Role of IoT in trans­form­ing au­to­mo­tive in­dus­try

Auto components India - - CONTENTS - By: Ashish Gu­lati, Coun­try Head, Telit In­dia

The In­dian au­to­mo­tive in­dus­try is one of the largest in the world and it ac­counts for 7.1% of the coun­try’s Gross Do­mes­tic Prod­uct (GDP). Ac­cord­ing to Brand Eq­uity Foun­da­tion the twowheeler seg­ment is said to be the leader in the In­dian Au­to­mo­tive mar­ket with 81% share owing to a grow­ing mid­dle class and a young pop­u­la­tion.

More­over, the grow­ing in­ter­est of the com­pa­nies in ex­plor­ing the ru­ral mar­kets has fur­ther aided the growth of this sec­tor. The over­all pas­sen­ger ve­hi­cle seg­ment ac­counts for 13% mar­ket share. In­dia is also a prom­i­nent au­to­mo­tive ex­porter. It has strong ex­port growth ex­pec­ta­tions in the near fu­ture.

In April-Jan­uary 2016, ex­ports of com­mer­cial ve­hi­cles reg­is­tered a growth of 18.36% over April-Jan­uary 2015. As per the Brand Eq­uity

Foun­da­tion, the ini­tia­tives by the Govern­ment of In­dia and by the ma­jor au­to­mo­tive play­ers are ex­pected to make In­dia a global leader in the two-wheeler and four-wheeler seg­ments by 2020.

Sales of pas­sen­ger ve­hi­cles in­creased 16.7% to 258,000 units in Au­gust 2016, driven by bet­terthan-ex­pected mon­soon and strong buy­ing sen­ti­ment. Sales of com­mer­cial ve­hi­cles grew 1.53% to 52,996 units. The two-wheeler in­dus­try also per­formed well. Mo­tor­cy­cle sales grew 22% to 1 mil­lion units, while over­all twowheeler sales grew 26.3% to 1.64 mil­lion units.

In­ter­net of Things

Glob­ally, com­pa­nies are pour­ing money into the In­ter­net of Things (IoT), and one area of par­tic­u­lar in­ter­est to in­vestors is `IoT Con­nected cars’. Ac­cord­ing to the Busi­ness In­sider, au­tomak­ers have been con­stantly notic­ing the grow­ing trends with sig­nif­i­cant busi­ness op­por­tu­ni­ties for con­nect­ing their cars. It is ex­pected that 381 mil­lion con­nected cars would be on the roads by 2020, against 36 mil­lion in 2015. Con­nected cars will gen­er­ate $8.1 tril­lion worth of rev­enues be­tween 2015 and 2020.

Nowa­days au­tomak­ers con­nect their ve­hi­cles in two dif­fer­ent ways:

The first is Em­bed­ded con­nec­tions. Here cars use a built-in an­tenna and chipset.

The se­cond is Tethered con­nec­tions which are used in hard­ware to al­low driv­ers to con­nect to their cars via their smart phones.

Fur­ther­more, e, app in­te­gra­tion is be­com­ing com­mon­place om­mon­place in to­day’s ve­hi­cles. Google Maps and other nav­i­ga­tion tools have be­gun to re­place built-t-in GPS sys­tems. As per Mar­kets andd Mar­ket, the au­to­mo­tive IoT mar­ket iss ex­pected to grow from USD 15.87 Bil­lion in 2015 to USD 82.79 bil­lion by 2022, at a CAGR of 26.75%.

The con­nected ve­hi­cle has been the most vis­i­ble and fa­mil­iar ex­am­ple of the IoT tech­nol­ogy. But as cars be­come in­creas­ingly soft­waredriven, the real IoT de­vel­op­ments in the auto in­dus­try are be­hind the scenes, as au­tomak­ers and soft­ware providers both lay claim to the driver’s seat.

Gart­ner pre­dicts that by 2020, more than 250 mil­lion ve­hi­cles will be con­nected glob­ally. The num­ber of in­stalled con­nec­tiv­ity units in ve­hi­cles world­wide will in­crease 67% and the con­sumer spend on in­ve­hi­cle con­nec­tiv­ity will dou­ble. Deloitte’s con­sumer re­search sug­gests that driv­ers of the next gen­er­a­tion want their cars to act as smart phones on wheels. They would like to re­main con­nected and pro­duc­tive while on the go, and to con­sider fully-con­nected ve­hi­cles among the most ben­e­fi­cial fu­tur­is­tic tech­nolo­gies. More­over, they would be ready to pay a size­able amount for a ve­hi­cle that meets all their tech­nol­ogy needs and wants.

As IoT tech­nolo­gies and ser­vices trans­form the au­to­mo­tive ecosys­tem, this ecosys­tem is wit­ness­ing steady in­flux of new play­ers and con­tin­ued evo­lu­tion in the roles of key stake­hold­ers and the bal­ance of power among them. Of par­tic­u­lar in­ter­est is the evolv­ing re­la­tion­ship be­tween au­tomak­ers and soft­ware providers. Each has a vi­able claim of con­trol on the rapidly chang­ing auto-in­dus­try ecosys­tem, even as each new gen­er­a­tion of ser­vices prom­ises to throw ques­tion on how long one might have their hands on the wheel and can keep them there.

In In­dia the Govern­ment en­cour­ages for­eign in­vest­ment in the au­to­mo­bile sec­tor and al­lows 100% For­eign Di­rect In­vest­ment (FDI) un­der the au­to­matic route. The Govern­ment of In­dia aims to make au­to­mo­bile man­u­fac­tur­ing the main driver of the `Make in In­dia’ pro­gramme, as it ex­pects the pas­sen­ger ve­hi­cles mar­ket to triple to 9.4 mil­lion units by 2026, as high­lighted in the Au­to­mo­tive Mis­sion Plan (AMP) 2016-26.

The govern­ment has for­mu­lated a Scheme for Faster Adop­tion and Man­u­fac­tur­ing of Elec­tric and Hy­brid ve­hi­cles in In­dia, un­der the Na­tional Elec­tric Mo­bil­ity Mis­sion 2020, to en­cour­age the pro­gres­sive in­tro­duc­tion of re­li­able, af­ford­able, and ef­fi­cient elec­tric and hy­brid ve­hi­cles into the coun­try.

The Fu­ture of IoT will be­come in­creas­ingly im­por­tant in trans­porta­tion and lo­gis­tics in the next sev­eral years, es­pe­cially as self­driv­ing cars hit the road in in­creas­ing num­bers. But this is just one area that IoT will to­tally trans­form ac­cord­ing to Busi­ness In­sider in­tel­li­gence. Nearly all sec­tors across in­dus­tries would be im­pacted by the IoT rev­o­lu­tion and we have to see how this rev­o­lu­tion trans­forms our day-to­day lives in the near fu­ture.

Ashish Gu­lati, Coun­try Head, Telit In­dia

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