Auto components India - - EDITORIAL - Bhar­gav TS Ex­ec­u­tive Ed­i­tor s.bhar­gav@nextgen­pub­lish­ing.net

Over the past 2 decades, the au­to­mo­tive in­dus­try has been ac­tively trans­form­ing and rein­vent­ing it­self by es­tab­lish­ing new al­liances, out­sourc­ing to tier-1 sup­pli­ers, ex­pand­ing glob­ally, de­vel­op­ing new car plat­form strate­gies, em­brac­ing lean principles, adding di­ver­sity to its prod­uct line-ups, speed­ing up prod­uct de­vel­op­ment cy­cles, and re­duc­ing emis­sions. To its credit, the in­dus­try has suc­ceeded to a great ex­tend in im­ple­ment­ing th­ese changes. De­spite fun­da­men­tal mar­ket de­vel­op­ments such as glob­al­i­sa­tion, enhanced qual­ity, and frag­men­ta­tion of tra­di­tional cus­tomer seg­ments, there has been no rad­i­cal change in the in­dus­try struc­ture. Apart from in­creased con­cen­tra­tion, the au­to­mo­tive in­dus­try is or­gan­ised es­sen­tially the same way as it was a few decades ago—ver­ti­cally in­te­grated around large man­u­fac­tur­ers.

The orig­i­nal jus­ti­fi­ca­tion for ver­ti­cal in­te­gra­tion no longer holds good. The present car tech­nolo­gies and global sup­ply chains are ma­ture. The car­mak­ers have im­proved qual­ity and digi­ti­sa­tion. New busi­ness mod­els have rev­o­lu­tionised the in­dus­try which is be­ing driven by 4 mega­trends: di­verse mo­bil­ity, au­tonomous driv­ing, elec­tri­fi­ca­tion, and con­nec­tiv­ity. Most in­dus­try play­ers and ex­perts agree that th­ese tech­nol­ogy-driven trends will re­in­force and ac­cel­er­ate one another, and the in­dus­try is ripe for dis­rup­tion. How­ever, there is no in­te­grated per­spec­tive on the fu­ture shape of the au­to­mo­tive in­dus­try.

In another dis­rup­tive de­vel­op­ment, soft­ware com­pe­tence is be­com­ing one of the most im­por­tant dif­fer­en­ti­at­ing fac­tors for the in­dus­try de­vel­op­ment. Soft­ware will be used to de­liver wide range of fea­tures and ser­vices like mo­bil­ity, ad­vanced safety, lo­ca­tion-based ser­vices, in-ve­hi­cle con­tent, and re­mote an­a­lyt­ics. Au­tomak­ers need to be strate­gic about which part of the con­nec­tiv­ity ecosys­tem they con­trol to profit from con­nec­tiv­ity and keep the ve­hi­cle it­self from be­com­ing a com­modi­tised con­tent plat­form. How­ever, as cars are in­creas­ingly in­te­grated into the con­nected world, au­tomak­ers will have no choice but to par­tic­i­pate in the new mo­bil­ity ecosys­tem that emerges from tech­no­log­i­cal and con­sumer trends. There­fore, elec­tron­ics is go­ing to rev­o­lutinse the au­to­mo­tive in­dus­try with many in­no­va­tions in ve­hi­cles. Elec­tron­ics will be both an en­abler and a so­lu­tion provider to the in­dus­try to fol­low th­ese mega­trends.

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