Customer trends that would shape the automotive industry in 2025

Changing consumer preferences and technological disruptions are shaking up every facet of mobility, forcing automakers to be original in all that they do

Updated: Apr 30, 2018 03:46:15 PM UTC
Image: Shutterstock

The future of transportation is evolving to a completely different level.  In the coming years, the changes in consumer preferences, environmental conditions and experience driven segmentation will reshape the automotive industry. An automobile is already a connected device on wheels and is on a path to increased intelligence for driving functions.

Changing consumer preferences and technological disruptions are shaking up every facet of mobility, forcing automakers to be original in all that they do. By 2025, it would be all about the travel experience, and less about passive ownership of vehicles. The future seems set for intelligent vehicles offering personalized travel experience in an increasingly shared economy.

Here are the two major shifts that will define the automotive landscape in 2025:

Cars are growing brains
The first shift is the inevitable and phased embrace of autonomous vehicles, which will lead to a wide range of in-transit innovation aligned with the latest technology. The five levels of evolution for autonomous vehicles defined by SAE International Standards are:

• Level 0: ‘Unintelligent’ regular cars of today where a driver controls everything inside the vehicle.
• Level 1: Driver controls most things, but specific functions such as accelerating and steering are automated.
• Level 2: The car includes at least one automated driver assist system using driver environment information. Even here, the driver should be ready to take control when needed.
• Level 3: Drivers are still necessary, but critical safety functions are completely automated.
• Level 4: Fully autonomous cars that drive, and ensure safety by monitoring all conditions.
• Level 5: Fully autonomous system that will perform just as a human would in every scenario. These cars would also be made without steering wheels or pedals. Perhaps even better than humans as certain environmental conditions create safety hazards that require complex multi-dimensional response.

While most of the advanced commercially-available cars were in level 2 in 2018, they are expected to hit Level 4 and 5 by 2025. While it is so, customers driving older models would also seek retro-fitment of autonomous capabilities.

Some autonomous vehicle functions have already become available from high-end carmakers. These include lane assist, adaptive cruise control and self-parking features. Even mass market players such as Nissan and Ford have begun cascading these features into their cars. Many of these autonomous capabilities such as navigation and auto emergency calling would become commonplace by 2025. More advanced telematics-based features (such as predictive maintenance) and convenience features (such as intelligent parking, easy-payment interfaces and augmented-reality) that elevate in-transit experiences will win in 2025.

Experience matters, not ownership
The second defining shift in the industry is the spread of the sharing economy, which will soon usher in ‘purpose-built vehicles’ and subscription models, moving away from passive ownership of cars.

In today’s digital age, customers have already developed a high level of comfort with the idea of sharing rather than owning a vehicle. The sharing economy that is based on the pay-per-use service model has also caught up in the automobile industry.

The future is therefore less about owning a car and more about owning the experience. This trend is predicted to accelerate, impacting sales that vehicle production numbers are expected to flatten in 2025! With no growth in numbers, it would all be about providing the latest and the best in technology (with open APIs -application programming interfaces-etc. that lend flexibility to integrate services) and design aimed at the sharing economy. Two rows of seats facing each other inside a car? Well...quite possible!

The proportion of shared cars on the road is expected to rise to more than 15% by 2030, according to a recent study by Morgan Stanley. Very soon, the daily commute would change into an end-to-end mobility experience conducted through a collaborative platform. The industry value chain will also shift from the traditional supplier-OEM-dealer model, to an interconnected ecosystem of multiple players, including technology companies, infrastructure providers, mobility service providers, utilities and traffic management entities.

With increasingly autonomous capabilities and a declining interest in ownership, customer preferences are shifting to new horizons. The players in automotive industry should focus on creating experiences for customers during transit, redesign vehicles to fit evolving purposes, and most importantly, transition to a hybrid business model that is both based on services and primary purchases.

-The author is the Chief Digital Officer of Manufacturing, Logistics, Energy & Utilities at Cognizant

The thoughts and opinions shared here are of the author.

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