Role of IoT in transforming automotive industry
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