applications
Develop programs to inspire such as connected car
customers on key initiatives insurance
(Example: FordHub)
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Research Scope, Objectives, Methodology, and
Background
Return to contents
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Research Scope and Objectives
Base Year 2016
Study Period 2016—2022
Forecast Period 2017—2022
Vehicle Type Passenger Cars
Global, North America*, Europe (28 European Union countries),

Geographical Scope
China, and Brazil
Passenger Car Market: Unit Shipment Forecast, Global, 2016–2022
Year 2016 2017 2018 2019 2020 2021 2022

North America 20,914,901 20,991,538 21,062,270 21,124,045 21,256,480 21,440,220 21,617,265
Europe 19,473,674 19,828,421 20,311,964 20,994,920 21,599,181 22,108,203 22,541,440
China 26,418,548 26,487,693 28,155,490 29,944,297 31,441,705 32,718,385 33,801,214
Brazil 2,007,447 2,077,842 2,262,136 2,418,299 2,599,464 2,800,925 2,976,879
*North America includes Canada and the United States for the purposes of this study
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Key Questions this Study will Answer
• What are the key pillars of automotive digitalization? What are the key
recommendations to automotive OEMs? Discuss case studies and initiatives from
OEMs, Tier Is, technology companies, and startups focusing on digitalization.
• What are the key markets for startups to venture into and what is the current
revenue potential of those markets?
• Who are the key participants and what are their unique service propositions
(USPs)?
• Considering automotive digitalization, how much will the automotive industry spend
from technology and software perspective?
• Discuss revenue opportunities and business models focusing on automotive

digitalization.
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Research Background
Automotive Digital Transformation Market: Research Background, Global, 2016
This study summarizes content from several of Frost & Sullivan’s recently published and in-progress
research services in the area of commercial vehicle telematics, including the following:
• NFDE-18: Cloud and the Car - Use Cases, Business Models and Impact Analysis (Completed)
• NF83-18: Automotive Industry IT Spending - Key Focus Areas, Trends and Future Outlook (Completed)
• K029-18: Automotive Dealer Management System (DMS) Market—Growth Opportunities and Digital
Transformation, Forecast to 2022 (Completed)
• K00F-18: State of Automotive Cybersecurity Key Trends, Solutions, OEM Activities and Vendor Profiles
(Completed)
• K09A-18: Disruptive Satellite Communication in the Automotive Industry (Completed)
• MCA6-18: Strategic Analysis of the Automotive Keyless Access Systems Market (Completed)
• This study is also supplemented by ongoing interactions with vehicle manufacturers, suppliers, service
providers, and software providers in the area of connected vehicle services.
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Frost & Sullivan—CES 2017 Interviews
HERE KARMA AUTOMOTIVE VocalZoom
Great Design Meets Great Driving Experience - Vocal Zoom’s Laser Microphone Eliminates
Accurate 3D HD Mapping for Mobility Providers
Future of Boutique Automotive Luxury Noise, Enhancing Voice Recognition
Argus Cyber Security Toyota Nissan
Vehicle Protection & Cybersecurity in the Digital CEO -Talks about The Future of The Auto
Deep Learning & AI Concept-CES 2017
Transformation Age Industry
Nissan Volkswagen
Digital Assistance and Machine Learning –

Digital Transformation of the Automobile Industry
CES2017
K079-18 29
Research Methodology
Research Methodology: Frost & Sullivan’s research services are based on secondary and primary
research data.
Secondary Research: Information is extracted from existing studies and project material within the
Frost & Sullivan database, including data and information gathered from technical papers, specialized
magazines, seminars, and Internet research.
Primary Research: More than 10 telephonic interviews were conducted by senior consultants/industry
analysts with original equipment suppliers, regulation authorities, and Tier I suppliers. Primary research
accounts for 80% of the total research.
Automotive Digital Transformation Market: Key Participants, Global, 2016
Company Company
BMW IBM
Renault CDO Jaguar Land Rover
Volkswagen CDO FEV
Pivotal Irdeto
Ford HERE
Karamba Security Mahindra
MaaS Global Reply
Samsung Valeo
Movimento Honda
Kymeta Corporation Fiat Chrysler Automobiles
K079-18 30
Frost & Sullivan Digital Transformation Framework
Business functions The digital

include people, ecosystem includes
Key Elements of Digital
operations, product, the technologies that
Transformation need to work
information
management, together seamlessly
customer journey, and for digital
leadership. Digital Digital transformation to be
Business
transformation Ecosystem effective.
Functions
improves the ability of
each function to
achieve their key Value
objectives. Extraction
Impact on Top
& Bottom Lines
The convergence of
business functions, the Business
digital ecosystem, and
Models
new business models
create innovative ways Business models
to impact the top line include new ways to
growth and bottom line generate revenue.
efficiency of
companies.
K079-18 31
Digital Transformation Framework—Digital Ecosystem
There are three phases Connectivity and

of digital transformation: interoperability is
Digital fundamentals, needed far beyond
digital proficiency, and Digital IT solutions –
digital evolution. Most Evolution partnerships must
organizations are likely to Enterprise be sought
Analytics Augmented
have a few investments in Information throughout the value
each phase, some more Management /Virtual
chain for digital
Reality
entrenched than others. Customer Digital transformation to
Experience Proficiency Artificial work effectively.
Social Intelligence
Media IoT
Mobile &
Collaboration
Wireless
Digital
Fundamentals
Security Connectivity
Interoperability
Cloud
Platforms
K079-18 32
Digital Transformation Framework—Business Models
Gig Economy
Crowdsourcing
Customization
Freemium Xaas
On-Demand Sharing Economy

K079-18 33
Digital Transformation Framework—Business Functions
Information Customer
Product Operations People Leadership
Management Journey
K079-18 34
Pillar 1—Digital Retailing
Return to contents
K079-18 35
Future of Automotive Retailing is Digital
Transformational shift from a transactional model—Leverage digital technology throughout the customer
journey.
Future Stores Connected Retailing New Business Models

Omni-channel Retailing
Smaller, Ephemeral, ‘on-the-go’ seamless Social Commerce, and
‘Bricks and Clicks’ Models
and Urban shopping new retail models
Big Data Retailing Women Empowerment

Engaging Retailing Changing Customer Journey
From selling products Emerging Retail Models
Era of customized targeting Future of retail supply chain
to selling information for Women
K079-18 36
New Customer Journey is Already Digital
Blended offline/online shopping experience with high levels of digitalization—Extensive participation of OEMs
and dealerships in eRetail, social commerce, and digital malls provide complete guidance to consumers.
Automotive Digital Transformation Market: Digital Customer Journey, Global, 2016–2022

Customer
Plan Arrive & Navigate Browse & Select Purchase Aftersales
Attract
Electronic Labels
Location-based Advertising (In-store
sensors) and Digital Signage
Website/mobile site
Entertain Gamification
Video Display on walls, Touch Screens
Augmented Reality (Example: eBay)
Online/in-app videos
Repair tutorials
Engage
Retailer
Virtual Solution Providers

Shelf Tablets, Digital direction boards
Mobile Apps
Transact Self Ordering Kiosk

Mobile POS
Smartphone Ordering,
Online Ordering
Reward Loyalty Points

Mobile App Promotional discounts
Easier Returns and Refunds
DIY Support, Shopper Insights and Feedback
K079-18 37
Digital Solutions Supporting Individual Building Blocks
OEMs/Tier Is will rely on technology partners and innovative startup companies to become a pioneer in the
digital customer experience.
Information Customer
Management Journey
• Analytics • Analytics • Accounting/

• Analytics • Analytics • Analytics
• Artificial Finance
• Artificial • Artificial • Collaboration • Big Data Intelligence Applications
Intelligence Intelligence • Communications • Artificial • Augmented
• Big Data • Big Data • Analytics
• Mobile Intelligence Reality
• Cloud • Cloud • Collaboration
Applications • Collaboration • Collaboration
• Collaboration • Collaboration • Performance • Customer • Communication
• Communication
• Connectivity • Connectivity Review Contact • Cloud
• Security
• IoT
Applications • CRM • ERP
• Security
• Social media • Digital • Mobile &
• M2M • Social media
• Training Marketing
• Security • Wireless
• Sales
• Workforce • Collaboration
Management
• Management • Security • Security
• Social media • Social media
• Virtual Reality
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Degree of Digitalization in Car Retailing—2010 to 2020
European OEMs lead the way in terms of digitalization in retailing, a major consideration for all future retailing
programs; North American OEMs are evaluating the retailing scenario and will focus on in-store digitalization.
Automotive Digital Transformation Market: Car Retailing Digitalization, Global, 2010–2020

2nd Wave Virtual
Test Drives
Focus was on improving
High
1st Wave Digital

customer experience and
Focus was on Store
sales conversion through
increasing sales Service parts
in-store digitalization.
leads through and accessories
dissemination of Product
product and sales ‘Geniuses’
Degree of Digitalization
related information Augmented

through click-based Reality New car sales
channels.
Gamification Online Parts
Digital Ecommerce Future Wave

Configurators aggregator Full integration of clicks formats
Social Media
into bricks retailing. New retailing
Tablets models from adjacent industries
Mobile Apps and interactive technology will be
Digital Kiosks
the key focus during the forecast
Electronic period.
Displays
Online Leads
Low
Web Sites
2010 2014 2016 2020

Timeline Source: Frost & Sullivan
K079-18 39
Future Automotive Retail Ecosystem
OEMs must identify appropriate technologies that will underpin digital customer experience by leveraging
appropriate technology partners (leading software companies as well as startups).
Automotive Digital Transformation Market: Future Retail Ecosystem, Global, 2016–2020

Online Modes Digital Showroom Associated Tools & Software's
New Car – Web Portal Digital Showrooms: DMS and Software:

Toyota Make My Car, Audi Hyundai Rockar, Audi City, CDK Global, SAP, COX
Configurator, Mercedes-Benz Fiat Live store, Unity Hyundai Automotive, Oracle, IBM, Microsoft
configurator, CarWale outlet, Toyota Collaborator
CEM & Analytics:

Used Car – Web Portal Strategic Concepts: T-Systems, Autosense
Mahindra First Choice, Toyota U Designit, SMART DESIGN, (TVS ASL), Autometrics
Trust, Maruti True Value, Continuum, Frog Design,
CarTrade.com, Quikr, OLX, Inc. Hakuhodo Percept (Nexa)
Digital Content:
Hungama Digital Services(M&M),
Third Party Aggregators: Display Technology: Razorfish, Dentsu Media (Toyota)
Amazon, Flipkart, Aila Technologies, Inc.
Snapdeal, Zigwheels blippAR, PERCH
Social Media Promotions
Mobile Applications: Payment Gateways: Social Media Marketing:

Mahindra Digital CC Avenue(M&M), Infor, OTTOEDGE (Nissan
Auto World, TrueCar, EBS Ingenico Group, dealer outlets), HootSuite,
Hyundai India Sales Citrus Pay, PayPal, PayU Wingify, MaxAudience
K079-18 40
Global Automotive Aftermarket eRetailing—Overview
China will be among the top 3 automotive aftermarkets for eRetailing opportunities by 2022.
eRetailing in Automotive Aftermarket: eRetailing eRetailing in Automotive Aftermarket: eRetailing

Region-wise Revenues, Global, 2015 and 2022 Growth Opportunity Areas, Global, 2015–2022
60.0
Total: $50.80
Billion
50.0
Revenue ($ Billion)
40.0
30.0
10–15% growth forecast 15–30% growth forecast
Total: $18.35 >30% growth forecast

20.0 Billion
eRetailing in Automotive Aftermarket: Top 3 Market
Revenues, Global, 2015–2022
9.50% 21.41%
10.0
1.70% 1.24% 6.40% 3.72%
1 1
2 3 2 3
0.0
2015 2022 2015 2022
Note: All figures are rounded. The base year is 2015. Source: Frost & Sullivan
K079-18 41
Aftermarket eRetailing Penetration by 2022
By 2022, aftermarket eRetailing penetration from NA and the UK is expected to be more than 10%.
Automotive Digital Transformation Market: Aftermarket eRetailing Penetration, Global, 2022
14.8% 6.8% 6.6% 4.3%
France 10.3% Spain 10.4% Italy 5.1% Mexico
North America UK China
12.0% 4.0% 6.5% 2.0%
Germany Brazil Russia India
K079-18 42
Connected Supply Chain—Impact on Service Aftermarket
Technology is at the heart of all new emerging service models in the vehicle aftermarket. Mobile apps and
online services provide new service models to customers.
Diagnostics Connected Car New Service Models
Remote Diagnostics:
LAUNCH Tech USA, On Remote Servicing: Tesla Mobile Services: GO Tire
board diagnostics (OBD) II-
based DIY applications
Handheld Tablets: Prognostics: General Mobile Vehicle Service:

General Motors, Ford, Motors yourmechanic.com
Launch Tech USA, Bolt
On, Autoserve
Participatory Services
Quick Service: Ford Quick
Software Subscriptions: Lane, Kwik Fit
Snap-On, Robert Bosch,
Advance Auto Parts Augmented Reality: Audi,
BMW, Volkswagen, Bosch Aggregator
Mobile-based Apps:
Federal Mogul, Mitchell Service Aggregators:
International Inc, Robert Telepresence: AUDI Whocanfixmycar.com,
Bosch RepairPal, openbay
DIY- Do it Yourself Source: Frost & Sullivan
K079-18 43
Digitalization Reshaping Leasing and Vehicle Financing
Digitalization is changing the way vehicles are financed by making the process faster, safer, and user friendly.
All financing arms of OEMs working on Fintech, Blockchain and P2P solutions leveraging digital platforms.
Shift from Ownership Online Car Finance Online Lending (P2P

Digital Signature
to Usage Consultation & Crowdfunding)
Online Loan
Blockchain Fintech application and eContracting
approval
K079-18 44
Gamification Leads to Next Level of User Engagement Models
OEMs are using state-of-the-art technologies such as AR and gestures to involve users in an experience which
offers vehicle information and is also used as marketing tool for retail.
OEM Technology Purpose

Technology
Virtual Reality on Immersive driving
Platform Nissan, London
• Rotoscope Technology Wind screen experience
Showroom • Oculus Rift 3D CAVE Virtual
Application Ford, Germany Prototype testing
• Graffiti Wall Environment
• Gesture Recognition Technology 3D CAVE Virtual
Renault, Paris R&D -Interior Design
• Transparent Touch Screen Environment
• Holographic Projection Create virtual user
Ford, US Oculus VR
experience
Mobile/Online/ • Smart Glass
Smart Phone app+ Customer
Wearable • Oculus Rift Volvo, US
Google Card Board application
Technology
• Microsoft HoloLens
Racing Game
• Google Cardboard Audi Online marketing
mobile app
• Virtual Reality Jaguar Land Rover, Virtual Reality on
R&D – Eco Driving
• Augmented Reality UK Wind screen
• QR Code Applications Jaguar Land Rover, Used in dealer
AR
• Driver Simulator application UK showrooms
Multi touch table and Used in dealer
In-Vehicle • Driver behavior score based on: Audi City, London
Gesture recognition showrooms
Applications o Fuel consumption
Used in dealer
o CO2 emitted Lexus, UK Oculus Rift
showrooms
o Tire Pressure
Create virtual user
o Eco-Route and mapping usage Toyota, US Virtual Reality
experience
o Driving Tips
Create virtual user
o Parking lot identification Fiat, Brazil AR
experience
K079-18 45
Exhibit A—Rockar: Leader in Digital Retailing in Europe
Rockar opened three stores in less than 24 months—across 2 brands—Hyundai & JLR.
Choose/Configure Purchase Service/After-sales
Rockar Web Store Web Configurator Price Comparison Exchange & Finance Online Purchase
Entry
Digital Engagement – Tablets and Simulators Purchase
Product Advisory by Rockar Angels

Journey
Unaccompanied Test Drives
Rockar Store Financial Advisory
• Personalized delivery of new car

• Online customer portal
• Automated service booking – pick and
Retention drop
• Motability schemes
• Connected service updates
Image source: Hyundai Rockar Source: Frost & Sullivan
K079-18 46
Exhibit B—Rockar Hyundai: KPIs
Soft and Hard KPIS—One Year Recap.
Westfield store
72% will host 94%
of Rockar
of customers 5 NEW HYUNDAI
customers are
lured away from MODELS. new to the
used cars
Hyundai brand.
86%
of customers
purchased their
car with Hyundai’s
finance deals.
150,000
user journeys
on Rockar.com
ROCKAR HYUNDAI
ONE YEAR ON
One year on from the first Rockar Hyundai digital
showroom opening its doors in Bluewater Shopping
Centre in Kent, the company has now announced
the opening of its second store in London’s
Westfield Stratford City. Here are all
the important figures from
Rockar Hyundai.
50%
of customers made Rockar Hyundai
purchase on has won
rockar.com at home.
4 AWARDS. Source: Rockar Hyundai; Frost & Sullivan
K079-18 47
Exhibit C—BMW’s eCommerce Strategy
BMW now operates its own marketplace for selling new cars and parts, and will roll it out globally.
2011 2015 2016
BMW Store on eBay BMW Online Store BMW Direct eStore

Motors (UK) (Europe) (Germany)
Source: BMW; Frost & Sullivan
K079-18 48
Exhibit D—eCommerce in Automotive Aftermarket: BMW Web Store
BMW could expand its own web store channel strategy outside of Germany depending on the outcome of
current pilot project.
BMW Direct eStore (Germany) Products Coverage:

Driveline, Suspension, Electricals, Systems, Exterior
Body Parts, HVAC, and Lighting
Payment Options:
Online banking, PayPal
Fulfillment Options:
• Delivery at Choice of Location (shipped from
dealer location)
• Pickup from BMW dealership
Shipping Cost:
• Varies according to order weight (minimum
shipping is EUR 5.99 across Germany)
BMW Direct
Delivery at Customer
eStore
eCatalogue Order Placement Order Fulfillment Location
11,000 + parts Online payment Via local Dealer Pickup from BMW
Dealership
Source: BMW; Frost & Sullivan
K079-18 49
Exhibit E—Mahindra KUV Launch Digital Marketing Highlights
Mahindra achieved 1.5 million views on its microsite, 300,000 views and 50,000 hot inquires in two days post
launch, after which, the management decided to upscale the production by more than 50%.
KUV Launch Digital Marketing Statistics
KUV launch was focused around 70 million

digital, starting with the first ever 17 million fans
video views
pre-launch site, to social media
engagement and online queries.
10 million 5 million
engagements website visitors
Parameter Number
5 million database:
KUV100 Website visits 2.1 million Customers & prospects
Enquiries/Test Drive requests 31,000
Video Views 6.5 million H1 2016
Social Media Engagement 2.7 million
Launch Reminder 15,000 5 million website visitors
Bookings Open Tab Entries 8,000

Price page eBrochure Enquiries Test drive Retails:
1.6 million 1.2 million 35000 taken: 560
7000
Source: Mahindra; Frost & Sullivan
K079-18 50
Pillar 2—Mobility as a Service
Return to contents
K079-18 51
Automotive Companies Unrealized Transportation Opportunities
In 2015, OEMs received minimal revenues from the $5.4 trillion transportation industry market. Digital initiatives and
investment in mobility focused startup companies will enable OEMs to compete in the wider transportation industry.
Automotive Digital Transformation Market: Transportation Opportunities, Global, 2015

Global Automotive Vehicle Global Transportation
Sales Revenue, 2015 Industry Revenue, 2015
5.4 trillion
2.3 trillion
• In 2015, the average OEM market share varied between 3.5–10.2% of global automotive industry revenue.
• OEMs across Europe and North America are starting to focus on digital initiatives considering urbanization,
connected travellers, and mobility.
• A software driven approach to tap available opportunities and recurring revenues will be targeted by OEMs
(connected car services, software investments, and multimodality applications are key focus areas).
K079-18 52
Industry Drivers—On Demand Mobility Services
Enabled by digitalization, mobility companies are disrupting automotive industry ecosystem. Integrated mobility,
ridesharing, eHailing, and parking are key monetization channels for OEMs and technology companies.
Automotive Digital Transformation Market: Industry Drivers, Global, 2016

• The global Internet user base is forecast to increase to over 3.50 billion users
Smartphone and by 2017, with over 2.82 billion mobile-based Internet users.
Internet • Global smartphone market is forecast to grow to 2.66 billion smartphone
users by 2019.
Penetration
• Access to mobility information & services is becoming seamless.
• Consumer to shift to modes that are cheaper and faster, with customised levels of
Consumer Behaviour service and convenience.
& Responsive Service • Influenced by developments in retail and adjacent sectors, customers expect
high levels of user experience and “on-demand” services from
Industry transportation.
• By 2017, global B2C online sales is expected to be over $2.30 trillion, registering
a CAGR of 18% since 2012.
eCommerce • By the end of 2015, the mobile share of global eCommerce transaction was over
40%, and is expected to grow to 70% by 2017; everything is going mobile,
including mobility.
• Cities are investing in public transit as a way to improve mobility, and are
improving service levels by digitizing the network and integrating with other
Public Sector transportation modes.
Initiatives • Private sector technology partners can facilitate integration of public &
private transportation.
K079-18 53
Mobility as a Service—Trends
Companies focusing on MaaS will revolutionize the way people move around in cities. CaaS business models,
strategic partnerships between government agencies, OEMs, and MaaS companies will be crucial.
Automotive Digital Transformation Market: Mobility as a Service Trends, Global, 2016
MaaS is expected to take off with OEMs shifting toward CaaS business models. Partnering or
1 investing in ride hailing, ridesharing, smart parking and technology providers will help OEMs
realize their goal to become an one-stop shop for all mobility needs.
Consolidation is expected to reduce the total number of players in the carsharing, ridesharing,
and the ride hailing market. The individual mobility platforms will be expanding to include other
2 solutions. For instance, the carsharing market will expand to offer P2P carsharing services,
and ride hailing platforms will begin to offer ridesharing services.
Public transport operators and local municipalities are expected to launch full-fledged
integrated mobility solutions in multiple cities to alleviate problems such as increasing
3 congestion and pollution. They are expected to partner with private mobility service providers
and technology companies to launch operations.
Smart parking is being considered a core component of smart city initiatives. Strategic
4 partnerships sought by OEMs and integration with other mobility solutions with increasing
online and mobile customers is expected to push parking operators to adopt high-end
automation solutions and software for parking reservations and payments.
K079-18 54
Digital Transformation to Drive Integrated Mobility Platforms and Apps
Technology has enabled device delivery of real-time, door-to-door multi-modal travel encompassing pre-trip,
in-trip and post-trip services, bringing convenience, time & cost savings to the mobility user.
Automotive Digital Transformation Market: Integrated Mobility, Global, 2016–2020
Dynamic
Demand Parking
Car Sharing and Car Rental & Responsive
Pooling Leasing Transport
(Taxi, BRT)
Intercity Public
Transport
Intracity Public
Transport
Car Rental Connected Living

(Including Car)
PHYD
Insurance Micro-mobility
Solutions
Apps, Journey Concierge

Trains/Flights Energy Planning, Big Services
Integration Management Data
K079-18 55
New Business Models Underpinned by Technology
New business models will continue to grow as part of the convergence towards electric, connected, shared,
and eventually autonomous mobility.
Automotive Digital Transformation Market: Mobility Business Models, Global, 2016–2022

Mobility Convergence
Exciting New
Business Models
Autonomous
Influence of Self- • Smart & Shared Mobility
Driving Features
on Vehicle o Smart Ticketing
Connectivity
Interior/ In-Vehicle,
Exterior o Open Data
Infrastructure,
Grid o Dynamic Pricing
o “On-Demand”
o Carsharing
Electric o Ride hailing/Sharing

Enabling Layers Mega Trends o Dynamic Public
• Data Security Influence on
• Safety Drivetrain Transport
• “Real-Time” Maps,
o Parking
Images & interpretation
• L1-5 Automation
K079-18 56
Mobility as a Service—Services, Business, and Pricing Models
Mobility options to become more personalized based on user needs. Travel would include subscription based
and one time paid packages in addition to “Bring your own content in cars”.
Automotive Digital Transformation Market: Mobility Business and Pricing Models, Global, 2016–2030
• Car sharing/renting and leasing

• Pay as you go models,
models
subscription-based
• Integrated options for point to Services
models for individual and
point transport
family
• Value-added connected services
• One-time purchase of
and entertainment models Business Pricing miles or time for usage of
Models Models mobility services
• OEMs will target
• OEMs will include 10% of vehicles percentage of revenues
produced as part of their mobility from connected services,
service by 2030. Examples and other in-vehicle
• Tie-ups with third-party vendors for packages from ecosystem
services and personalized features partners.
• Customization and personalization
will be key selling points.
Mobility will have multiple pricing options. Similar to mobile industry, packages suited
for individual needs will be created. Transactions will be made based on time and miles
covered. Most European OEMs are already progressing towards Car as a Service (CaaS).
K079-18 57
Market Evolution of Vehicle Sharing Technologies
By 2025, advanced technologies such as automated driving, connected mobility, EV charging, and HWW
solutions will play a pivotal role in improving the experience offered by vehicle-sharing operators.
Road
Ahead • Wireless induction EV Charging Impact
• Rapid EV charging
2015– • Automated Technology • Significant cost benefits (due to
2025 • Digital Keys keyless access technology)
• Enhanced customer experience such
Recent Past as digital keys can be easily scaled to
to Today • Smartphone and smartcards include additional features (adjust
(RFID/NFC Technology) seat preference, turn on A/C, select
2008– • Fuel management cards, on-board favorite radio channels).
2015 computers, and GPS technologies • Calendar synchronized personal
mobility services
• Improved efficiency due to better
• RFID card reader or Key Fob utilization of fleets and parking
1996– • Time and mileage automatically spaces
Traditional recorded • Merging of Be driven and Self-driven
2008 Model • Emergence of off-the-shelf business models (due to autonomous
technology providers technology)
• Live telephone operator-based

Pre- reservations
• Manual lockbox mode of access for
1996 keys
Historical
K079-18 58
Digitalization Enabling the Shift to Car as a Service
Mobility will lead to dissolving brands; OEMs will look to maintain the differentiation with their signature CaaS platforms, one stop
shop for purchase, rent/hire of vehicles, connected and concierge services and integrated mobility platform.
• Single app platform – Sell/Rent/Hire/Share cars, subscribe to

connected & concierge services and host integrated mobility
solution
• Future Use Case – Customized car (Body, Engine, Interiors
Tier I and and Others)
• Dealership-based engagement models to sell OES, services
Tier IIs
and extended packages
• Product as a service in the aftermarket and mobility operators:

Disruptors
(Tire as a service, Infotainment Unit as a service, etc.) –
Michelin
• Software as a service to OEMs – Movimento, Security
OEMs Innovation, Tier Is on Licensing models
• Custom products/software made on-demand – Bosch MySpin
Dealers • Sell Miles/KMs to end user with add ons like connected
package and partnership with stores – Geofenced approach
• Sell Time: “X” hours to the user, which could be used to access
any transport mode
• Autonomous Software packages (Apple and Google), Cars for
personal and shared use
User
• Dealerships to integrate services from OEMs, Tier Is, and also
other concierge service providers
• Maintain and Operate model for autonomous vehicles
• Supermarket of mobility options
K079-18 59
Blockchain and Mobility Solutions
Application of Blockchain technology for automotive uses cases is nascent. Ride sharing, shared autonomous
systems, and supply chain logistics are some of the use cases currently using Blockchain technology.
Connected Insurance
• When an OBD device is used, insurance providers can track vehicles and collect data on
over-speeding, location, engine diagnostics, and use the data for premium calculation.
• It reduces the number of insurance claims by decreasing the risk of accidents which in turn
reduces fraudulent claims.
Sales and Leasing
• DocuSign’s Digital Transaction Management (DTM) platform and eSignature solution
together with Visa’s secure payment technology works using Blockchain technology.
• Customers leverage DocuSign platform to sign a smart contract. Leasing, insurance,
services such as parking and tolls are activated and payment is made using Visa.
Automotive
Blockchain – Supply chain Logistics
Key • Blockchain technology improves transparency, facilitates better tracking of orders,
Functional eliminates errors in payment processing, and tracks real-time feedback from customers.
Areas • Smart contracts and smart payments are recorded using Blockchain technology.
Manufacturing, IoT and Connected Living

• Blockchain technology follows a decentralized approach facilitating a standardized peer-to-
peer communication.
• Processes billions of transaction and reduces the associated cost as it eliminates setup
costs of large centralized data centers.
Mobility Solutions
• La‘Zooz, an Israeli startup, is one of the first Blockchain ride-sharing company.
• La‘Zooz ride sharing service is completely decentralized and enables the real sharing
economy.
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Exhibit F—Daimler Moving Towards Car as a Service
Daimler (Moovel gmbh)—Daimler’s mobility services reached over €100 million in revenue in 2014, and the
company has targeted revenues of €800 million by 2020.
Automotive Digital Transformation Market: Daimler Engagement, Global, 2014–2020
Taxi & Chauffeur Integrated Mobility Urban Logistics
Carsharing Smart Parking Public Transportation Ride sharing
K079-18 61
Exhibit G—MaaS Global’s Solutions “The Whim App”
For about 100 euros, consumers can have unlimited access to public transport services plus limited access to
shared cars for a given number of miles.
Automotive Digital Transformation Market: MaaS Global Solution, Global, 2016

Long
Distance Taxi
Public Bus
Transport
Short
Distance
Bus
End Consumers
Pay as You
Go Whim
Bike sharing Whim App
Carsharing
Back
End
Consumer End Consumers
Car Subscription
Rental Whim App
Parking Routing
Service System
Gasoline Ticketing
Service System
Other Payment Business Subscription Corporate
Services System Whim App Customers
K079-18 62
Exhibit H—Technology Enabled Mobility Integration Platform
Qixxit—Deutsche Bahn Launching Mobility Integration Services is another example.
Integrated Real-time information of Alternative Cross- & upsell-products Social

booking integrated means of routing (Hotel, luggage service) travelling
transport
Current
Services
Current partners
Rental Local public Long-distance

Taxi Bicycle Car Sharing Car Flight Coach
car transportation transport
via
+ partners + partners
K079-18 63
FordPass Platform—Parking Service to Autonomous Taxi Service
Ford led a $253 million investment and strategic alliance in Pivotal Software, joined by Microsoft. FordPass will
be the platform for smart mobility initiatives acting as a medium for recurring revenues.
FordPass
Ridesharing and car

sharing are key assets
that will be added.
Marketplace Hubs Guides Perks The idea is to interact

Apps & Experience Navigation/ Loyalty and daily with customers.
Services Zones Parking Rewards
FordPass is more
LTE SYNC organic and ecosystem-
Automated
Connect based digital solution.
New Mobility Modes Driving,
Industry First
Example: FlightCar Data and Dealer integration,
Remote
Analytics finance/lease
De-icer
payments, vehicle
health, are all
4 Key Pillars to FordPass
integrated.
18 Months of Development Time – Going Global
Organized Under: Ford Smart Mobility LLC.
Owners Non-owners
K079-18 64
Mobility as a Service Market—2015 vs. 2025
Whim app from MaaS Global addresses some of the major gaps and issues in the urban mobility ecosystem in
2015.
Automotive Digital Transformation Market: Mobility Services Landscape and Market , Global, 2015–2025
Public Transportation
SERVICES PROVIDED
965.40 B
544.82 B
Car Rental
• MaaS Global 172.6 B Bikesharing

solution combines 97.10 B
all the existing
transport services in eHailing 15.67 B
a single app on the 3.03 B
“Single Ticket 837.67 B
Principle” and 331.4 B
offers customized Ridesharing
travel plans for the
customers. Carsharing
24.43 B
11.2 B
3.40 B
2.34 B
2025
2015
K079-18 65
Pillar 3—Connected and Autonomous Cars
Return to contents
K079-18 66
Connected Car—Regional Trends and Highlights
Smart mobility, cyber security, and software-defined cars remain the key areas of interest across Europe, NA,
and China. Japan and Korea, despite technological advancements, lag in the connected car space.
Region Trends
• Despite free telematics service offerings aimed at data collection, ROI models are still unclear. NA leads in LTE
penetration; Volkswagen to commercialize 5G based services by 2020. Toyota and Ford have joined hands to build an
open source infotainment framework forming consortium with other manufacturers.
• Cyber security initiatives are moving to Silicon valley as OEMs invest in white hat hackers to react swiftly. Safety takes
North priority over comfort and convenience. Smart Mobility and Autonomous vehicles still remain the focus areas for OEMs
America in NA.
• Telematics penetration is still restricted. Mass market OEMs are prepared to offer basic eCall services, while premium
OEMs are packaging connected navigation as a suite of connected services. Android, the open source OS for
infotainment, is gaining traction.
• C-ITS is expected to play an important role in 2017 as the EU commission pushes for wide-scale deployment by 2019.
Europe OEMs expand in mobility services – possible inclusion of connected services with mobility packages.
• Focus in areas of data analysis, Internet-vehicle platform building, and urban intelligent transport—Audi partnership
with Baidu and Alibaba is an example. Baidu’s partnership with BMW, NVIDIA for AI, and with Harman suggests a
strong footprint for connected automated cars.
• China also started the Cybersecurity initiative focused on identification of threats to make the next generation cars
China more safe.
• Post SIMRAV focus is on smartphone-based infotainment solutions. Solutions from Telit for tracking and speed
monitoring, OE navigation solutions powered by NNG depict the seriousness of vehicle tracking amidst cases of theft.
Brazil
• Japan and Korea are the leaders in LTE penetration (>90%) and are expected to be the pioneers of 5G connectivity.
Despite infrastructure availability, embedded solutions are considered to be premium segment solutions. OEMs focus
Korea and on smartphone-enabled app services.
Japan • Japan is one of the most advanced V2X markets, with proliferation of V2V services expected in 2017.
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Connected Cars & Technology Startups
The list of startups below have a unique perspective, strong vision, and innovation that are expected to bring a
wind of change in the automotive industry.
Automotive Digital Transformation Market: Connected Cars and Technology Startups, Global, 2016
Funding Technology Usp (Unique Selling Point)
Company Received Domain
Innoviz $9 Million Sensor Hardware LiDAR under $100 to support Autonomous cars
Artificial Intelligence Autonomous driving AI software including environment recognition, motion planning,
ADASWorks $11 Million
Software navigation, and control
Kymeta V2V/V2X Kymeta is a forerunner specializing in the development and commercialization of the
$144 Million
communication software-enabled satellite terminals.
Gestigon €6 Million Driver Safety Driver Monitoring and recording the events inside the cabin
Maluuba $11 Million HMI Maluuba’s voice assistant platform offers accuracy ~93%.
nuTonomy $19.6 Million Mobility(Driverless Taxi) Commercialization of driverless taxi. A fleet of 12 will be added by end of 2016.
Geodigital $17.93 Million HAD Mapping Developing HD Map data with <10 cm absolute accuracy and relative Accuracy <5 cm
Lit Motors $2.2 Million Electric Vehicles Low-cost electric scooter with comfort features of a car.
WAYRAY $10.6 Million Driver Safety- HUD Cost-effective portable holographic HUD that can be used in different cars
Movimento $9.6 Million OTA services Capability to perform SOTA and FOTA.
Rightware $5.2 Million HMI Software Virtual cockpit to support information sharing
Car Beacon plugs into a standard cigarette lighter and requires no setup. It can be used
Cloud Your Car $4.5 Million Aftermarket Telematics
in any car and make and year.
Karamba Security Embedded software has zero false positives, requires no malware signature updates
$5 Million Automotive Cybersecurity
with negligible performance impact on the ECUs it hardens.
Civil Maps $9.2 Million HAD Mapping Technology available for commercialization as a plug and drive hardware
UBI with help of smartphone technology and solution is more robust and secured when
Zendrive $20 Million UBI
compared to OBD port solutions.
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Rollout of 5G from 2020 will Accelerate Digitalization of Vehicle
High-speed connectivity technologies such as 5G can increase speed by 70% compared to LTE. There is a
plethora of service opportunities with high-speed connectivity.
5G Characteristics
Speed: 1–10GB/s • 70% faster than LTE
Latency: 1–5ms • High Download Speed close to 1–10Gbs/s
• Latency Period close to 1–5 ms
Bandwidth: 6–30GHZ • Supports 1,000X more Traffic Volume
Coverage: 100% • 100% Network Coverage
5G High to Fully Automated Driving

(Over 2 GB data needs to be harnessed at a
given point.)
Over the Air Updates

(Smart compression and high Internet
speeds will reduce update times by 50%.)
Augmented and Virtual Reality

(Continuous processing of real-time
information to windshield)
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5G and Satellite Communication—Use Cases
Connectivity, software, and robotic automations are key elements that constitute the transformation toward
Industry 4.0. By 2020, satellite connectivity is likely to support autonomous vehicles and IIoT use cases.
5G Smart Entertainment
Infra
P
eHealth
Smart Smart Connectivity
wearables parking
Smart Living
Smart car
Smart Utility
Traffic Car-to-car Safety and
mobility management
Update connection Security
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Incremental Updates based on Navigation Data Standard (NDS)
Objective to creation of common standards for mapping solutions will make OTA updates seamless. There
have been pioneering efforts from OEMs such as VW, MB, BMW, and Tier Is such as Harman and TomTom.
Pros and Cons
Map Data System Service

Developers OEMs
Providers Providers Provider
• Nokia • Aisin • Alpine • Technisat • Daimler • Needs-based update results in
• TomTom • Autonavi • Melco • Neusoft • BMW reduced data downloads.
• NavInfo • Zenrin • Bosch, • Mini
• Updates are done in background
• MXNavi Harman, • Volkswagen
and does not hinder performance
Panasonic • Hyundai
of infotainment system.
• Denso, • Volvo
Clarion • On the downside, uptake rates are
• Garmin low (Only VW on select models).
• Association for creating map standard for automotive grade use
• Standardized digital maps enable updates over the air ensuring up-
to-date local information.
Highlights
• Standardized format allows easy updates and innovation.
NDS
• The database modules enable navigation systems to find the • Harman: Navigation solution with
Initiative
optimal and most efficient route, avoid traffic jams, guide the car to Live data fusion and incremental
a parking space, and offer tips on restaurants at your destination. OTA NDS solution. It will also offer
crowd sourced dynamic data.
• Main focus was to reduce the cost.
• NDS will serve as a backbone for digital maps for automated • TomTom offers modular, plug and
vehicles. play maps ready with NDS
updates.
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Connected Living—The Alphabet Ecosystem
Alphabet aims at offering seamless integration of/and access to personal data for millions of users anytime,
anywhere—an Alphabet product/service dependent lifestyle for users.
Automotive Digital Transformation Market:

KEY FINDING, Alphabet
GLOBAL, Ecosystem, Global, 2016–2022
2016-2030
NEST Alphabet’s various offerings serve

Home Automation as modes collecting vital
information about the user’s
Google preferences
Fiber
75
Autonomous
Cars and activities.
Waymo’s autonomous software

Autonomous is only a part of Alphabet’s final
Chrome Home Drones vision, however, it would enable
efficient movement
of people & goods.
Personal
Autonomous AI could play a vital role in a user’s
Trucks
Work Devices Shop day to day life from home
YouTube
automation (NEST) to self-driving
vehicles (Waymo) to healthcare
(Verily).
Health &
Wellness Android phones, wearables, and
G-mail mobile apps will have a major
significance in the years to come,
G-maps
allowing easy access to a user’s
Deep
Learning ecosystem with the touch of a
button.
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Smartphone Interfacing Technologies
Toyota and Ford have teamed up to take the fight to Apple CarPlay and Android Auto, by establishing the
SmartDeviceLink Consortium.
Automotive Digital Transformation Market: Smartphone Interfacing Technologies, Global, 2016–2020

Smartphone Interfacing Technology Benchmark, Global, 2016 IVI OS Market Share, Global, 2016 and 2025
13% 8%
OEM MirrorLink CarPlay Android Auto 2%
23%
Audi NA  
50%
37%
BMW NA  
Mercedes   23%
27%
Tesla NA NA NA 12% 5%
2016 2025
Ford AppLink   Microsoft Embedded GENIVI Linux
QNX Android
GM   
Others
Peugeot   NA Others: Propriety OEM solutions
Renault NA NA NA Smartphone Interfacing Technology

Penetration, Global, 2016 & 2020
Toyota  Ford SDL NA
The base numbers are connected car
Volkswagen    50.0 numbers for 2016 and 2020.
38.4
  40.0 2016 2020 36.5
Millions
Volvo NA
30.0
JLR NA NA NA 21.5
20.0
Subaru   NA 10.0
0.9 1.0 1.0
Nissan NA  NA 0.0
MirrorLink Android Auto CarPlay
Hyundai   
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Input HMI Related Trends—Displays and Touch Screens
The need for better screen visibility and improved response time of touch screens are the key factors, leading
OEMs to increase the screen size and switch to capacitive touch screens.
PORTRAIT DISPLAY CAPACITIVE TOUCH

Trend: Aston Martin features a 13.3 inch portrait Trend: OEMs are adapting to capacitive touch
flat screen inspired by Tesla. Tile-based interface screen from resistive screen.
in Volvo is an example. Reason: Highly responsive and durable with
Reason: Clear visibility, ease of access, and high-quality display; helps reduce driver
helping to reduce driver distraction distraction
Impact Region: Impact Region:
Large icons, simpler menu structure, Clear visibility, increased response time,
Advantages
high visibility, and symmetric layout gentle touch approach for easy operation
Ford, Aston Martin, VW, BMW, Hyundai OEMs Ford, VW, Hyundai, BMW
Continental LeTV (13.3 inch with Aston Martin)

Suppliers Bosch, Visteon, Continental, Harman
Visteon
Multimedia, HVAC, automation output information, Multimedia control, HVAC control, automation
Use case
ADAS information, and infotainment access output information, ADAS information
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Input HMI Related Trends—Voice & Handwriting Recognition
Multimodal user interfaces possess intrinsic intuitiveness which help the user to learn and use the system with
ease and are preferred by many OEMs to operate their infotainment system compared to a unimodal interface.
PERSONAL ASSISTANT: HANDWRITING RECOGNITION

Trend: Advanced Voice Recognition for controlling Trend: The implementation of a touch pad to
infotainment features and other use cases perform gestures is on the horizon.
Reason: Intuitive method to control the vehicle Reason: Ease in accessing IVI. Does not
and helps to reduce driver distraction as driver hinder the primary task of driving
engages in natural conversation
Expected by 2019
Control multimedia entertainment,

Ease in operation of infotainment
Advantages navigation, and other systems by drawing
system, reduced cognitive load
letters, numbers, and symbols on the pad
BMW, Audi, and Mercedes-Benz OEMs Audi, Mercedes Benz, BMW, and Cadillac
Nuance, Inago, Voicebox, and Sensory Suppliers MyScript, Hanwang, and Nuance
Embedded, Hybrid, and Cloud services Solutions Touch pad, Touch Screen, and Touch Mouse
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Output HMI Related Trends—HUD and Instrument Cluster Display
Networked displays with information sharing is a key market trend. Increasing central display size with portrait
mode preference for more clarity (Volvo). Reconfigurable instrument clusters for autonomous cars.
AR HEAD UP DISPLAY NETWORKED DISPLAY

Trend: OEMs plan to accelerate the implementation of Trend: Controlling IC, HUD, and Center stack with just
HUDs in their vehicle line-up even in the small size cars. one ECU
Reason: HUDs project information inline with the driver’s Reason: Manage the increasing cost and complexity
sightline on the road and reduce driver distraction. of electronics while improving driving experience.
Projecting navigation, ADAS, blind-spot

Clear visibility, increased response time,
detection warning, and other driver related Advantages
gentle touch approach for easy operation
information
Hyundai, BMW, Audi, Mercedes-Benz, Entry with premium Manufacturers such

OEMs
Cadillac, Jaguar Land Rover as Audi, Mercedes Benz, and BMW
Continental, Denso, Nippon Seiki Suppliers Visteon, Continental
3D HUD (Toyota), Laser HUD (Jaguar Land Rover), Instrument Cluster, Head Up Display,
Use case
Dice Concept (Mercedes Benz) Center stack
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Key Developments in Voice Recognition
Microsoft’s Cortana, Amazon’s Alexa were the latest in line after efforts from Nuance in the personal assistant
domain.
Automotive Digital Transformation Market: Voice Recognition Developments, Global, 2016

Real-time Translation
Microsoft is offering this service on
Skype, in over 40 languages
including speech and
text translation.
Voice Biometrics Active Noise Cancellation
$100 billion market globally by 2021 Harman’s HALOsonic road noise
with Healthcare, Mobile Banking, and cancellation and engine order
Public Sector as primary drivers cancellation
Deep Speech Vision Analytics to

Baidu developed system Improve Voice
that uses AI to directly Harman’s HALOsonic road noise
convert audio input into cancellation and engine order
transcribed output cancellation
Embedded Natural
Language processing AI Enabled Virtual Assistants
TrulyNatural’s fully Virtual assistants that understand
embedded deep neural context and nuances to directly
network speech recognition understand cognitive load of the
driver
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Automotive Industry—Rise of Automation
Automation in the automotive market will create a $60 billion per annum market opportunity in 2030.
Human Change in Responsibility Machine
Brain Off
Mind Off
Eyes Off
Hand Off
Feet Off
Current Level
2011 2016 2018 2025 2030

Awareness for General Awareness
Early Warning Traffic Control Takeover
No Systems Full Autonomous
Assist Driving
Level 0 Level 1 Level 2 Level 3 Level 4 Level 5

New 40 million 15 million 5 million 2 million 1 million
Vehicles Source: Frost & Sullivan
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Natural Language Processing & Machine Learning for Self Driving Cars
Deep neural networks are highly scalable and flexible with data and will be the key method used by OEMs and
technology companies to develop self learning AI.
• Deep neural networks are large networks that are trained to perform various tasks such as object
recognition and speech recognition.
• Machine learning (ML) using deep neural networks is also known as Deep Learning.
Hidden layers Self Learning Cars: Popular Forms of Machine

Learning Algorithms, 2016
Supervised
Recurrent neural net

Boosting
Convolutional
Input Output neural net
layer layer
Neural net Perceptron SVM
Deep Shallow
Sparse Coding
Autoencoder
Deep autoencoder neural net
neural net
SP
• The algorithm consists of many layers that are used Deep Belief net Restricted BM
GMM
to learn various subjects or concepts.
Bayes NP
• Each layer defines a certain parameter of the subject.
Unsupervised
• Weights are assigned to each layer to identify a
particular subject or concept. Deep learning
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Self Driving Technology Trends
Thirteen OEMs will invest $7.1 billion to develop 4 levels of self learning cars. Three broad applications will
give rise to 12 use cases by 2025.
Automotive Digital Transformation Market: Self Driving Technology Trends, Global, 2016–2025
2 million level 4 self learning Super computers key to run Database availability to evolve
cars on road by 2025 the self learning software technology in 4 levels
Technology companies to be
3 broad applications of vision, 13 OEMs invest $7.1 billion to
Tier I to OEMS for software
speech, and user behavior develop the technology
and hardware
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Software and Self Learning Cars—2016 to 2025
By 2025, four levels of self learning cars would enable a fully autonomous car with advanced driver
assistance capability.
Automotive Digital Transformation Market: Software and Self Learning Cars, Global, 2016–2025
2016 2018 2022 2025

Levels
1. Basic Function 2. Complex Function 3. Critical Function 4. Vehicle Control
Functionalities
Basic functionalities Complex Critical functionalities All functionalities of
of the vehicle’s functionalities are of the vehicle’s the vehicles are
operation is performed performed using self operation is performed performed by the self
by the self learning AI. learning AI. by the self learning AI. learning AI.
Applications
• Voice commands to • Natural Language • HAD Maps • The car acts as a
control the vehicle processing • Object recognition personal assistant
interiors • Object recognition • SAE Level 3 and level and is fully
• User preferences • SAE level 2 4 autonomous autonomous.
• Gesture recognition autonomous • Health monitoring
Key OEMs
• JLR • Audi • JLR • Tesla • Ford • JLR • Tesla
• Daimler • Renault • Volvo • Audi • Toyota
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Self Learning is not Autonomous—It is Beyond
Self learning technology accelerates the development of a fully autonomous car and enhances user experience
by learning to assist with various infotainment functions.
• Highly Autonomous
Driving Maps
• Object Recognition
• Path Planning
• Free Space
• Driving Analytics
• Situational
Awareness
• Natural Language
Processing
• User Preferences
• Driver Analytics
• Gesture Recognition
• Health Monitoring
• Situational Awareness
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Self Learning Technology—OEM Analysis
JLR and Tesla are anticipated to lead the development of level 4 self learning cars by 2025.
Automotive Digital Transformation Market: Self Learning Technology OEM Analysis, Global, 2016–2025
Levels of Self Learning
Level 1 Level 2 Level 3 Level 4
JLR and Tesla are expected
to be the first companies to
2020– develop level 4 self-learning
2025 cars by 2025.
By 2020, Toyota is expected

2018– to develop HAD maps using
2020 the fleet of autonomous
vehicles.
Tesla is leading the current

2016– development of self-learning
2018 cars with the largest
database and beta testing.
100–200 200–400 400–600 600+

Driving Data (Million Miles)
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True Type Learning Algorithm Based Self Learning Car
Self learning cars must be able to learn new driving maneuvers, routes, and trends in traffic patterns that can
be integrated into a user experience, beyond personalized vehicle interiors and infotainment settings.
Automotive Digital Transformation Market: Self Learning Cars Algorithm, Global, 2016
Vehicular Tasks & Decisions Human Tasks & Decisions

Driving Dynamics
Raw Traffic & Parameterized Manual Dataset Smooth? Sporty?
Driving Data Data Inspection Selection
Points of Interest
Where/when to stop
Self-Learning Learning Rationale Interior & Infotainment

Car Algorithm Parameterization Occupant-group-based
infotainment & interiors
Opportunity for Data Analytics

Businesses
Machine Learning Human Input

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Self Learning Revenue Opportunities
By 2025, four levels of self learning will enable revenue opportunity of $78.6 billion from subscriptions,
licensing, data analytics, and new mobility services, etc.
LEVEL LEVEL LEVEL LEVEL

1 2 3 4
Revenue Revenue Revenue Revenue

Models Models Models Models
End to end
System solutions solutions
Subscription Subscription
Licensing Licensing
Data
Licensing New Mobility
Analytics
Data Analytics Services
• 35 million vehicles • 12 million vehicles • 4 million vehicles • 2 million vehicles

by 2025 by 2025 by 2025 by 2025
• Revenue • Revenue • Revenue • Revenue
opportunity – $8.9 opportunity – $21.7 opportunity – $23.6 opportunity – $24.3
billion billion billion billion
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Re-thinking Automotive with Big Data
Meaningful data sets are expected to grow from 10 MB to 5 GB in an average connected car by 2017/2018.
Internet Aggregators
Price transparency, unbundling of activities
Real-time Prognostics
Proactive maintenance, warranty management
Personalization & Customization

‘Me-commerce’, Social media analytics, and reporting for targeted ads
New Products
User-based insurance, Telematics
Dynamic Pricing
Real-time billboard pricing, Price different vouchers, Surge pricing (Uber)
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Autonomous Supply Chain—M&A Opportunity for OEMs & Tier Is
OEMs, in addition to partnering with established companies, must continuously monitor various solutions
across different regions and make strategic moves with emerging players focusing on automotive industry.
Software Hardware Silicon Services
SAP TESIS mobileye freescale here

QNX Autoliv semiconductor NXP Carvoyant
IBM
Established
TRW
Companies
LUXOFT Texas SIERRA wireless

ESG Autnn Visteon instruments orange
Valeo Peloton Telliq
Green Hills software XILINX
Delphi BOSCH ON Cohda wireless
Neusoft
semiconductor
Continental ORACLE
Autotalks
Magna RENESAS
INRIX
NAUTO Melexis LiDAR USA nextchip

nVIDIA Xata
nuTonomy itseez
Emerging Companies
SWIFT Arteris
ALTERA DiDi nuTonomy
WIND RIVER
TRILUMINA ARGUS
drive.ai codeplay
Velodyne TOWERSEC
Adas Works Flexcar
QUANERGY Dream CHIP
Gett MapBox
RoboCV TTTech
BrightWayVision
OXTS ARM dash deCarta
VI-GRADE FORESIGHT SAMSUNG
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Pillar 4—Industry 4.0
Return to contents
K079-18 88
Industry 4.0 and the Automotive Industry
Discerning big four set to define the business of automotive manufacturing.
Automotive Digital Transformation Market: Industry 4.0, Global, 2016
Value-chain Additive Analytics & New

Disruptions Manufacturing Security Synergies
Supply Chain From Big Data & The Industry 4.0

Innovations Digital  Physical Security Business Ecosystem
The digital-to-physical Increased connectivity
Increasing demand for Interrelationships and
revolution (3-D and interoperability in
innovation, interdependencies in
Printing) will become automotive plants will
customization, and future will shape
an indispensable part pave way for greater
localization are set to unconventional
of automotive value- analytics and call for
disrupt existing supply business collaborations
creation in future. new frameworks of
chain networks. and partnerships.
safety and security.
Industry 4.0 & the Automotive Industry:

Key Implications
Digitalization of Glocalization of
Automation in
Manufacturing Automotive
Logistics
Processes Industry
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Industry 4.0 in Automotive Manufacturing
Cyber-physical systems provide huge potential to improve productivity in the production process and the
supply chain.
Automotive Digital Transformation Market: Industry 4.0 in Automotive Manufacturing, Global, 2016
Digital platforms embedded with security are poised to become the cornerstone of
Big Data &
next-generation automotive production. The disruption will make many existing
Security
industrial supplier markets obsolete.
Connectivity will form the cornerstone of next-generation manufacturing. By 2020,

Connectivity nearly 2.8 billion devices in the automotive industry are expected to be connected
via advanced M2M (machine2machine) technology.
Supply
Process Predictive
Chain Material Testing &
Improve- Mainte-
Optimiza- Tracking Inspection
ments nance
tion
Big Data & Analytics will add value across Automotive Manufacturing process.
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Big Data—Enhancing the Quest for a Lean Enterprise
Constant monitoring of manufacturing data is found to reduce operational costs in the range of 10–25%.
Automotive Digital Transformation Market: Big Data Implications, Global, 2016
Processing Transit Over- Idle time Rework Inventory

time Production
Processing above Movement of Production of the The waiting time for More than one Finished goods,
or under standard people, parts, and part/product faster people or parts iteration required raw materials, and
requirements of the equipment within a and of a greater between operations or to get the right even work in
customer process that quantity than the the next cycle on the part or product progress parts are
disrupts work flow actual demand production line produced either over or
under stocked.
Wastes in Automotive Manufacturing
Functional Blocks of a Lean Enterprise Big Data to Cut Operational Costs by 10–25%
The four functional blocks that are required to Validate key performance indicators, such as line
achieve a lean enterprise include: effectiveness, capacity requirements, utilization rates,
and process efficiency at various points on the production
• Value floor
• Process synchronization
• Enterprise visibility:
• Alignment
Impact index is calculated based on three parameters: i) Potential

cost incurred from the waste, ii) Frequency of occurrence in the
manufacturing facility, iii) End-user feedback.
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Impact of Industry 4.0 on MES Platforms
Industry 4.0 cannot be implemented overnight; there will be a transition period where MES becomes updated
alongside Industry 4.0.
Core Enablers of Industry 4.0 Implications on MES
Digitalization Influx of ICT-based applications

complement core industrial MES systems are set to handle dynamic
platforms for increasing re-routing of manufacturing and assembly
innovation, reducing lead times to optimize production lines in real-time.
and maximizing productivity
Agile
Manufacturing cubes will replace
Manufacturing Increasing flexibility of
manufacturing processes to traditional work-cell structure
Internet of facilitate ad-hoc design and providing the flexibility to facilitate
Industrial engineering changes dynamic customization.
Things
(Industry
4.0) Supply Chain
Unifying protocols, standards, MES platform will be equipped to
Integration
and systems across value- interact with multiple suppliers
chain networks for improved
across the value-chain.
efficiency
Predictive, preventive, and Integration of MES platform with analytical

Data Analytics prescriptive analytics for engine will enable automatic planning
processes, minimizing maintenance and increase in production
operational bottlenecks and
efficiency.
operational inefficiencies
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MES Solutions—Automotive Industry
Industry 4.0 enabled MES solutions are expected to cope with the advanced challenges of logical
decentralization, cloud and advanced analytics, connectivity and mobile, vertical and horizontal integration.
Batch Manufacturing of Trucks Powered by Current MES Solutions

Work Cell Shipping Customer
Suppliers Station 1 Station 2 Station 3 Paint Shop
Traditional MES solutions are designed to support the sequence manufacturing production and assembly
lines which are employed by most global automobile manufacturers.
Flexible Manufacturing of Trucks Powered by Industry 4.0 enabled MES Solutions

Manufacturing Cube
Station 2
Station 5
Suppliers Station 1 Station 3 Paint Shop Shipping Customer
Station 6
Station 2
Industry 4.0 enabled MES solutions are part of integrated framework which are equipped with the capability
to make dynamic changes in the production orientations to suit the changing requirement.
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Future of Automotive Manufacturing
The value of Automation & Robotics market in the automotive Industry is expected to be $21.66 billion by 2025.
Automotive Digital Transformation Market: Future of Automotive Manufacturing, Global, 2015–2025
Factories of Today Factories of the Future
H2M (Human to Machines) M2H (Machine to Humans)
• Pre-programmed machines to execute the • Real-time production optimization through

assigned tasks integration with the simulation techniques
• Preventive maintenance systems • Predictive analytics through pattern recognition
• Highly configurable and flexible production cells methods
operated by robots • Encryptions in data packets to enhance security
• Optimization through systematic feedback from the • Automatic capturing, modeling, and optimizing of
production machinery the production systems
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Industrial Robotics—Implications for Automotive Manufacturing
Industry 4.0 will expand robotic applications in the smart factory from performing mundane jobs such as
assembly to building sophisticated machinery on production floors to achieve flexible production lines.
Industrial Robotics: Key Trends in Human-Robot Collaboration in

Automotive Manufacturing Automotive Manufacturing
• Automotive production in future will

see the coming together of humans and
robots—collaborating to fulfil tasks,
leveraging advanced sensor technology,
Industrial
Robotics enabling greater flexibility and
manufacturing process efficiency.
• Real-time Autonomy
• Smart systems
• Time Productivity & enhanced efficiency
Robotic • Fault Discovery
Benefits • Optimization
Humanoids Seven Axis 3-D Vision
Machines Key functional challenges in automotive production
Industrial robotics: End-to-end Involvement
Ergonomic Cost Labor
Challenges Reduction Shortages
Automotive Warehousing
Manufacturing Industrial Robotics - Overall Market Indicators & Forecast
1 million* Industrial << 10% of Overall By 2020, Robotics set to

Robots in 2014 Production expand to account for 15% of
Automation Tasks overall Production tasks
Distribution
*The data for Industrial Robots is for all industry and is not specific to automotive. Source: Frost & Sullivan
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IIoT Driving a New Industrial Revolution Manufacturing
A global market survey conducted among large and small OEMs and SME subcontractors shows that more
than 55% of them are already investing in digitalization of plants.
• Unifying networks 18% IT TCO

• Intelligent (i) Manufacturing savings
o ICT Enabled
• 33% NPI process acceleration
o Smart Factories
o Virtual & Digital Factories • 70% have Big Data plans to
improve plant operations
• High Performance Manufacturing
o Flexible Manufacturing • 45% have plans to use 3D
printing for dashboard aesthetics
o High-precision Micro-manufacturing
o Zero-defect Manufacturing
o Advanced Production Planning
• Open-Source Low-Volume Manufacturing
• 3-D Printing
• Green Manufacturing
• Faster NPI (New Product Introduction)
• Mobile Manufacturing
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Cyber Security—The New Normal in Production Design
Real-time detection of security violations and proactive prevention of cyber threats will become highly profound
in an Industry 4.0 automotive environment.
Automotive Digital Transformation Market: Cybersecurity Implications, Global, 2016

Unlimited New ecosystem
IIoT
• Open architecture
4 • Continuous monitoring
• Predictive maintenance
Adaptive • Intelligent decision makers
Systems • Advanced visibility
Interaction
3 Collaborative
• Increasing number of devices:
Systems
Approximately three-fourth of all
Integrated connected devices are expected to
Policy be in the ICS space by 2025.
2 Limited • Communication systems: There
Security Limited Systems are several applications of wireless
technologies—such as
Policy Isolated WirelessHART used in the field
1 Systems
Add-on Service level, WiFi and Bluetooth
Finite Ways to Architecture Every Point is applications in factory automation,
Unmet Needs Attacks Vulnerable
and cellular connections for remote
Complexity
monitoring and communication
• Limited flexibility and expensive product line changeovers
• Need for complete visibility
between plants.
• Decline of an experienced and capable workforce
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GM Digitalization Initiatives to Reduce Factory Downtime
GM factories will leverage a combination of IoT with data from sensors and data analytics all enabled by cloud
technology to reduce unplanned downtime.
Automotive Digital Transformation Market: GM Digitalization Initiatives, Global, 2016
GM’s
Rockwell Future Factory Robots
Fanuc CISCO
Automation Connected through Cloud
GM leverages Cisco Intercloud Fabric, robotics manufacturer Fanuc ZDT and hardware
maker Rockwell Automation to collect data from 800 robots and external devices and send it
to a cloud network setup by Cisco for further analysis primarily to reduce downtime.
Fanuc's Zero Down Time (ZDT) application collects

Tesla’s data generated from robots to determine optimization
Innovative approach of GM’s manufacturing systems by reducing
Strategies energy consumption, extending equipment life, and
improving cycle time and product quality.
Fanuc uses algorithms that Unplanned downtime

GM will leverage cloud based IoT analytics to Costs: $15,000–
have been tailored to
factories across the globe in the next 5 years. $40,000
factory robots to create
insights for GM. per minute
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BMW Approach for Digitalization of Production Facilities
BMW associated with KUKA Robotics will deploy cobots in South Carolina assembly plant. BMW globally uses
about 7600 industrial robots to increase productivity and precision.
Automotive Digital Transformation Market: BMW Intelligent tools to support workforce to simplify complex
Industry 4.0 Approach, Global, 2013–2016 1 processes, for example, smart watches used in Munich
and Leipzig plants for special vehicles
Innovative Eliminating physically demanding and non-ergonomic
robot tasks with lightweight robots. Example: Robot
systems 2 integration at Spartanburg, Regensburg, Dingolfing, and
Context- Leipzig plants
Simulation
and factory 2 sensitive
assistance
digitalization
systems
Digital data to increase efficiency in process and reduce
3 1 3 time spent on fixes. Example: 3-D understanding of
production facility for real-time planning
Automated data analysis for quality and efficiency
BMW’s I4.0 4 improvement. Example: Dingolfing and Landshut plants’
Approach Intelligent record production process of carbon parts for 7 series.
Planning
and control
4 energy
data man- Real-time supply chain information and radar type
systems agement 5 functionalities are being deployed to increase
(iEDMS)
transparency of BMW’s supply network.
Improvements in process safety and optimization

5 6
6 through data analysis/sifting in turn leading to improved
Smart Advanced
quality and efficiency at BMW facilities
logistics analytics
• The key differentiator of BMW’s approach to I4.0 is its idea to
use intelligent meters for energy consumption at its plants
aligning with its centralized Big Data network since 2013.
• iEDMS has been Implemented at Spartanburg, Leipzig,
Effect of iEDMS  Expected energy cost savings of
Regensburg, Munich, and Landshut plants.
~25 M Euros in in 10 years from one plant
K079-18 99
Mercedes-Benz’s Approach to Connected Factory
Robots cost an average of $6 per hour, which is comparatively cheaper than man power. Mercedes Benz
partnered with ABB robotics and uses two armed and single armed robots in Germany plant.
Faster response to market Creating new working and

fluctuations and an easier Efficiency
1 lifestyle models using man
approach to market Ergonomic and machine interactivity
demand 5 Environment
Mercedes- Vehicle configuration 

Benz 5 2 parts  procurement 
Ability to control production pronged production  delivery
Smart
from any remote location Flexibility approach
Logistics
i.e. smart/decisive usage to I4.0
of resources Shorter innovation cycles
4 with flexibility in
Speed production processes 
3 faster time to market
Current (Standardization in Processes Globally) The next decade’s plan The scientific backup for the
• Global standardization across components, systems • Globally relevant move towards the digital
architecture, automation, regulation and control technology equipment in line with factory will be provided by
• Investments made in robotics and production processes are production modules and ARENA 2036 project. This
standardized globally standardized working is a campus where Daimler
• Why is this being done? Goal is to work towards product strategies conducts research into the
customization, and improve production flexibility and future of production and
efficiency (2015–2020). lightweight designs.
K079-18 100
General Electric—IIoT Platform Seems to be Most Preferred Solution
GE’s Brilliant Manufacturing Suite is a cloud-based IIoT application that integrates machines, manufacturing
plants, cobots, supply chain vendors, and provides real-time production and inventory insights.
GE – Digital Solution Overview GE – Predix Cloud Platform
• Predix cloud platform • Cloud platforms that support IIoT and provide smart
• Asset Performance Management and Discrete connected manufacturing
Manufacturing Software • Industry verticals – Manufacturing, healthcare, wind energy,
• Cybersecurity and aviation
• Brilliant Manufacturing Suite • Predix platform partners – Cisco and PTC
• Asset tracking software • Predix services – cloud storage, data management,
secured connectivity, analytics, mobile applications,
• Efficiency Analyzer
DevOps (application development and test platforms)
• GE iFIX - HMI and SADA software
Brilliant Manufacturing Suite -

GE – Brilliant Manufacturing Suite (IIoT Solution)
Solutions
• OEE Performance Analyzer

Virtual Intelligent Flexible Reconfigurable • Production Execution
Manufacturing Machines Factories Supply Chain Supervisor
• Bridge the gap and • Analytics on the • Follows a data • Supply chain • Production Quality Analyzer
establish data collected from driven approach visibility • Product Genealogy Manager
connections machines enabled and provides real • Maintain optimized
between virtual with sensors time decisions to inventory
design and • Constant maximize
simulation communication with productivity SCADA Software – supervisory control and data acquisition;
capabilities factory systems HMI – Human Machine Interface
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Pillar 5—Connected Supply Chain
Return to contents
K079-18 102
Future of Automotive Supply Chain—Connected Supply Chain
Future automotive connected supply chain targets substantial improvements to the value chain through
enhanced efficiencies, reduced costs, greater collaboration and more innovation.
Automotive Digital Transformation Market: Connected Supply Chain, Global, 2016

C
D
Part bins Part bins Part bins

Connected
Product
Parts Suppliers
Connected
products, service
Assembly Line opportunity (when
Stores a part needs
replacement), real-
time customer
feedback to be
incorporated in
design changes,
modifications, etc.
A B
B A

C
A – Connected Inventory Management C – Product Traceability D – Sensorization E – Supply Chain Integration
B – Embedded Intelligence Can link the final product to Sensors embedded across the value Looks to bring suppliers and
Connected inventory management manages the manufacturing records, including chain can help monitor usage of manufacturers on a common platform
movement of raw material, finished components from the exact batch number and part components and productivity. to increase efficiencies in the supply
stores to part bins. Sensor-based embedded supplier. This information can be Analytics can help improve process chain using real-time data on
intelligence requisitions parts from store when the bin used to diagnose faults, take and remove flaws from available movement and consumption of
is empty and makes an auto requisition to the corrective action, and prompt manufacturing data. components and parts.
vendors when a threshold level is reached. changes in design if required.
K079-18 103
Automotive Supply Chain Network Architecture
Transition from adjacent supplier-customer-based binary information to simultaneous information sharing and
collaboration across a common network to drive efficiency and value creation.
Plan Plan Plan Plan

Information shared
between adjacent
Lower-Tier Tier I
OEM Dealer Customer supplier-customer
Supplier Supplier
entities across the
supply chain.
Order & Confirm Order & Confirm Order & Confirm Order & Confirm
Lower-
Tier
Supplier
Ord. &
Conf.
Plan
Tier I Information shared by all stakeholders

Customer
Supplier
across the supply chain on a common
Platform cloud-based network enables more
accurate forecasting, effective planning
and greater supply chain responsiveness
and value creation.
Dealer OEM
Track and Trace Plan/Order & Confirm

K079-18 104
Connected Supply Chain Network Features—2016 vs. 2018
Common cloud-based platform for stakeholders will operate with real-time visibility promoting collaboration,
dynamic responsiveness, and flexibility; leading to significant improvement in efficiency and lower costs.
Conventional Supply Chain (2016) Connected Supply Chain (~2018)
Real-time visibility across the supply

Siloed visibility mostly within the Transparency chain using encryption to protect IP
enterprise to protect IP and sensitive
and sensitive information drives
information
collaboration
Information delayed as it moves Communication Information available across the

through siloed organizations supply chain simultaneously
Limited visibility to the entire supply Greater width and depth of

chain hindering meaningful Collaboration collaboration to capture maximum
collaboration intrinsic supply chain value
End-customer demand variance

End-customer demand distorted and
assessed in real-time and factored in
delayed as information flows along the Flexibility
planning and scheduling across the
material path
supply chain
Different planning cycles resulting in Real-time response on planning and

delays and unsynchronized responses Responsiveness execution level (across all tiers to
across multiple tiers demand changes)
These 5 key elements combined lead to improvement in productivity, throughput, quality, and cost.
Cost reduction potential of up to 50% of Supply Chain Management Cost or 5.0% reduction in finished product cost
K079-18 105
Conventional (Current ) vs. Connected (Future) Auto Supply Chain
Automotive Connected Supply Chain in future is about creation of Responsive Supply Networks that enable
stakeholder collaboration and maximize synergy and efficiency.
Automotive OEMs and other stakeholders in the ecosystem seeking a high ground
via Responsive Supply Networks within Connected Supply Chain
Vision
Automotive industry Create responsive

has been slow in supply networks
migrating towards overcoming cyber
one common system/ Cost Leadership Service Leadership security and
platform to create information
responsive supply confidentiality
networks. challenges.
Demand-Driven High Production

High Productivity Increased Quality
Throughput
Key KPIs as Pillars
Connected Supply Chain aims to offer right product, at the right time, in the right condition, and at the right price;
driven by inventory visibility across the supply chain and agile manufacturing to respond to demand fluctuations.
K079-18 106
Conventional (Current ) vs. Connected (Future) Auto Supply Chain
(continued)
Automotive Connected Supply Chain in future is about executing smart logistics for parts and vehicle movement.
Opportunity 4: Connected
Logistics supply chain enables carriers to
Opportunity 1: Connected
Companies to match demand with supply and
supply chain helps shippers
benefit from maximize payload utilization,
avoid expedited/express
connected supply return trip fill rate, etc., resulting in
shipping.
chain immensely higher throughput and lower
costs.
Executing smart
logistics
Connected supply
matching production
Connected supply chain to provide
with demand
chain to help realize logistics companies
optimized cost of real time decision
Mapping of movement
operations for making ability to
of products to end
OEMs and others match demand
consumer as it goes
supply with demand
through the value
chain
In turn, connected
supply chain to Opportunity 3: Connected supply
Opportunity 2: Connected chain drives collaboration and
enable dynamic use
supply chain improves end- creates opportunity for logistics
of lowest cost
customer serviceability via companies to consolidate
transportation mode
same day/next day vehicle shipping, warehousing, fulfillment
deliveries to dealerships. operations, and improve
efficiency.
K079-18 107
Logistics Optimization
In addition to minimizing supply chain disruptions and associated costs, connected supply chain system
enables optimization of inventory across the supply chain and logistics cost savings.
Automotive Digital Transformation Market: Logistics Optimization, Global, 2016

Real-time visibility of process and inventory across the OEMs, suppliers, and logistics service providers share
supply chain enables optimization across all elements information across the network to maximize efficiency
of logistics on both inbound and outbound side. and throughput and improve key operations KPIs:
Inbound Logistics Outbound Logistics Operating Cash Flows/COGS
Customs clearance Forwarding

Raw Material Stability
Transportation Customs Clearance

Inventory Turns
Warehousing Transportation
Days Payables Outstanding (DPO)

In-plant Storage Warehousing
Returns/Recalls/
Order Fulfillment Cash-to-Cash
Reclamation
In-plant handling
Days of Sales Outstanding (DSO)
Finished Storage
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Total Supply Chain Management Cost—Potential for 25–50% Reduction
Connected supply chain provides opportunity for 25% to 50% reduction in supply chain management cost.
Automotive Digital Transformation Market: Supply Chain Management Cost, Global, 2016
Total supply chain management cost as a Percent of Revenue across key Industries
Telecommunication Equipment 7.4%
3.6%
Semi Conductor 6.6%

3.5%
Pharmaceutical 9.1%
3.4%
Industry
Consumer Goods 10.7%

4.8%
Computer 10.0%
4.2%
Chemical and advanced materials 10.7%

5.5%
Industrial 12.3%
5.3%
Automotive 10.0%
5.4%
Median 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

Revenue (%)
The larger and more complex the supply chain the greater is the potential for optimization and cost reduction
through a connected supply chain.
K079-18 109
Supply Chain Operations Reference Level-1 Strategic Metrics
Connected supply chain has the potential to reduce vehicle cost by up to 6% through reduction in SCM cost
and an additional reduction up to 10% through savings in Cost of Goods Sold (COGS) using IIoT.
Automotive Digital Transformation Market: Metrics, Global, 2016

Estimated
Performance Attribute Metric Reference Value Improvement Potential (%) with CSC
Supply Chain Reliability Perfect order fulfillment 75–85% 10–30% Improvement
Supply Chain Order fulfillment cycle
30045 days 30–50% Reduction
Responsiveness time
Upside supply chain
45–60 days 30–50% Reduction
flexibility
Upside supply chain

Supply Chain Flexibility
adaptability
Downside supply chain

adaptability
Supply chain 10–12% of

25–50% Reduction
management cost Revenues
Supply Chain Costs
Cost of goods sold 70–80% of revenues 5–10% improvement
Cash-to-Cash cycle time 30–95 days 25–50% improvement
Supply Chain Assets Return on supply chain 10–20% Improvement (based on capacity
Management fixed assets realization/revenues)
Return on working capital 25–50% Increase (based on C2C cycle time)

K079-18 110
(continued)
Supply chain costs and supply chain asset managements are key performance attributes.
Automotive Digital Transformation Market: Supply Chain Costs, Global, 2016
Performance Attribute Description Metric Measurement/Implications
The sum of the costs associated with the processes

to plan, source, deliver, and return raw materials,
components, and other products required for the
Supply chain production, distribution and delivery of finished
management cost product. This includes supply chain IT costs, finance
and planning costs, inventory carrying costs, material
acquisition costs, order management costs, and
returns management costs.
The cost associated
Supply Chain Costs with operating the
supply chain
Cost of raw material and components, and

Cost of goods sold manufacturing costs for the production of the finished
products
Source: APICS; Frost & Sullivan
K079-18 111
(continued)
Supply chain costs and supply chain asset managements are key performance attributes.
Automotive Digital Transformation Market: Supply Chain Assets Management, Global, 2016
Performance Attribute Description Metric Importance
The time it takes for an investment in raw materials

and components (direct materials) to flow back into a
Cash-to-Cash company. A cash-to-cash cycle is the number of
cycle time inventory days of supply and days of sales
outstanding minus the average payment period for
materials.
It measures the return an organization receives on its

The effectiveness of invested capital in supply chain fixed assets. This
an organization in includes the fixed assets used in Plan, Source, Make,
Return on supply
Supply Chain Assets managing assets Deliver, and Return. Return on supply chain fixed
chain fixed assets
Management (fixed and working assets is calculated as (Supply Chain Revenue +
capital) to support COGS + Supply Chain Management Costs)/Supply-
demand satisfaction Chain Fixed Assets.
A measurement for the magnitude of investment

relative to a company's working capital position
verses the revenue generated from a supply chain.
Return on working
Return on Working Capital is calculated as (Supply
capital
Chain Revenue + COGS + Supply Chain
Management Costs) / (Inventory + Accounts
Receivable + Accounts Payable).
K079-18 112
Automotive Cash to Cash (C2C) Cycle Time
North American OEMs such as Ford are better positioned to benefit from connected supply chain compared to
Asian, European OEMs which are already at a near optimized level.
Automotive Digital Transformation Market: Cash to Cash Cycle Time, Global, 2000–2011
300
250
Cash to Cash Cycle (Days)
Ford (Connected
200
supply chain offers a
bigger opportunity to
reduce C2C cycle time)
150
100
50
Toyota (Connected
supply chain offers a
0 greater opportunity to
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 set new benchmark in
Year future)
Ford Toyota Honda Volkswagen
Connected supply chain provides the opportunity for automotive OEMs to improve — 5.0% (Toyota) – 90% (Ford) in
terms of C2C cycle time.
K079-18 113
Connected Supply Chain—Effectiveness and Efficiency
Companies across different industries have implemented connected supply chain (combined with other
digitalization programs) contributed towards a more profitable supply chain.
Consumer Transaction Technologies Industry Human Therapeutics Industry
Expected Increased Inventory S&OP Cycle Time Reduction:

Productivity: 30–40% 40–50%
R&D and manufacturing Industry SCM & Electronic Manufacturing Industry
Reduction of Big Order Commit: Reduction in Expedite Orders:

80–90% 80–90%
Mobile Technologies Industry
On Time Delivery: 95–100%
Source: Kinaxis; Frost & Sullivan
K079-18 114
Measuring Connected Supply Chain Success
Avaya's 4-Year Journey to a Best-in-Class Supply Chain (January 2011–December 2014).
Automotive Digital Transformation Market: Avaya Connected Supply Chain, Global, 2011–2014
Avaya operates within the Business Phones, Video Conferencing industry
Gross Inventory Improved Inventory Cash to Cash

Reduction Turns Cycle
($286M$116M) (5.8  9.2 Turns) (44  26 days)
60.0% 59.0% 41.0%
Average Past Due Reduced EBITDA Supply Chain Annual

Shipment Risk Expense
($42M--<$10M) ($16M$1.5M) ($255M  $177M)
76.0% 91.0% 31.0%
GAAP Gross
Margin
(43.5%57.2%)
31.0%
Source: Kinaxis; Frost & Sullivan
K079-18 115
Competitive Analysis—OEM Activities
in the Digitalization Space
Return to contents
K079-18 116
Automotive OEMs—IoT Platforms
Connected cars, autonomous driving, Industry 4.0, and artificial intelligence are the key automotive use cases
compelling OEMs to invest in IoT during 2016–2020.
Automotive Digital Transformation Market: OEM IoT Platforms, Global, 2016–2020

Volks- AT&T
next- wagen LG Amazon Renault-
BMW IBM Audi Ford Alexa, Micro-
LAP (VW) HERE Nissan
Echo & soft
Wink
BMW ‘s Open • nextLAP’s cloud- • VW’s crossover • Integration of Ford • Renault-Nissan and
Mobility Cloud based IoT platform platform in SYNC Connect, Microsoft partnered
Platform and IBM will help Audi to collaboration with LG Smart City and to leverage next-
Watson integrate all IoT will provide the Voice Assistant generation
objects in the technical ability to App connected services
• IBM Watson sensors
manufacturing plant offer unlimited and innovative
will be integrated • Amazon's cloud-
such as Robots, access to smart digital experience
into BMW car’s based voice service
Tablets, etc. home and location- powered by
leveraging includes playing
Production and based services. Microsoft Azure’s
personalized user audios, adding items
logistics data will cloud platform.
experience. • RIO platform for to shopping lists,
be stored on the commercial vehicles and controlling • Personalization,
• BMW’s Open platform. provides information Alexa-enabled smart improved vehicle
Mobility Cloud
• Implement complex on real-time traffic home devices. experience, and
platform will
production and and routing for remote monitoring
integrate various • Amazon Echo
logistics processes trucks. HERE is the are the key factors
systems such as provides voice
significantly faster, location intelligence underpinning the
smart homes, car control access
and any smart more flexibly, and provider for VW’s between the car and connected
cost-effectively RIO platform. experience.
devices used by home.
optimize them
customers.
holistically with
intelligent algorithms
K079-18 117
Automotive OEMs Big Data Analytics Initiatives
Automotive OEMs are deploying in-house data centers and software departments to create a unified and secure
platform for data management. For example, Ford and GM use an open source Hadoop platform for BDA.
Automotive Digital Transformation Market: OEM Big Data Analytics Initiatives, Global, 2016
OEM Big Data Application
• Volkswagen uses a CSC predictive marketing tool to increase service revenue and promote brand loyalty
Volkswagen in France.
• VW opened a Data Lab in Munich to work on IT solution—IoT and Big Data.
• Toyota Financial Services provide financing and leasing options to customers via dealers and use data
analytics tools to guide customers about contract risks and payment delinquencies. Tool development cost
Toyota was $3 million and helped 10,000 customers to maintain their credit record.
• Data Communication Modules (DCM) installed in the vehicle will collect relevant data and communicate
with Toyota Big Data Center (TBDC), which is a part of Toyota Smart Center.
• GM applies Big Data to monitor dealer performance, create detailed customer profile, capture data from
General sensors installed on the car, and support telematics use cases.
Motors • GM has invested $130 million and developed its own data centers that run on Hadoop. Data centers are
located in Warren and Milford.
• Customer digital touch points, warranty, and diagnostics data are analyzed to improve failure management
and improvise services.
Daimler
• Daimler used Teradata’s Active Enterprise Data Warehouse and Micro Strategy user interface tools to
retrieve business insights.
• Ford captures data from 4.2 million cars via sensors and remote data management software. For example,
25 gigabytes of data are captured from the Ford Energi line of plug-in hybrid cars, and collected data are
Ford analyzed and provide real-time decisions on fuel economy.
• Ford’s lab in Silicon Valley uses open source tools such as Hadoop to monitor and manage data and other
open source applications for data mining.
K079-18 118
Automotive OEMs Technology Initiatives
OEMs have prioritized the development of Connectivity, Mobility, Autonomous Vehicles, Electrification, and
Connected Cars competencies as part of their digital strategy in 2016.
Automotive Digital Transformation Market: OEM Technology Initiatives, Global, 2016
01 02 03
Porsche Digital Competence
Toyota Connected Inc. Audi Fit Driver
Center
• Toyota Connected Inc., will • Porsche recently announced a • AUDI AG becomes founding partner in
act as data science for Toyota. subsidiary, Porsche Digital Berlin’s 'Flying Health Incubator'.
• Microsoft Azure will be the GmbH, to focus on Audi focuses on 'Automotive health' to
cloud computing platform- digitalization initiatives in enhance customer’s health and fitness
global hybrid solution. premium segment—to while driving—Audi Fit Driver.
strengthen brand value and • Audi will collaborate with startups and
• Partnership with Microsoft will develop innovative customer
expand mobile and data network of scientists, IT experts,
experiences. investors, and mentors to develop
analytics capabilities.
• Act as interface between digital business strategies, from
• Toyota Connected aims to Porsche and innovative research to quality management and
centralize company companies, focusing on to project controlling. Research site is
initiatives across different connectivity, smart mobility at Berlin’s Trauma Hospital.
emerging technology fields and autonomous vehicles
with primary focus on • Integrate Audi’s ongoing development
customer. projects identify trends, business
models, and technical solution in
digital health market.
K079-18 119
Automotive OEM Mobility Strategies
OEMs are focusing on a target audience aged 25–45 years to improve their brand image, which will influence
their customers’ future purchase decisions.
Automotive Digital Transformation Market: OEM Mobility Strategies, Global, 2016
Volume automakers are rapidly launching Commercialization of existing mobility services

mobility services through pilot projects, to deliver innovative concepts such as
introducing their mobility brands/divisions, and Premium
integrated mobility and journey planning;
trying to broaden their customer base. OEM’s exploring opportunities to offer mobility as a
service:
• Ford and GM launched Ford Volume • Moovel acquired RideScout; it is
Mobility LLC and Maven, OEM’s
looking to expand at a global level by
respectively.
M&As.
• Toyota has pilot projects such as
• BMW has partnered with Moovit and
Yuko, Ha:mo, while GM has Mobility
Mobility has also launched parking
partnered with ride hailing operator, Sub-brands
Sub-Brands management solutions and EV
Lyft.
charging stations.
Best-in-class More leeway to freely Advanced

talent experiment Technologies
BMW i Smart Mobility Free2Move

Ventures LLC
Small and Less InMotion Less Moia

Maven
Agile Regulated bureaucracy
K079-18 120
Digital Transformation Building Blocks—Ford
Ford aims to bring ‘Go Further’ and Auto and Mobility to Life with New FordHub Brand Experience Studio.
Customer Journey and Mobility are key focus areas.
Key Findings
People • Ford plans to collocate 30,000 employees from 70 buildings into two primary locations during 2016 to
2026—invest in people and tools to develop open and collaborative environment.
• Product Campus (Smart Mobility Solutions hub focusing on Innovation) will feature an eye-catching,
700,000 square-foot design center that will house state-of-the-art studios and have a complementary
outdoor courtyard for working and socializing.
• Product Campus will act as the Pilot site for a variety of mobility solutions such as on-demand shuttles
and eBikes.
Products & • Ford's focus on City Solutions and Mobility clearly indicates that Ford is targeting the transportation
Services industry—with substantial revenue opportunities in providing mobility solutions to millions of commuters.
• In addition to existing Ford customers, Ford plans to target growing workforce/commuters in various cities
that do not own vehicles or do business with Ford. Digital solutions will help Ford increase its customer base
from mobility standpoint.
Leadership- • Ford will be active in Ford Smart Mobility LLC. In 2016, Raj Rao was appointed as CEO of Ford Smart
Mobility Mobility LLC.
• Ford recently appointed Laura Merling as its new VP of Autonomous Vehicles Solutions for Ford Smart
Mobility LLC. Laura is expected to invent and develop the commercialization strategy to connect
autonomous vehicles technology developed by Ford with global users.
Customer • Ford recently launched FordPass App considering Ford’s vision to focus on auto and mobility company and
Journey help consumers. It aims to make car ownership a more fulfilling customer experience.
• Ford will continue to design services and new features in FordPass by understanding the real consumer
challenges and developing breakthrough solutions to end consumers. It plans to take customer loyalty to a
new level with FordPass.
Info • Ford plans to not only focus on ‘Car of Tomorrow’ but also on ‘City of Tomorrow’. Big Data analytics
Management and cybersecurity will play a major role in data gathering, analysis, and secured data management
K079-18 121
Business Models—Ford
FordHub enables customers to view near-term mobility advancements. Autonomous and electric vehicles,
ride-sharing, ride-hailing, and connected vehicles will play a pivotal role in the City of Tomorrow.
Automotive Digital Transformation Market: Ford Business Models, Global, 2016–2020

Digital Transformation Best Practice Findings
Customization/ • Ford will continue to make comprehensive investment in analytics to support global customers with
Crowdsourcing future products and services.
• By leveraging analytics, Ford plans to communicate more effectively with customers and optimize the
business opportunities. Big Data in the mobility space must leverage analytics yet possess data
governance challenge, involving the use and management of large amounts of unstructured
information and highly complex problem-solving.
Sharing Economy • Ford is partnering with Bloomberg Philanthropies and Aspen Institute’s Initiative on Cities and
Autonomous Vehicles to reshape urban transportation and boost its goal towards megacities and
sharing economy.
• Ford, MIT Partner on Mobility Project to Predict Pedestrian Traffic
Internet of Things • Ford is investing in two VC firms focusing on mobility, autonomous technology, cloud computing, and
automotive IT—RPM Ventures, an early stage venture capital firm based in Ann Arbor, and
Fontinalis Partners, the Detroit-based VC co-founded by Ford executive chairman Bill Ford.
Freemium • FordPass is an innovative and free platform launched in April 2016. FordPass app is available in
Android PlayStore or Apple AppStore. FordPass supports both core and emerging businesses
through digital, physical, and personal experiences to help consumers move more efficiently.
• FordGuides: Members can speak directly to knowledgeable FordGuides free of charge. Their only
job is to solve mobility challenges, not to sell.
• FordPass Perks: Members will be rewarded for engaging with Ford, including registering, parking, or
setting up their FordPay wallet.
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Ford Mobility Experiments
For over one year, Ford has conducted more than 30 mobility experiments globally to gain insight into changing
customer preferences, some of which are still underway.
Automotive Digital Transformation Market: Ford Mobility Experiments, Global, 2014–2017

Dearborn London
• Car Swap, • Painless Parking
• Rapid recharge and • Data driven insurance
share • City driving on demand
• Fleet Insights • Traffic Tamer
• Info cycle • GoPark
• Big Data Drive • GoDrive
• Dynamic Shuttle New York
• Dynamic
Germany
Social Shuttle
• Ford Carsharing
Atlanta Chongqing
• Parking • Commuter Smart
Palo Alto Spotter India • Routing system
• Info cycle • Remote Lisbon • Monsoon App
Repositioning • Smarttaxi • Sharecar
• Flare Shanghai
Los Angles • Simprint Solution • Urban
• Crowd Commuter
Gambia
Park
• Data driven
healthcare
Argentina
Australia
• Urban
• Accessory
Shuttle Johannesburg
challenge
• Secondary Power
(proposed)
Management System
K079-18 123
Volkswagen Digital Lab and Enhanced Digital Platform
VW has set up a digital lab in Munich and has now expanded in Spain to develop digital solutions led by CIO.
Digitalization Connectivity eMobility

Strategy
2025
Sustainability Smart mobility Autonomous driving
VW Digital Lab—Overview Key Projects

• Considering VW Digital strategy 2025 and Digitalization, VW plans to • Develops a digital mobility platform
place 600 programmers, data scientists, design thinking experts, and where external partners can jointly develop
cloud architects working in VW labs in Berlin, Munich, and software solutions
San Francisco. • New vehicle control center which collects
• IT experts from VW and Pivotal jointly develop innovative software data on weather, surroundings, and traffic
and mobility solutions for networked customers together with from networked vehicles and uses this
specialists from Technical Development and Sales. data to generate early hazard warnings
• Pivotal supports about 20 VW experts from San Francisco and • Initial software projects include digital sales
Boulder, Colorado, and is training them in new software development support for dealers and a data hub for
methods. digital products.
Source: Volkswagen; Frost & Sullivan
K079-18 124
General Motors (GM)—Digital Transformation Elements
CIO Randy Mott heads IT organization’s transformation effort of GM. Insourcing is considered crucial for GM
innovations and there are plans to cut down costs on outsourcing.
Manpower Insourcing – Shift from support to

Innovation Focused IT Innovation
• GM leverages central EDW to consolidate global • GM plans to employ 11,200+ IT professionals by
production, customer, and other data. Dedicated 400+ December 2016
resources to manage GM's 1 petabyte of structured
• Reverse internal/external IT worker ratio from about
and unstructured data Manpower 10/90 to about 90/10
• Vehicle/Component level profitability analysis. EDW Insourcing
• Reduce time on IT support and maintenance work.
will help GM to analyze actual profit per vehicle vs.
Massive shift from 80% in 2012 to 25% in January
Planned profit during manufacturing. It will help GM
2016
to revisit material/design/engineering costs to get a
better margin. • GM innovation centers in Detroit, Austin, Atlanta,
and Phoenix
Enterprise Transfor- Data Center

Data and
Warehouse
mation Application
(EDW) Elements Consolidation
Innovation Focused IT Consolidation - Global processes and capabilities

• Digital initiatives will allow GM's IT organization in • Reduce from 23 large, legacy data centers operated
areas such as autonomous and car sharing, by suppliers worldwide into two modern data
connected vehicles, Big Data analytics, customer centers in Michigan
analytics, and precision marketing. Innovation
• IT applications reduced to 3600+ in 2016 from
Focused IT
• Prioritize new projects—rigorous cost-benefit 4000. CIO plans to have 1500 standardized,
analysis that quantifies its annual benefits in ways global applications in next 3 years.
on which the business unit, finance team, and IT • Michigan in-house data center leverages private
team agree “cloud-like” architecture to handle computing
• Innovation centers in Detroit, Austin, Atlanta, and needs.
Phoenix Source: Frost & Sullivan
K079-18 125
Future Digitalization of Service Technologies
Currently limited with OEMs, AR-based applications could trickle down to independent aftermarket service
providers looking to create a niche for themselves.
Automotive Digital Transformation Market: Future Digitalization of Service Technologies, Global, 2016
BMW Augmented Reality Volkswagen MARTA AUDI Cam
Solution includes a set a of data The app runs on iPad and uses the Solution allows technicians to
goggles and wireless access device’s camera to view vehicle focus the hand-held Audi Cam on
capability. internals. specific areas.
General Motors
Tesla Remote Service
Prognostics
Bug fixes via remote software Prognostics capabilities added to

updates OnStar
Source: BMW; Volkswagen; Audi; Tesla; GM; Frost & Sullivan
K079-18 126
Key Digital Initiatives by OEMs
OEMs/Tier Is will continue to invest in startups and specialized software companies through partnerships and
acquisitions to accelerate mobility, autonomous vehicles, cybersecurity, and connected car capabilities.
100%
CONNECTED CONNECTED AUTONOMOUS DIGITAL

MOBILITY CONNECTIVITY
LIVING CARS VEHICLES STRATEGIES
BMW entered US car As of 2016, Ford is In 2016, Toyota In January 2016, GM In March 2016, GM VW appointed former
sharing market working to seamlessly collaborated with invested $500 million acquired Cruise Apple executive
through ReachNow- integrate Ford SYNC Microsoft on Toyota in Lyft. Latest funding Automation to Johann Jungwirth as
Ridecell (MaaS with Amazon Echo Connected venture, round to help build a accelerate AV Chief Digital Officer.
provider). and Wink headed by connected network Development. Focus on electric
applications. Zack Hicks, CIO and for self-driving cars vehicles, new mobility,
Daimler’s moovel GM, Daimler, and big investments in
group VP at (Express Drive Volkswagen, Volvo,
Group: Merger of Ford plans to future technologies.
Toyota Motor, NA. launched in Chicago). Google, Baidu, BMW,
RideScout and effectively leverage
GlobeSherpa as Alexa's and Tesla will invest BMW partners with
Use data science BMW plans to boost
moovel NA. powerful voice heavily in complex Intel and Mobileye to
through Microsoft's its digital operations
recognition self-driving car develop technologies
Azure cloud by appointing former
Ford Platform
capabilities projects. – Common platform
technology. Initial Google manager Jens
(FordPass): for level 3 to level 5
to build strong use investment of $5.5 Monsees as VP - The US government
Concierge autonomous driving.
cases around million: Analyze Digital Strategy. will invest over $4
services, smart
smart home and traffic patterns, UBI billion in next 10
parking, car-sharing, Ford’s largest ever EV
connected cars. pricing to connecting Ford’s largest ever EV years to accelerate
mobile payment, etc. investment of $4.5
drivers with investment of $4.5 development and
Omnimodality: information and billion in EV billion in EV
adoption of safe
Monthly Personalised security services in solutions, with plans solutions, with plans
vehicle automation
Mobility model from their homes. to add 13 new EV to add 13 new EV
through real-world
startup MaaS Finland. vehicles by 2020. vehicles by 2020.
pilot projects.
EV - Electric Vehicles; AV - Autonomous Vehicles Source: Frost & Sullivan
K079-18 127
Automotive Digital Transformation—Growth
Opportunity Analysis, Conclusions, and
Recommendations
Return to contents
K079-18 128
Automotive Digital Transformation—Strategic Imperatives
Digital transformation initiatives will disrupt the entire automotive value chain. New business models must focus
on data, mobility, connectivity, and customer centricity along with cybersecurity.
• Automotive Digital Transformation: New process improvements, product

improvements and innovative business models will be developed by OEMs
across manufacturing, retail, supply chain logistics, and enterprise operations.
01
• Revenue Growth: Industry revenues will register a CAGR of 5.2% during 2015
02 to 2030. Connected living, industry convergence, digital lifestyle of customers,
and mobility are key drivers
• Commercialization: One-time vehicle sales will increase from $2.3 trillion in

03 2015 to $3.8 trillion in 2030. New revenue streams and innovative business
models in transportation will generate $1.3 trillion opportunity in 2030.
• OEM Digital Strategy: Electrification, smart mobility, connected cars,

autonomous vehicles development, connected living, and connected factory are
04 key pillars of automotive digitalization.
• New Digital Ecosystem: Automotive OEMs, component suppliers, software

integrators, infrastructure providers, telecom companies, third-party data
processors, and service providers such as insurers and advertisers will compete
05 for core and new recurring revenues.
06 • Technology Investments: OEMs and Tier I suppliers will invest in IoT, Big Data
analytics (BDA), Artificial Intelligence (Toyota invested $1 billion in 2015),
Industry 4.0 (OEMs/Suppliers),cloud services, and cybersecurity.
K079-18 129
Digital Transformation Solution Accelerators for Automotive Companies
OEMs and Tier Is will partner with technology companies such as Amazon, Microsoft, Google, Pivotal, and IBM
to leverage the digital solution capabilities across key pillars.
Automotive Digital Transformation Market: Digital Solution Accelerators, Global, 2016

Cloud Computing Big Data Analytics Connected Car/IoT Connected Factory Customer Touch points
Amazon web services - Amazon web services - Amazon Echo and Leverage Amazon Cloud eCommerce portal,
Amazon Elastic Compute Amazon Elastic Alexa customers can Amazon Kindle
Amazon Cloud (Amazon EC2), MapReduce (Amazon access lights, home
Amazon Simple Storage EMR), Amazon Kinesis, security systems,
Service (Amazon S3), Amazon QuickSight garage doors and TV.
Microsoft Azure Proprietary platforms Azure IoT Suite, Azure Enterprise solution – Web, logic, API apps,
Microsoft
run on Hadoop – Data IoT Hubs Microsoft Dynamics ERP wearables – HoloLens
Lake Analytics,HDInsight and mobile engagements
IBM cloud IBM PureData for IBM Watson IoT, IBM IBM Watson IoT – IBM Customer
IBM Analytics and IBM Streams capture and Cognitive Manufacturing Experience Suite, IBM
BigInsights on Cloud analyze data in motion Digital Experience
and provide insights for Manager. Works with
IoT applications. Honda R&D
SaaS, PaaS, IaaS, DaaS, Oracle Advanced Oracle IoT cloud Oracle Configurator, Order Brand engagement and
Oracle private and managed Analytics, Oracle Platform Management, Warranty cross channel commerce
cloud services Business intelligence Management, and
Inventory Management
Pivotal Cloud Foundry Pivotal Big Data Suite, Mobility software IoT Platform – GE’s Predix Driving Mobile
Pivotal Hadoop Native SQL platform development. Cloud is built upon Experience With Cloud
For example, FordPass Pivotal’s Cloud Foundry Native Application
platform. Platforms – Works with
Ford and Microsoft
Google Google CloudPlatform Business Intelligence Android Auto Google Apps and cloud Google Hangouts used in
and hosting services Visualization Prediction platforms Toyota Collaborator
Tools, Google BigQuery
SMAC – Social, Mobile, Analytics and Cloud Source: Frost & Sullivan
K079-18 130
Digitalization and Mobility Companies
Technology startups support the automotive market from last-mile urban mobility vehicles to fintech and B2B
and B2C platforms.
BlaBlaCar GrabExpress Didi Chuxing baxi OLA Parkmobile Urban MaaS.fi

Engines
Ridesharing eHailing Parking Integrated Mobility
ID Fixed Long Siemens

VROOM
baxi Bike Hailing JustPark Online Parking AG B2B Platform
distance
Zimride Corporate/ ARRO

University SpotHero Urban Mobility Urban
GrabExpress Service Utilities P2P Parking
iTAXI Engines
Haxi Short Dynamic Curb
ParkHelp
Public Taxis WAY@RIDE unu
eMobility
Didi Chuxing Parking
CommuterLink Fixed libelium
Uber Technology
Technolog Parkmobile
nuride SMART Drover
ies Inc. Vehicle Rental
e-Hailing Pango PARKING
Ridesharing Solution
OLA Parking Mobile
BlaBlaCar Payment
QuickPay Mobility as a MaaS.fi
Kiunsys
GRABTAXI
Service
iCarpool Note-Indicative list of RingGO
participants providing services Source: Frost & Sullivan
K079-18 131
Manufacturing—Connected Factory will Transform the Supply Chain
New entrants focusing on automotive use cases will partner with traditional companies in 2017.
DENSO BITSTEW
ABB Siemens AG Pivotal Software XPLORE Stratasys SENTRIAN
CORPORATION SYSTEMS
Robotics Software & Advanced Analytics IIoT Design Simulation
KUKA AG XPLORE
Pivotal Mobile
ABB Cobots Software, Inc Panasonic Stratasys
Computing
Corporation Ltd.
3-D Printing
STAUBLI Teradata
Big Data Sculpteo
Splunk Inc
Analytics
Teradyne Inc.
Test Greenwave
SAS
DENSO Equipment Systems
CORPORATION Institute Inc.
IIoT Cloud
BITSTEW XOEYE
SYSTEMS
Platforms
Technologies Ergonomics
NXP Dassault Technology
Semiconductors Systemes PLM Meshify
Sensors Software
SENTRIAN
Infineon
Siemens AG
Technologies AG
K079-18 132
Connected Supply Chain and Enterprise Operations Ecosystem
New investments from OEMs will be leveraged for innovations and transformations in 2017. Automotive OEMs
and Tier Is will execute agile IT projects and leverage digital expertise from extended value chain.
Robert Bosch GmbH 3M Shyp, Inc. truckstop.com CDK Global Cloudera, Inc. Microsoft Audi Designit.
Suppliers Mediators Software/Technology Providers Retailing
DENSO Schedule & Land Rover

CORPORATION JDA
Shyp, Inc. Manage
Software
Continental AG Pickups Group, Inc. Inventory Audi Digital Retailing
System Management
Robert Bosch Infosys
Manufacturers Nissan
GmbH CT Global Limited
Payment –
Delphi Freight
Audit Ltd
Generate Bills Oculus VR,
Automotive
incadea LLC
LLP.
Dealer Wearables
Microsoft
CDK Global Management
Keychain Mobile-based System Google
3M
Logistics Auto-IT
Brokering
Corp Designit.
TORAY Strategy/
Parts
INDUSTRIES, Cloudera, Implementation
INC.
Manufacturers Kanga Frog Design
Inc. Web services/ Firms
Inc.
Amazon Web Analytics
Goodyear truckstop.com Services, Inc.
K079-18 133
Key Conclusions
OEMs’ digital strategy needs to be around Connected Living solutions with a roadmap of Mobility as a Service
model by 2030.
Automotive Digital Transformation Market: Conclusions, Global, 2016–2030

Tier I Suppliers New Business
Organization Structure Software Defined Car Technologies
Digitalization Models
1 2 3 4 5
• In 2015, former Apple • Self learning and • Big Data analytics, • Automotive suppliers • Strategic plan
executive Johann machine learning Industry 4.0, Cyber Denso, Panasonic, embracing electric
Jungwirth started as algorithms will aid next- security, IoT, Cloud Continental and vehicles, new mobility
head of the VW group’s generation predictive computing and Hyundai Mobis, Toshiba services, multi modality,
digitalization efforts. services such as Connectivity are key have joined AGL project autonomous vehicle
BMW, Audi, and other insurance premiums technologies attracting that aims to develop an focus, and significant
OEMs realize the need and warranties. significant investments open-source, Linux- investments in future
of dedicated digital from auto companies based platform for technologies will be
• Artificial intelligence will
officers. connected cars. It has inevitable for OEMs.
become fundamental to • In addition to IT budget,
potential to become
• Between 2015–2017, prescriptive analysis, automotive companies • OEMs need to look
defacto standard
OEMs/Tier Is will set up OTA, and autonomous will spend between 3.5 beyond the car to
new business unit to vehicles. NVIDIA PX2 is to 8% of annual R&D • Tier I suppliers must connected living, Car as
develop new an example. budget in new gain software a service, and mobility
technologies and hire technologies. capabilities to serve as a service business
digital strategy officers dynamic demands of models.
to create short term and OEMs, regulatory
long-term strategic plan. authorities, consumers.
K079-18 134
Recommendations to Automotive OEMs
OEMs digitalization strategy must include vehicle digitalization, organization digitalization, and future mobility
concepts in addition to targeting new business models—Focus on Time to market and security.
Automotive Digital Transformation Market: OEM Recommendations, Global, 2016–2022
Hire a Chief Digital Establish an Innovation Consider country specific

Officer Function along Lab focused on creating digital retailing strategy
with an associated digital solutions as well as for new/used cars in
budget and team a digital focused venture addition to aftermarket
(benchmark BMW) capital fund and servicing
Focus on building
Developing digital
Incorporate IIOT in capability in digital
connected lifestyle
the development of customer experience,
solutions targeted at a
new factories focusing on regional
premium customer base
markets
Focus on creating CaaS

and MaaS business Evaluate potential for
models. Develop Fintech applications
programs to inspire such as connected car
customers on key insurance
initiatives (e.g., FordHub)
K079-18 135
Legal Disclaimer
Frost & Sullivan is not responsible for any incorrect information supplied to us by
manufacturers or users. Quantitative market information is based primarily on interviews and
therefore is subject to fluctuation. Frost & Sullivan research services are limited publications
containing valuable market information provided to a select group of customers. Our
customers acknowledge, when ordering or downloading, that Frost & Sullivan research
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For information regarding permission, write to:

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© 2017 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
K079-18 136
Appendix
Return to contents
K079-18 137
Product
Organizations aim to generate new revenue streams through digital solutions, either as product as a service or
new digital services.
Information
Operations People Customer Journey Leadership
Management
Product
New Revenue Differentiation R&D

• New digital • Customization • Collaboration
solutions
• Data Monetization • Impact on new
• New customer business models
• Flexible deployment
segments
topologies • Incorporating
• New regions customer feedback
• Pricing models
• New markets • Knowledge
• Sharing economy
management
• Shared digital
• Xaas
services • Service Delivery
K079-18 138
Operations
Digital solutions must optimize business processes and operations to improve speed, efficiency, and customer
experience.
Information
Product People Customer Journey Leadership
Management
Operations
Manufacturing Management IT
• Automation • BPO • Big Data
• Connectivity
• Dynamic process • Finance
• Integration
framework
• Regulation • Interoperability
• M2M compliance • Storage
• Supply chain • Security
management
K079-18 139
People
Digital solutions empower workers to increase productivity through better decisions, collaboration, and agility.
Information
Product Operations Customer Journey Leadershipe
Management
People
• Automation
• Collaboration
• Employee retention
• Learning & Development
• Performance alignment
incentives
• Talent acquisition
• Virtual workplace
• Workforce management
K079-18 140
Information Management
Data is collected securely and leveraged effectively to improve decision making and improve business
performance.
Product Operations People Customer Journey Leadership

Information
Management
• Data-driven decision making

• Information discovery
• Information sharing
• Real-time
decision making
K079-18 141
Customer Journey
Omni-channel customer interaction creates a compelling and consistent experience that increases spending and
loyalty. OEMs must develop a holistic solution and focus on creating a seamless/consistent customer journey.
Information
Management
Customer
Journey
Customer Experience Marketing Sales

• Customer feedback • Adaptive pricing • Automate
• Customer engagement • Content marketing processes
• Customer loyalty • Develop brand • Cross

equity platform sales
• Omni-channel & fulfillment
• Nurture/trigger-
• On-demand • eCommerce/
based marketing
• Personalization mCommerce
• Smarter
• Sentiment analysis segmentation • Improve sales
margins
• Social media – become • Single-view of
interactive customer
K079-18 142
Leadership
Executive support, governance structure, and performance reporting improve effectiveness of digital strategies.
Companies will develop subsidiaries to act as startups managed by prominent digital executives.
Information
Product Operations People Customer Journey
Management
Leadership
• Accountability
• Agility
• Availability of funds
• Business Intelligence
• Change management
• Corporate governance
• Discovery & transparency
• Vision alignment
K079-18 143
Market Engineering Methodology
One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They
are based on our proprietary Market
Engineering Methodology. This approach,
developed across the 50 years of
experience assessing global markets,
applies engineering rigor to the often
nebulous art of market forecasting and
interpretation.
A detailed description of the methodology
can be found here.
K079-18 144

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Digital Transformation of the Automotive Industry

Digitalization Spending to Grow Rapidly to $82.01 Billion in 2020

Global Automotive & Transportation Research Team at Frost & Sullivan

Section Slide Number

Automotive Digital Transformation Market: Key Findings, Global, 2016–2030

Automotive Digital Transformation Market: Five Pillars of Digitalization, Global, 2016

Digital Retailing Mobility as a Connected and Connected

New Business Models Source: Frost & Sullivan

Supply Chain Enterprise

Automotive Digital Transformation Market: Total Automotive IT Spending, Global, 2015–2020

32.5% 9.5% 6.9% 1.4% 0.7% 0.6%

12.35 3.62 2.60 524.4 246.7 227.7

Percent of Key Automotive IT Spending

HMI Cybersecurity OTA (Over The Air Update) AI Software

P2P Used Car Market Place Autonomous Algorithm Sensors Hardware

UBI (Usage-based Insurance) Autonomous Solution

Blockchain Electric Vehicles HD Mapping

Autonomous Processing Aftermarket Telematics

Source: Frost & Sullivan

Automotive Digital Transformation Market: Startups Snapshot, Global, 2011–2016

(EV) (P) (M) (M)

(M) (M) (Mapping)

(A) (M) (M)

(A) (M) (Aftermarket)

(M) (E) (Com) (Energy)

(M) (M) (HAD) (M)

(L) (M) (B) (Manufacturing) (Battery)

(M) Going myway (P) (M) (M) (Solar Power)

IoT Platform IoT Value Chain

Source: Frost & Sullivan

Automotive Digital Transformation Market: Automotive Digital Retailing, Global, 2014–2020

BEFORE 2016 VISION 2020

• Digital Marketing – Contextual

Source: Frost & Sullivan

Automotive Digital Transformation Market: Retail Network Digitalization, Global, 2016

INTRIGUE INTERACT ORGANIZE TRANSACT MANAGE

In-store • Use of tablets with latest diagnostic software installed

Self Learning to enable $78.6 billion revenue opportunity by 2025

Increasing Mergers & Acquisitions focusing on technology and software

Source: Frost & Sullivan

• Auto Parking • Algorithm-based Warranty

Source: Frost & Sullivan

Automotive Digital Transformation Market: Automotive Data Monetization, Global, 2016

Connected Data Optimizing

DIRECT REVENUE OPPORTUNITIES INDIRECT REVENUE OPPORTUNITIES

Source: Frost & Sullivan

Service experts and Introduction of new

customer care models such as pay

VALUE ADDED MOBILITY AS A VALUE ADDED VALUE ADDED

Automotive Digital Transformation Market: Integrated Mobility Roadmap, Global, 2016

Journey Planning Booking Payment & Reconciliation

Multi-modal planning of Booking of transportation Facilitating payment for

IT-OT = Information Technology-operational Technology; ICT = Information and communication Technology

Automotive Digital Transformation: Digitalization in Manufacturing, Global, 2016–2022

Cloud Computing Big Data and Enterprise-wide Smart Logistics

Who will In- Out- How is it

The entire value chain Achieved via

Automotive Digital Transformation Market: OEM Recommendations, Global, 2016–2022

Hire a Chief Digital Establish an Innovation Consider country specific