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Consumerisation of the auto
industry: fact, not fiction
19 Nov 2012
by Mark Morley, GXS
Posted in: Comment, Electronics
Today’s high tech industry has become heavily ‘consumerised’. In the past, high tech
manufacturers would release numerous products to market with a perception that they
knew what consumers wanted and so were able to drive the pace of technology
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change.
Now things have changed: consumers are hungry for the next big technological
development and as a result, product release cycles have become much shorter over
time. Today’s consumer electronic devices have a very short life span and many would
consider some products as being out of date after only two years. Take Apple’s firstgeneration iPad: iOS6, Apple’s latest operating system, is unable to run on this version
of the iPad, thus pushing the device into obsolescence. However, Apple believes
consumers do not mind, and are eager to upgrade to the latest version of the iPad.
For years, automotive companies have focused on ‘build to stock’
production, i.e. manufacturing cars in an almost continuous fashion. Once
they leave the production line, cars built in this way will often end up in a
storage compound in the hope that someone somewhere will want to buy
them
Built-in obsolescence has become a smart way to force consumers onto the latest
platform. It is no surprise that companies like Apple and Dell operate the most efficient
supply chains in the world, thanks to the way in which they allow consumers to
configure and customise their products online. Can any lessons be learnt here by the
automotive industry? Is there any evidence to suggest that consumerisation is starting
to impact the automotive industry?
For years, automotive companies have focused on ‘build to stock’ production, i.e.
manufacturing cars in an almost continuous fashion. Once they leave the production
line, cars built in this way will often end up in a storage compound in the hope that
someone somewhere will want to buy them. On the other hand, many of the premium
brands, such as BMW, Audi and Mercedes-Benz, use ‘build to order’ production as a
way of reducing inventory levels and hence taking significant cost out of their business.
More importantly, this enables car buyers to specify the exact vehicle they want before
it is produced, giving those brands better visibility of required components and likely
expenditure on sourcing components to manufacture their cars.
The recent economic downturn has seen high volume vehicle
manufacturers look for ways to reduce their inventory levels. Nearly
every car manufacturer offers consumers a way to build their exact car
specification online
The Internet has transformed the car buying process, and build to order production is
no longer the preserve of the premium OEMs. The recent economic downturn has seen
high volume vehicle manufacturers look for ways to reduce their inventory levels.
Nearly every car manufacturer offers consumers a way to build their exact car
specification online. This can form the basis of a car order which is then submitted to
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2. the factory for build. The consumer has been able to choose the body colour, type of
wheels, in-car entertainment system and more, and this selection process has allowed
many manufacturers to improve their component ordering process and provide a more
tailored service to their customers.
Consumers expecting to be able to connect their mobile devices to in-car
entertainment and communication systems may need to download apps or simply have
access to the Internet. Car manufacturers are now falling over themselves to meet
these demands, and the age of the connected car is here.
Consumers have changed the way in which car manufacturers build their cars, with
greater emphasis on build to order versus build to stock, reduced inventory levels,
greater customer satisfaction and, more importantly, greater customer loyalty that will
hopefully lead to repeat sales in the future. The consumerisation of the automotive
industry is very much fact, not fiction.
The opinions expressed here are those of the author and do not necessarily reflect the
positions of Automotive World Ltd.
Mark Morley is Automotive Director at GXS
The AutomotiveWorld.com Comment column is open to automotive industry decision
makers and influencers. If you would like to contribute a Comment article, please
contact editorial@automotiveworld.com
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