How connectivity is transforming the automotive industry and driving new revenue streams

Page 10 Page 19Page 16
Automotive has
become a digital
business
Learn how a digital business
strategy improves the bottom line.
July 2017
Who’s driving the
customer experience
The customer journey will change
with digital smart ecosystems.
Interview with Hans
Kwaad, Auto BINK
Group
How to stay ahead of the game as
a dealer.
INDEX
Editorial ................................................................................... 3
Industry data ............................................................................ 4
The importance of the connected car ........................................5
Connected warranty management: Cost or opportunity?............8
Automotive has become a digital business................................ 11
Technology in Motion................................................................ 14
Who’s driving the customer experience?................................... 16
Pioneering partnerships at the wheel of smart mobility................... 19
Dealer profitability: capitalizing on connected car revenues......... 21
Spotlight USA – automotive leader still king of the road in the
age of connected vehicles.......................................................... 24
Contact..................................................................................... 27
Importance of the
Connected Car
The connected car will change
the automotive industry as we
know it today.
Unlock the potential of
CONNECTED CARS

How will
traditional
automotive
companies
earn money
in the
future?

Global Edition Benchmarker3 July 2017
The connected car is finally coming of age in the era of digitalization.
Many of you are already driving cars equipped with more than 40
microprocessors, and 250 sensors and cameras generating about
300 megabytes of vehicle and personal data per second - related to
safety, wear and tear, defects, infotainment and navigation. About
88% of this data is currently unused. Imagine you wanted to cross
a street, but only had 12% visibility. Would you cross it? Probably
not. But most OEMs are doing just that – making business critical
decisions without full access to quality data. Today’s developments
in artificial intelligence, machine learning and digitalization require
that everyone involved in automotive invest in the knowledge and
technology necessary to connect this complex array of data – even
those you never see and don’t own – to profit from this valuable
information. OEMs will have to provide clarity and education to their
customers about how they plan to use their data to win customer
trust. Many OEMs will need to revisit their entire business model to
master the challenges posed by connected cars and digitalization. The
market leaders of tomorrow will be faster, more agile and customer,
rather than product, focused. New partnerships will emerge.
Particularly in urban areas, we are witnessing a shift from private
car ownership to mobility services. What if OEMs could monitor
incoming data from mobility fleets to access insights about the
unique condition of each asset? What if OEMs and their dealers take
advantage of the many new revenue streams associated with the
connected car? This is the future. What if automotive call centers
could tap into insights gained by structured or unstructured data
like social media and blog posts to better and more quickly answer
customer or technician queries? The possibilities for transforming car
and customer generated data into valuable products and services are
endless. At MSXI, we are actively involved in helping our customers
design roadmaps to navigate this quickly changing data-driven
landscape. This edition of Benchmarker is therefore dedicated to the
connected car and the many ways it impacts our industry. Moving
forward will require constant adjustments, vigilance and adaption.
We will likely be blown off course from time to time. We will have to
adapt our strategies to local markets. But ultimately, the connected
car is a win-win proposition for everyone in the automotive space.
CONNECTIVITY IS
DRIVING THE FUTURE
OF THE CAR
Fred Minturn
Fred Minturn
President and CEO, MSXI
EDITORIAL

AUTOMOTIVE INDUSTRY SALES DATA
Sales (2017 & 2018 forecast)
20.804.956
20.825.619
NORTH AMERICA
SOUTH AMERICA
3.759.766
3.882.974
1.163.612
1.231.297
AFRICA
364.464
378.084
CENTRAL AMERICA
4.261.327
4.596.058
EASTERN EUROPE
44.476.515
45.009.766
ASIA-PACIFIC
WESTERN EUROPE
16.275.688
16.426.612
MIDDLE EAST
3.489.759
3.890.103
300.247
≈ 28,07 %
217.011
≈ 20,29 %
111.716
≈ 10,44 %
217.537
≈ 20,34 %
130.755
≈ 12,22 %
60.163
≈ 5,62 %
32.319
≈ 3,02 %
NORTH AMERICA
ASIA PACIFIC
EASTERN EUROPE
WESTERN EUROPE
OTHER (AFRICA, AUSTRALIA,...)
JAPAN
MERCOSUR
Car Parc Top 5 per Market (Sales 2016)
ASIA-PACIFIC
Toyota
Volkswagen
Renault-Nissan
Honda
Hyundai
5.112.924
4.438.200
3.711.842
2.833.695
2.606.055
NORTH AMERICA
General Motors
Ford
Fiat Chrysler
Renault-Nissan
Toyota
3.567.762
2.970.388
2.752.493
2.629.488
2.249.248
WESTERN EUROPE
Volkswagen
Renault-Nissan
Ford
Fiat Chrysler
PSA
3.477.073
2.354.736
1.777.755
1.282.540
1.123.968
EASTERN EUROPE
General Motors
Renault-Nissan
Volkswagen
Hyundai
Fiat Chrysler
949.010
747.696
494.490
349.251
260.841
MIDDLE EAST
Toyota
Iranian Manufacturers
Hyundai
Renault-Nissan
PSA
560.826
548.703
435.312
426.704
412.827
SOUTH AMERICA
General Motors
Renault-Nissan
Volkswagen
Hyundai
Fiat Chrysler
591.269
483.466
474.523
377.087
365.654
AFRICA
General Motors
Ford
Fiat Chrysler
Renault-Nissan
Toyota
236.526
151.442
136.020
105.618
94.110
Source: Data based on LMC Global Automotive Sales Forecast, Quarter 2, 2017
Car Parc Top 5 per Market (Sales 2016)
Sales (2017 & 2018 forecast)

Connectivity is literally reinventing the automotive industry.
Within the next two decades autonomous driving will be
normal and even today, most vehicles can master a variety
of driving situations independently and are seen by drivers
as one more mobile device in their digital universe. The
next logical step is for OEMs to transform the way they do
business to maximize the full potential of the connected car
over the next 5 to 10 years in terms of brand differentiation,
revenue generation and profits.
The possibilities for leveraging the opportunities presented by
connected vehicles will emerge on several fronts.
The first has to do with customer preferences. OEMs will have to
accelerate product cycles using dynamic and agile processes in
order to get new products to customers faster. Already today,
we see many drivers preferring their smartphone’s navigation
apps over outdated navigation software in their cars.
THE IMPORTANCE OF
THE CONNECTED CAR
Pieter van Rosmalen
Global Vice President
Retail Network Solutions
Pieter van Rosmalen has been the vice president of Retail
Network Solutions at MSXI since March 2011. In this role,
he is responsible for the operational management, strategic
planning, solutions development and profitability of the
business worldwide. He previously served as Vice President
Retail Network Solutions for Europe and Asia Pacific. He can be
reached at pvanrosmalen@msxi-euro.com.
86%
of customers are willing to pay a
premium for connectivity and related services
Source: Kienbaum Connected Car Study
75%
of customers will categorically reject
models without connectivity features
INSIGHT

Established connectivity features such as phone capabilities and
in-car entertainment will be supplemented by other functions
like remote diagnostics, live traffic updates and a range of
autonomous and semi-autonomous driving technologies.
A majority of consumers today already report that they are
willing to pay more for connectivity capabilities as well as pay-
as-you-go car sharing models, particularly relevant in urban
environments such as Beijing where some people spend 4-5
hours daily in traffic jams. To keep pace with their customers,
OEMs need to move away from a simple car sales mentality to
being experts at delivering intelligent customer services across
a multitude of touch points.
A second front is driven by the massive amount of vehicle
and customer data available to OEMs and dealers. Cars today
feature approximately 100 ICUs creating telematics data
that allows OEMs to track a vehicle over its lifetime. Digital
technologies and data analytics will need to become an
integral part of the automotive value chain. This requires new
corporate structures and employee competencies at all levels
of the organization – from leadership through to service and
sales. However, the investment in connectivity promises a high
ROI since this data has the potential to be worth billions of
dollars in revenue over the next few years.
maintenance and parts. It has been estimated that if everyone
were to switch to electric vehicles at once, profits across the
industry would decrease by 40%. Data generation represents
a long-term scalable revenue stream that can be harnessed to
offset lost revenue in other areas.
Some OEMs are already selling data to third parties such as
insurance companies who can use information such as speed,
braking distance and lane movement to determine driver
safety and to set appropriate premiums.
More than 75%
of the calls received by the MSXI Technical
Help Desk are related to electronic issues
Autonomous vehicles will generate
4,000 GB
per day... each day
Future automotive trends
Service and maintenance is another area that will be
transformed by connected vehicle data. Eventually, data
analysis will become more automated, relying on machine
learning and artificial intelligence to solve problems before
the driver or dealer is even aware of them. In the not too
distant future it will be possible for a car to not only detect a
malfunction but to schedule a maintenance appointment and
order the necessary parts.
In response, OEMs need to digitalize their technical support
systems since it is impossible for service technicians to keep
up with the increasingly complex technology in cars.
Network systems that enable connection and transmission of
data are also susceptible to malfunctions. Suddenly, it is not
just the OEM who must troubleshoot and fix the problem. The
telecommunication and mobile device companies that enable
connectivity will have to be part of the solution as well.
The revenue potential of the connected car, and its data, could
not come at a better time. Currently, parts sales represent 50%
of margin for most OEMs. Electric cars require significantly less
Source: Intel
MSX International
100%
80%
60%
40%
20%
0
Nascent Disruption End game
Connected cars
(% of new cars sold)
Car sharing
(% of km travelled)
Online carsales
(% of new cars sold online)
Electric cars
(% of new cars sold)
Autonomous cars
(L3/4/5% of new cars sold)
Evolution beyond 2030
highly uncertain
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40
Penetration forecasts INDICATIVE
Note: Connected cars includes systems relying on smartphone connection, Electric cars excluding hybrids; Autonomous car levels: L3: Conditional automation – full autonomy in
selected situations (e.g. highway), driver intervention probably needed, L4 : High automation – full autonomy in most situations, no driver intervention; L5 : Full automation
Source : SBD (connected car); Morningstar (Electric car); Bain research (Online car sales, autonomous car), Morgan Stanley (Car sharing)

Unfortunately, this data is not only valuable to OEMs, suppliers
and third parties. It is also of interest to those who might
use it for less than legal purposes. OEMs and technology
companies are already aware of the challenges of cybersecurity
in connected cars. Using a laptop computer and mobile phone,
hackers were able to remotely gain control of a Jeep Wrangler
and drive it off the road. Future cyber attacks could even disrupt
traffic flow or target an entire fleet of vehicles. Drivers’ personal
data is also subject to the same online vulnerabilities of using a
laptop or smart phone. And theoretically, hackers could use the
car to access the IT systems of the OEM, of suppliers and other
service providers. For these reasons, data security must be a key
consideration as manufacturers move forward with connected
car design. This will be challenging since connected cars are
complex machines with a variety of different digital systems
built by different companies, making it difficult to decide just
who is responsible for developing, testing and maintaining
security software.
Finally, as the amount of data transmitted from connected cars
increases, there will be a major gap in supply and demand of
qualified software developers and IT specialists. OEMs will need
to proactively position the industry as offering a stimulating
working environment for Generation Y technocrats who are
still more likely to look to companies like Google and Apple
as the most promising employers and to Silicon Valley rather
than Detroit. Global conferences like Technology in Motion,
sponsored by MSXI, are working hard to reposition the
automotive industry as an exciting and engaging industry.
Closing the gap between the level of technology in cars and
the ability of OEMs to react at a retail level requires a new kind
of leadership based on novel thinking, decentralized processes
and a high affinity for technology. The connected car is not just
Technical competence in the dealer network
1980 1990 2000 20502010
Time
TechnicalEvolution
Technical competence
in the Dealer Network
– Parts and Service –
“TECHNOLOGYGAP”
Vehicle & Repair
Complexity
Powertrain
diversity
Electrical
components
Connectivity
MSXI Research
a product. It is a set of technologies that completely disrupt
existing business models. Many automotive managers have
spent their whole careers in a traditional retail network. They
will find it hard to make the leap from a hierarchical leadership
model to a more collaborative one that also includes involving
their customers in the product design process. However, this
is the leap that will have to be made to compete in the fast
moving connected business world. At the end of the day, it’s
not selling the technologies of the connected car that will make
OEMs market leaders, it’s selling a premium driving experience
in which digital services are configured to the exact needs of
each driver. As one very wise person once said: “If you do what
you’ve always done, you’ll get where you’ve always got.” It’s a
windy road, but driving into a curve remains one of the best
parts of sitting behind the wheel.

CONNECTED WARRANTY
MANAGEMENT: COST OR
OPPORTUNITY?
Eric Menoret
Vice President and Global Accout Executive
Eric Menoret has been Vice President Retail Network Solutions
at MSXI since March 2011. In this role he oversees the P&L of
approximately 40% of our Retail Network Solutions, where he
contributes to the growth of global OEM accounts such as Renault,
Nissan Europe, PSA Peugeot Citroen, Fiat Auto and CNH. Prior to this
role, he set up a European sales and marketing organization at MSXI
in 2007 and has been with the company for more than 20 years. He
can be reached at emenoret@msxi-euro.com
Connected cars and digitalization are rewriting the
manual on warranty to the benefit of OEMs, dealers
and customers. The future of warranty management
will be driven by artificial intelligence and predictive
analytics. Automated warranty processes will help OEMs
reduce costs by eliminating warranty waste with safe,
effective and compliant strategies. A data driven warranty
management solution further ensures dealers can react
quicker to warranty claims, resulting in a better customer
experience. Dealers also benefit from quicker turnarounds
when it comes to receiving reimbursement from the OEM
on warranty claims. But the future of warranty is not
without challenges.
Inefficencies such as unnesessary or
repeated repair represent the potential for a
30% warranty cost reduction
MSX International
INSIGHT

A 360° warranty management approach
Currently, OEMs employ far too many people to classify the
phenomenal amount of data spread across their organization.
There are many thousands of Project Reference (PR) categories
and searching for diagnostic support data manually is time-
consuming, inaccurate and costly. Adding to the complexity,
data is rarely shared across the organization. Connecting all the
data dots will require OEMs to replace traditional hierarchical
business models with more agile, flat ones. They will need to
eliminate data silos, not only to communicate more efficiently
with customers, but also to improve knowledge sharing across
divisions in real time. With predictive analytics and robust digital
platforms, OEMs can integrate customer, vehicle, technical and
financial data to further streamline the warranty process.
Evolution of warranty management
The Past
Today The Future
Tomorrow
Artificial
Intelligence
TheFuture
Warranty is managed
and approved by the
OEM field teams and
considered a “driver”
of dealer satisfaction
Increased tendency
to outsource the
warranty management
process to allow field
teams to focus on
core service and parts
Data analytics drive:
¾Focus on critical dealers
and components
¾Efficiency in the warranty
management process
¾Optimization of claims
filtering and continuous
improvement
The role of Artiﬁcial
Intelligence
¾Early identification of
concserns – prognostic
¾Leaner diagnostic process
based on natural language
Warranty is an integral part of the customer journey
Connected cars will be able to proactively alert OEMs and
dealers to failures in the car so they can be fixed earlier in the
process when they are less expensive and time consuming.
MSX International
MSX International
70%
of vehicle failures are electronic and
could be avoided by doing regular updates
For example, OEMs will be able to identify a defect and send
a software upgrade directly to the vehicle. Tesla is doing this
already. When customers complained about a software upgrade
in their cars, Tesla offered individual drivers the option to
respond digitally with a simple yes or no if they wanted to reset
the software. It was then done automatically without the driver
having to come in for service. This is the speed of service and
level of customer convenience required in the future.
In another scenario, data identifying a malfunction to a system or
component will initiate an automated repair process. The driver
will be notified and provided with options for a service visit. The
dealership and technicians are also notified and the necessary
parts ordered so that everything is ready to go when the driver
arrives. Finally, thanks to predictive analytics combined with the
automatization of diagnosis, customers will benefit from fix-it-
right-first-time servicing. A win-win situation for everyone.
95.1%
of dealers are satisfied with the
MSXI warranty management solution
However, managing and interpreting data requires a different
skill set, meaning OEMs will have to hire talent adept at
digitalization and further educate existing staff. The collecting
and collating of massive amounts of data can also contribute
to helping OEMs reduce warranty fraud, an issue that can
cost OEMs up to 5% in profits annually. However, the greatest
potential for driving efficiency, cost reduction and customer
satisfaction will be realized through the connected car itself.
MSX International

Predicting and preventing future warranty challenges
Many of these possibilities are still on the horizon. In the
meantime, OEMs and dealers will have to navigate a period of
transition as the industry moves from the internal combustion
engine towards electrified and, eventually, fully autonomous
vehicles. At least for the next 12-15 years, the focus will continue
to be on servicing warranties for combustion engines, albeit
with increasingly complex technologies and stricter regulations.
So even with improving quality, warranty costs are likely to
go up. Another issue to be tackled is the shift from private to
Warranty process improvement - MSXI warranty BPO
Assessment
Pre Authority
OEM
Warranty
System
Pre-Audit
Audit
Warranty Policies & Procedures
Continuous
Improvement Process
Business Inteligence
Warranty Data-Mart
Audit Report
Audit Chargeback
Pre-Audit Visit Report
Pre-Audit Action Plan
Pre-Audit Chargeback
Pre-Authority validation
Pre-Authority Ass. nt
Claims
validation
Blocks
Matrix
impl.
Dealer Selection
Pre-Audit Visits scheduling
Audit Visits scheduling
Spot Audit visits scheduling
Pre Authority selection
Claims Assessing guide lines
Network Ass.ment
Network Needs
Network feedback
Network Training needs
Training modules contents
Technical bullettin
Standard
Report
Ad Hoc Report
& Analysis
Training
NetworkSupport
Markets
Networks
Evaluation
&
Real Time
Action Plan
MSX International
shared mobility models. With shared ownership, vehicles are
driven more frequently, leading to more wear and tear, earlier
in the lifetime of the vehicle. This muddies the waters of liability
in the case of an accident. OEMs, tier ones and insurance
companies will have to rethink how they partner to managing
warranty liability. Finally, OEMs will need to harness the power
of cognitive analytics to access, manage, analyze and, most
importantly, to learn from the massive amounts of structured
and unstructured data relevant to warranty management.
MSXI has been able to reduce
speed of claims payments from
23 to 4.3 days
MSX International

Digitalization is at the heart of connected cars, but also
extends far beyond them. Digital disruption is speeding
up innovation and changing traditional industry models.
From retail strategies to the driving experience itself,
the automotive industry will have to become leaner,
more agile and more responsive to survive in a rapidly
changing, dynamic market. However, putting technology
first will open the doors to new products and different
ways of generating value. OEMs will be able to customize
and improve the driver experience in unprecedented ways.
Data will allow them to predict what customers want and
to adjust manufacturing to meet those needs. To remain
competitive in the age of digitalization, OEMs need to
build up their expertise in three main areas: customer
experience, operations and digital business models.
AUTOMOTIVE HAS
BECOME A DIGITAL
BUSINESS
INSIGHT
Brendan Walsh
Global Vice President and
Chief Digital Officer
Brendan Walsh was named vice president and chief information
officer at MSXI in April 2013. In this role, he is responsible for global
information technology strategy and operations as MSXI continues to
identify means by which technology based solutions can differentiate
the company in the marketplace, and create value for customers and
shareholders. He can be reached at bwalsh@msxi.com.
Market research indicates that by moving at
speed to build new eco-systems, any
automotive brand could boost profitability
by 6.5 percent by 2020 – and by
2025 it could be generating as much
as US $ 2.8 billion in new value
Source: Accenture

Digitalize the customer experience
In the age of digitalization, the value proposition will change
as the industry transitions from a model of individual vehicle
ownership to one of mobility solutions. Consumers will be less
interested in owning a vehicle, choosing instead to pay for
mobility that is safe, ecological and digitally integrated with
other parts of their life.
For businesses, like Uber and Lyft, who already offer mobility
services, uptime will continue to be a key consideration. OEMs
are ideally positioned to service these mobility service partners
– and their own mobility fleets – with vehicle and driver data
that allows them to predict, diagnose and fix vehicles quickly to
keep them on the road generating revenue.
Digitalizing the customer experience requires targeted and
tailored two-way interactions with each driver – on a large
scale. The ability to do this well, however, is contingent on
consumer approval. Private and business customers will want to
know that their data is safe. The connected car, like any digital
device, is susceptible to security breaches which put personal
and proprietary data at risk. Ransomware that disables vehicles,
identity theft and remote hijacking of vehicles systems are real
threats that need to be addressed. Cybersecurity will become as
important as vehicle safety.
OEMs and tech companies will therefore have to offer
compelling reasons to consumers for sharing their data such
as individualization, cost savings and safety. The more data
they have at their disposal about driving habits and predictive
maintenance needs, the better OEMs can personalize and
streamline customer service – parts can be ordered in
advance of a maintenance visit, insurance premiums can be
automatically adjusted to reward safe driving and OEMs can
suggest upgrades based on customer usage. Knowing more
about how or where or when drivers are operating their
vehicle can also enable solutions that prevent accidents and
collisions. However, it will take more than good data analytics
to be successful. It will require a shift in mindset and culture as
well. OEMs and tech companies will need to pursue thoughtful,
purposeful and responsive applications of technology. They
will need to design new roadmaps for ensuring they connect
with customers at all touchpoints – online and in digitally
enhanced dealerships. And they will have to ensure that these
solutions serve business interests in a way that is profitable.
Digital strategy framework
+18.8%
+6.5%
+17,5%
1 | Partial
digitization
2 | New business models
Internal focus
Digital
enterprise
Digital
business
Strategic options
Value areas
1. Partial digitization
Realize EBITDA opportunities through
digitization of existing value chain
Realize EBITDA opportunities through
development of new revenue streams
enabled by a new value chain
Apply digital technology to adress
customers in a more sophisticated way
in increase revenues and profitability
Decrease costs of the existing value chain´s
primary functions (e.g. R&D) as well as
support functions (e.g. HR)
Digitize your current business model or
develop new business models generating
profits based on digital technology
2. New business models
Digital customer
Digital enterprise
Digital business
Digital
customer
Digitize
operations
Digitize customer
experience
Disrupt
(Sub-) Market(s)
Source: Accenture

New business model strategy – 2020 Market / EBITDA potentials
NEW BUSINESS MODELS +6,5% in EBITDA
TRADITIONAL AUTOMOTIVE
+5,2%
CONVERGING MARKETS
+1,1%
ENABLING MARKETS
+0,2%
Mobility on Demand
 B2C Car Sharing
 Peer-to-Peer Car Sharing
 Intermodal Travel Platform
Car Sales
 Autonomous Driving
Living Brands
 Digital Service Platform
Connected Car
 Connected Car
Vehicle-related Services
 Open car/Mobility App
Platform (App Store)
Connected Car
 Vehicle Data Monetization
 Vehicle Monetization
Digitalize operations
The way forward will come at a cost. Investment in R&D will
expand even as profit margins are squeezed. As OEMs focus
on their core business of delivering more fuel-efficient vehicles
with a higher degree of automation, they will be forced to find
ways to maintain and grow revenue and profit. The future will
include streamlined dealer networks and sales channels. This will
probably result in less full-time employees due to the increase
in digital and data-based services. Processes and services for
monetizing the terabytes of data generated by their vehicles
and consumers will be optimized to enable fast, data-driven
decisions (e.g. predictive analytics). Data will become the new
dollar. We will also see new profit opportunities for OEMs
as they enter a broader ecosystem of partners and a highly
connected digital community. Digitalization will also result in a
shift from applications to multifunctional platforms capable of
supporting a broader range of uses. As the Internet of Things
becomes more mature, data from sensors in cars, in cities and
weather data will be consolidated to eliminate rush hour grid
lock or to calibrate an autonomous vehicle to the weather
conditions in which it is driving.
Digitalize business models
Add-on services, digital service platforms, digital applications
and mobility options are all examples of how digitalization
will define future business models in automotive. How can
OEMs and dealers make the right decisions at a pace that is
competitive and profitable to emerge as the market leaders in
this new digital mobility space?
Data can be an early indicator of trends and customer
expectations. But data is only useful to OEMs if they can
collect, analyze and respond to the growing scale, diversity
and complexity of data. Digitalization will increasingly bring
intelligence into things, systems and processes, offering
OEMs invaluable insights into how to design future products,
services and experiences. We are already seeing the growth of
digital labs in the automotive industry and the integration of IT
into other divisions such as sales and strategy. OEMs are also
receiving valuable data from warranty, technical helpdesks,
parts and service. At MSXI we are actively supporting many
OEMs with analytical and transactional digital platforms.
However, although many OEMs are partially digitizing key areas
of their business, few are moving fast enough to unlock the
full value potential of digitalization. What’s more, they need to
get up to speed and digitize their business models to protect
their established business domain form outside industries,
particularly from the technology sector. The trick will be to
know where they want to go and to develop a competitive
digital strategy. The digital road is bound to be bumpy at first.
OEMs will have to find ways to to separate valuable signals
from the noise. But if they make digital integral to their
business, the rewards will be groundbreaking.
“You don’t need a digital
strategy, you need a business
strategy for the digital age.”
– Judy Goldberg / Sony Pictures
Source: Accenture

With companies like Apple, Google, Uber and Lyft poised
to disrupt the automotive industry, it’s easy to think
the future is in Silicon Valley. While it’s true that Silicon
Valley will be a major force as connected cars evolve,
David Graff, Vice President of Sales at MSX International,
champions a different view. He believes the future of
automotive technology and innovation is in Detroit, a city
we’ve seen go from robust to ruin, from bailout to revival.
What’s more, he’s convinced Detroit is the place to be for
young engineers and developers looking for an exciting
career future, characterized by leading-edge technology,
innovation and entrepreneurship.
David recently spoke to us about TIM DETROIT, a three-day
summit from Sept. 6-8 at the Cobo Center in Detroit, and
why he believes the Motor City is just starting to rev up its
engines.
TECHNOLOGY
IN MOTION (TIM)
STRENGTHENS DETROIT’S
REPUTATION AS THE MOBILITY HUB
David Graff
Vice President of Sales
David Graff was named the vice president of sales, Retail
Network Solutions (RNS) at MSXI in October 2013 and is
responsible for the company’s sales strategy and execution
for global automotive accounts. He has extensive experience
throughout the manufacturing field including automotive,
industrial equipment, aerospace and technology and can be
reached at dgraff@msxi.com
“70% of the US-based
auto-tech research happens
within 100 miles of Detroit.”
What is Technology in Motion?
Technology in Motion, or TIM, is the largest mobility tradeshow
in North America, sponsored by MSX International and Crain
Communications Inc, publisher of Automotive News and Crain’s
Detroit Business. It brings together OEMs, suppliers, technology
companies and investors actively involved in shaping the future
of connected cars, autonomous driving, new forms of mobility
and powertrains. It links start-ups with ride sharing companies
and Detroit’s traditional strengths in automotive with higher
education and RD.
INTERVIEW

We expect between 300 to 500 industry professionals to
participate in our four-track conference focused on the
consumer experience, connected vehicles, autonomous/electric
vehicles and mobility solutions. We are also highlighting young
talent and will be hosting more than 10,000 students from local
high schools and universities interested in future careers in the
dynamic automotive technology space.
Why the conference?
I came from Microsoft and worked with Crain for years. Ten
years ago, we were using a version of Windows to develop
the operating system for the head radios in cars. This was the
advent of the connected car and vehicle generated data. Since
then, the technology has exploded with exciting opportunities
and challenges. TIM offers a platform for bringing together the
best thought leaders from Silicon Valley and Detroit together as
well as putting Detroit back in the driver’s seat when it comes to
innovation in automotive technology.
When we think high tech, we think Silicon Valley.
Why locate TIM in Detroit?
Media attention has shifted from Detroit to Silicon Valley but
the truth is that a lot of the tech that is developed in Califronia
is ultimately refined, tested and deployed in Michigan.
In fact, 70% of the US-based autotech happens within 100 miles
of Detroit and 61 of the top 100 suppliers have their headquarters
in Detroit. Furthermore, Michigan is the number one employer
of industrial and mechanical engineers. Unfortunately, not a lot
of people know this, especially young engineers and developers.
The young talent is focused on Silicon Valley?
There is a battle for talent. Everyone is going after the best and
brightest and what we are trying to say is that if you are a young
engineer or developer or finance professional and you want a
high tech career, it is right here in the automotive industry in
Detroit. You don’t have to move to Silicon Valley. There is a lot
of ground-breaking work in the areas of software development,
applications, sensors and, green technologies happening here.
Detroit has everything that millenials are interested in.
And all of this amazing design, innovation and thought
leadership will be on full display at TIM.
Let’s talk more about TIM. Who will be attending?
The conference attracts four different groups: OEMs, suppliers,
tech companies and start-ups. It’s a great opportunity to see
what’s happening in automotive and to problem solve the
challenges of an industry that is growing and transforming at
an exponential rate.
There will be exhibitors from across the industry and speakers
include Matt Simoncini, CEO of Lear Corp. and Mike Ableson,
vice president of strategy at General Motors. Both companies
are Technology in Motion exhibitors and sponsors.
But there is more than exhibitions and
presentations.
Exactly. There will be a Start-Up Village where companies
demonstrate the latest technology and innovation happening
in the industry. They will be able to present their solutions in a
“Shark Tank” style competition. We will also host a hackathon
where engineers and developers can compete to solve some
unique technology challenges.
The conference is not just for industry professionals. While
this is not a job fair, we have created opportunities for high
school and university students to enter into dialog with start-
ups and industry professionals. On Wednesday afternoon, Go
Mobile will host a STEM (Science, Technology, Engineering
Math) inspired discussion about careers in the automotive
industry.
How do you see Technology in Motion evolving?
In the very near future we see TIM taking on more of a South-
by-Southwest style experience that integrates music, art, food
and hands-on demonstrations. We’ll shut down the streets
of Detroit to give participants the chance to experience the
latest technologies in the real world.
The ultimate goal is to eventually create a week-long
technology fair with Technology in Motion at the center,
driving thought leadership in the areas of autonomous
vehicles, mobility solutions, electric vehicles and digital
consumer engagement.
Anything else you can share at this time?
There will be a few surprises. Some OEMs are reporting that
they will make some major announcements at the congress.
That should be intriguing to everybody.
Technology In Motion
n Detroit Michigan
n Cobo Center
n September 6-8, 2017
The largest mobility tradeshow in North America
Find out more at www.timdetroit.com

Find the car. Buy the car. Drive the car. Fix the car. Look for
a new car. Repeat.
Forget everything you know about manufacturing, marketing and
selling automobiles. It’s all changing right now. Driving this change
is the emergence of new technologies, clean energy requirements
and consumer experience. OEMs, tier one suppliers, dealers and,
of course, car owners will find themselves at the epicenter of this
transformation, wondering what the new world of driving will
look like and, more importantly, how to navigate the road ahead.
Wherever that road leads, traditional business models will be
rendered obsolete as the driving experience evolves. In addition
to competing against each other, OEMs will also be in competition
with other types of businesses vying for potential customers –
many of whom are already established in the digital space.
WHO’S DRIVING
THE CUSTOMER
EXPERIENCE?
Rob van Rijswijk
Global Director Business Development
Rob van Rijswijk leads the MSXI Global Solutions Team. He is
responsible for developing and positioning the full range of
MSXI products and services. Rob has a deep passion for strategic
innovation and he works alongside the organization’s global
account executives, helping them add value to a growing global
client base. Rob is based in Cologne, Germany and can be
reached at rvanrijswijk@msxi-euro.com.
72%
of consumers feel that an improved buying
process would motivate them to visit
dealerships more often
Source: Car Buyer of the Future, AutoTrader, 2015; The perfect landing: an
engaging customer experience EY, 2014
70%
of organizations believe that an increasing
emphasis on customer experience
is driving business growth strategies
INSIGHT

As this evolution unfolds, consumers will no longer buy just
a car. Instead, they will demand a digitally enabled mobile
experience profoundly different from anything that has come
before. This new driving experience will be a confluence of five
major forces – the connected car, integrated sales and service,
electrification, shared mobility and, the autonomous automobile.
Engaging consumers in this new world and delivering on their
expectations in a way that is relevant and profitable will require
an epic rethink of the automotive industry.
Recent market research done by McKinsey examined purchasing
decisions of almost 20,000 consumers across five industries and
five continents. It showed that brands need to find new ways
to get themselves included in the initial consideration set that
consumers develop during their purchasing decision journey.
Some of these changes are already underway. The industry has
moved from a product-centric, mono-channel sales model to a
customer-centric smart ecosystem that integrates the dealer-
based purchase of a car with other elements that are central to the
consumer’s life: digital apps, services and brand engagements
that enhance and personalize the driving experience. The good
news is that almost all OEMs already have an ever expanding
database of customer and vehicle data at hand.
A good example is Mercedes Digital One, a new internal
structure that merges IT, marketing, service and sales into one
division. Another is Lynk Co., who is designing vehicles with
an open API, shared services and a dedicated app store for cars.
These services are synced to the connected lives of millennials.
They have essentially turned automotive design on its head by
building the car around the tech instead of layering tech on top
of the car.
To meet the demand for more personalized, brand-oriented
offerings, OEMs and dealers will also need to streamline the
buying experience, integrating more products and services into
the process. The Brand and Business Delivery Centre will emerge
as a place where consumers can buy a vehicle and the myriad
of new offerings that will be associated with a new vehicle
purchase. The digital and physical aspects of researching, buying
and servicing vehicles will be more fully integrated in a way that
satisfies all consumer wants and needs. It’s currently unrealistic
to think that the dealership network concept as we know it will
succeed in being available to customers 24 hours a day, seven
days a week, 365 days a year. However, there are six ways they can
close the availability gap:
n Consolidate inbound call centers for informational requests
with outbound call centers into one customer engagement
service center focused on speed of response
n Integrate artificial intelligence tools to quickly and accurately
identify and analyze the right data to keep pace with the
increase and diversity of service requests
n Change the distribution strategy by adopting a dual system
with both traditional dealer networks and a digital, direct-to-
consumer retail model driven by vehicle and customer data
nStrengthen collaboration with external vendors to expand
customer service help with digital applications within vehicles
n Develop a seamless payment system as part of in-car
connectivity to speed up service transactions
n Reduce model variations and concentrating value on a limited
number of high quality, thoroughly tested options
Dream, discuss,
consider, evaluate
Personal research
Digital billboard
Viral email
Online adds
3rd
party sites
Web site
Smartphone App
Tablet App
Chat
Instant messagingEmail Email
NewsletterBlog
Web site
TV, radio
Outdoor
Word of mouth
Dealer
Dealer
Call centre
Call centre
Call centreGenius live chat
Genius live chat
Dealer
Direct mail Direct mail
Genius live chat
Call centre
Awareness Consideration Purchase Service Loyalty
Physical and digital customer journey
MSX International

How will OEMs and dealers profit in this dynamic
retail environment?
With the mobile digital experience, where cars, smart phones
and sensors in smart cities are fully integrated, an abundance of
data will be generated. This wealth of information can be used
to further customize and monetize products or services such as
maintenance or entertainment packages. Data can also be sold
to third party vendors. Further down the road, dealers may not
sell cars to individuals at all. Instead, they may offer mobility
packages where vehicles are shared between individuals to use at
different times for different purposes.
Fleet sales and maintaining mobility parks in urban areas will be
potential revenue drivers. Service will remain critical, with vehicle
and customer data generated by connected vehicles opening the
door to predictive and prepaid maintenance.
And what about the design and manufacture of the vehicles
themselves? Electrification and autonomous will change cars as
we know them. Fossil fuels will become history and we will need
more efficient batteries and a fast, reliable charging network
broadly available for long-range travel. And the autonomous car
will eliminate the need for a driver, thus creating the opportunity
for an in-car experience that engages passengers. As we
relinquish the wheel, the grip of the mobile digital experience
will only tighten.
To stay at the forefront of this new driving experience, OEMs
will no longer view engineering as its leading core competency.
They will have to expand their philosophy to include a sales
and marketing mindset, one that sees the world from the user’s
perspective and is able to design a machine that more offers
comfort, engagement, efficiency and safety.
As OEMs and dealers navigate the road ahead, they will have to
see the new vehicle owner or user in new ways. They will have to
ask important questions if they are to survive in this changing
world.
Four customer experience challenges for connected cars
1 Accessibility
2 Touch-points 3 Analytics
4 Integration
When a driver wants to buy
or service their vehicle,
how do we make it possible for
them to do so anytime of day,
anytime of year?
The road will always be there. How we drive it is changing like never before.
How do we integrate all touch-points,
both digital and physical, into a seamless,
360° experience and how do we ensure
that every touch point is relevant?
How do we utilize the data coming
from vehicles and drivers to improve
the brand experience for the customer,
to the point where we are addressing
customer needs before they are even
aware of them?
How do we integrate traditional
practices like engineering, IT,
sales and marketing into a new
design and manufacturing
paradigm that is able to
deliver the driving experience
of tomorrow?
MSX International

PIONEERING PARTNERSHIPS
AT THE WHEEL OF
SMART MOBILITY
Hans Kwaad
Chief Business Development Officer,
AutoBinck Group NV
Hans Kwaad is a true pioneer in smart mobility business, responsible for
strategy, innovation and business development at the Netherlands-based
AutoBinck. He established and heads a new division within the AutoBinck
Group called Smart Mobility which invests in start-ups and scale-ups active
in new areas of the mobility industry. Under his leadership, AutoBinck has
also started several start-ups of their own, which are also part of the Smart
Mobility Division. He can be reached at hkwaad@autobinck.com.
Hans Kwaad, Chief Business Development Officer, AutoBinck
Group NV, spoke with us about his company’s new Smart
Mobility Division and their pioneering investment strategy
in start-ups and scale-ups active in new areas of the mobility
industry.
What impact will connected cars have on
dealerships?
For dealerships, it is all about getting a grip on the customer to
increase retention. To engage with customers when they need
a new car or get them in for maintenance and repairs before
someone tries to steal that customer. Access to data about where
the car is, how it is driven and when it requires maintenance can
help dealers vastly improve customer relationships. For dealers,
this will be the main opportunity from connected vehicles.
What is the recipe for dealers to achieve this?
Vehicle data and new business models offer enormous possibilities
for generating revenue from connected cars. However, dealers
won’t benefit directly from this. They will have to find ways
to access the data. OEMs, of course, are now trying to design
connected cars in a way that ensures they have sole access to
the data, giving them ultimate control over the customer for
as long as they are the original owners. However, in the future,
more and more cars will be sold to mobility providers and leasing
companies, raising the question: Who has access to the data and
can use that data to steer customer behavior?
“The next 10 years will see a
massive shift from buying cars to
using mobility services.”
INTERVIEW

AutoBinck has a unique smart mobility business
model based on partnerships and investing in
start-ups. What key learnings would you share with
OEMs?
We followed major trends in the mobility industry. We were
uncertain at what pace these trends would develop but we
were sure that car sharing models would heavily pressure our
110-year-old traditional business consisting of dealerships,
distributors, parts, etc. However, we recognized that it made little
sense for us to start a mobility business ourselves but rather to
invest in a minority share in innovative start-ups in the mobility
field. This allowed us to link our traditional business to these new
companies to learn a lot and to develop new business models.
We bundled these investments into our Smart Mobility Division.
As a result, I believe we are more future-proof as a company.
Is this approach scalable to OEMs or is this the
advantage of a more agile company like yours?
The latter. OEMs are used to run the show, to have the power in
the industry. It was all push driven to ensure that the factory was
running at maximum capacity to maintain highest level profits.
Now we are moving into a world where mobility will be driven
by mass, mobility as a service. New players will be directing the
show and OEMs will start to lose control of their business. They
have seen this coming and are now trying to position themselves
as hardware providers to mobility service providers such as Uber
or Lyft. The problem is that these providers don’t care if they
drive a Volvo or a BMW. They see a car as a commodity that takes
people from A to B at an affordable price and level of comfort.
Then the OEM is no longer in the driver’s seat – they become
one supplier among many. Rather the mobility providers will
be buying huge volumes of cars – say 10,000 at a time – and
negotiating price, what data they want, what platform they want,
maintenance contracts, etc. To be fair, some OEMs are also trying
to reposition themselves as mobility providers but we will have to
see where that goes in the future.
Does this create a wider gap between dealers and
OEMs?
This dilemma will bring them closer together because they are in
the same boat, battling for customers against mobility providers.
For example, in the Netherlands, it is becoming increasingly
popular to buy mobility subscriptions rather than buying a car
from a dealer. Mobility service providers will still buy cars, but at
larger volumes and manufacturer direct – skipping dealerships
altogether – to get a bigger discount without any loyalty to a
brand.
You have embraced this technology topic instead
of competing against technology companies. Can
you talk about the criteria for choosing the partners
you are working with?
We researched mobility and looked for partners who were
market leaders or a company close to being a leader in one of
the mobility domain trends that we researched. One trend is the
move from owning a car to having access to mobility. We wanted
to invest in car sharing, but investing in asset based car sharing is
not interesting enough since usage is still too low to make money.
It had to be a peer-to-peer company. So we invested in SnappCar
which is the number two platform in Europe and number three in
the world – well positioned to become one of the major players
in the industry.
What kind of mindset do you need as a company
to make this happen? How is your mindset different
than that of OEMs?
OEMs have a legacy based on huge investments in factories. They
can’t just become mobility providers. As a trading company, we
are much more flexible. We also strongly believe that the next 10
years will see a massive shift from buying cars to using mobility
services. We see the need for change in strategy during a time
when technology is making new business models possible.
We spend a lot of time in the car – if we can provide in-car
entertainment people will consume content and vehicles and
their drivers will produce data. These are only two of the many
ways you can make money from mobility rather than just from
the car itself. This is a new way of thinking about mobility. The
Rethinkx Report which came out in May 2017 predicted that in
13 years, 95% of every mile that will be driven, will be driven
in an electric, fully autonomous shared pod. This will turn the
industry upside down. It sounds extremely disruptive. Nobody
knows if this will happen within that time frame, but for sure we
will move in that direction so it is better to start your learning
curve now and make radical choices today. Otherwise you can’t
bring a company into the new generation.
How has mixing automotive with technology people
together affecting your own corporate culture?
It’s more the digital opportunity that opens people’s eyes if you
are willing to think outside the box. Than you come up with new
business models based on things like alternative energy sources
or lower maintenance and fuel costs with shared cars being used
44% rather than 4% of the time. This represents a huge shift in the
cost of mobility. It’s a big ecosystem coming together to speed
up innovation. You have to connect the dots to come up with a
new possible future. And you have to invest the profit you make
in traditional business into these new areas to explore rapidly
growing trends. In five years, it will be too late.
Established in 1907
50 subsidary companies
2,700 employees worldwide
Active in 8 countries
€ 1.2 billion annual turnover
€ 800 million assets
28% solvency
About AutoBinck Group
www.autobinck.com

Despite significant changes in the automotive retail
landscape, dealerships remain at the heart of the operating
model. Customers rely on dealers to help them weigh their
options, for test driving, for fulfillment, and for quality
vehicle servicing. However, to remain profitable and
competitive in the long term, dealers need to rethink their
current business model. For many traditional dealership
networks, this requires a radical shift in mindset.
DEALER PROFITABILITY:
CAPITALIZING ON CONNECTED
CAR REVENUES
Greg Strydom, PhD
Head - Solutions and Innovation
Greg Strydom leads a global team of subject matter experts
developing solutions, approaches and technology to address
the opportunities and challenges in the auto retail domain.
Greg also leads the Performance Consulting Practice and
works closely with the company’s strategic clients. Greg is
based in Melbourne, Australia and can be reached
at gstrydom@sewells-msxi.com.
Source: McKinsey and Company – Innovating Automotive Retail
In China, the number of car dealerships
has more than doubled in the last 5 years,
while in the U.S. and Europe
it has fallen by15%
INSIGHT

» Intelligent business mix
Dealers need to rethink their current business mix, taking
action to proactively shift the balance of their operations
to capitalize on the larger margins resulting from parts and
service. A tell-tale sign of a healthy mix would be an overall
gross profit to Sales percentage between 15-18%.
» Disciplined investment
In the short term, forward thinking dealers should be
seeking to retain around 20% of their gross profit. This is
not easy and will require discipline and a concerted drive to
off-set expenses with productive sales efforts. They should
also be looking to invest in new facilities, technologies and
staff training to make the shift from pure bricks-and-mortar
to a 360° omnichannel, customer-centric environment.
» Healthy sales activity to investment ratio
To remain profitable and grow their business, dealers must
actively monitor the relationship between their operating
investment and their annual turnover. The goal should be
to generate six to eight turns per annum.
» Increased staff productivity
Personnel costs remain one of the largest expenses faced by
dealers. Ensuring that the investment in manpower pays off
is critical. A recent MSXI benchmarking analysis of mature
market dealerships found that profitable dealers produced
monthly Gross Profit per employee of over $10,000.
The four key drivers of dealer network profitability
For the most part, dealers around the world are engaged as
independent franchise investors. Profitable dealers tend to
focus their efforts on looking after customers and employees,
while at the same time gearing themselves up to invest in
any opportunities that the business landscape may present.
Unprofitable dealers, by contrast, represent a major risk to
everyone. As profits spiral downward so does their loyalty to
the brand. They stop following processes, stop investing in
infrastructure and employees, and become unable to address
customer needs at the level required. In our experience, there
are four key drivers of dealer profitability which serve as
signposts for healthy returns.
Connected vehicles open up new revenue streams
Cars are fast becoming an important part of the Internet of
Things, opening up significant possibilities as connected data
platforms. As such, they represent a financial opportunity for
the broader auto industry. However, the question will be about
how (and if) dealers themselves stand to benefit.
Vendors who design new digital applications for connected cars
will realize added revenue. Dealers, on the other hand, will only
realize revenue from the connected car when they learn how
to capitalize on the steady, predictable stream of data being
generated. For example, the real-time feedback loop regarding
service needs and vehicle driving habits, has the potential to
make resource planning and skill matching more effective.
Other possibilities lie in the area of up-sell and vehicle
replacement. Cars will generate significant information relating
to usage, driving experience and safety, providing drivers
with a nonpartisan perspective relating to product upgrades,
enhancements and even replacement. This takes the pressure off
dealership sales teams but increases the pressure for dealerships
to provide the quick, accurate service the connected consumer
expects. This includes leveraging the increased efficiency offered
by the connected car for in-car service booking and credit card
payment processing.
Finally, dealers will have to set their sights higher up the value
chain to take advantage of the revenue streams from data
application support, or even application creation.
OEMs play an important role in supporting dealer
profitability
Unlike franchisees in other industries, automotive franchisees
value their independence and sometimes follow different
processes that can lead to an adversarial relationship with their
OEM.
As connected cars make the business more complex, OEMs and
dealers will have to standardize and streamline decision-making
and resource allocation as well as newly defining roles and
responsibilities within the dealer network structure. OEMs will
also have a key role to play in providing dealers with actionable
data intelligence such as benchmarks and performance data on
which they can build their business models, set incentives and
drive performance. Finally, dealers will require OEM support for
investment in connected infrastructure and skills.
At MSXI we work with OEMs and dealers, helping them actively
address network profitability challenges by collecting, analyzing
and benchmarking data, and then showing them ways in which
they can act on that data to achieve improved performance
outcomes. Whether the answer is mapping out a network-wide
plan to address dealer viability or simply sharing best practices
relating to connected vehicle revenue generation, we always
look forward to adding value.
Source: MSXI Dealer Benchmark (based on top quartile of reporting dealers)
Retail automotive dealers should be striving to
achieve 2 or 3 times the cost of funds as
a minimum return on their operating investment

Opportunities and challenges moving forward
In mature markets, the willingness to embrace and invest in new
technologies related to connected cars and autonomous driving
is there but legacy technologies are slowing dealers down.
Emerging markets have the advantage of investing in the right
technologies from the onset, but often face the challenge of a
customer base that lacks access and financial means.
Shifting
consumer
behaviour
Shifting
retail
models
Shifting
legislation
Shifting
OEM
incentives
Shifting
vehicle
technology
Shifting Consumer Behavior
Information has become democratized, and
consumers are very comfortable doing their own
research through different channels. This culture
of autonomy and choice has resulted in a shift in
power and the emergence of new customer loyalty
drivers. In just one of many examples, MSXI recently
interviewed a Toyota dealership that is selling
vehicles with free servicing, but whose new vehicle
customers are still not returning to their workshop.
This has much to do with the fact that switching
costs are low and that competitive offers related
to vehicle ownership, trade-in values and financing
arrangements, are being aggressively presented as
compelling alternatives.
Shifting Retail Models
Traditional franchise dealer models are under
attack from alternative car buying experiences and
business frameworks such as Rockar – a multichannel
used vehicle superstore that has also opened pop-
up digital experience stores – the Rockar store in
the Bluewater Shopping Centre in Kent in the U.K.
reported more than 100,000 customers over their
first six months of operation.
Shifting Legislation
Dealers have been extremely reliant on
supplementary income sources such as finance and
insurance, extended warranties and aftermarket
applications. These back-end income models are
now under threat as legislative bodies investigate
the impact on consumers and explore ways in which
to protect them, potentially limiting profit making
opportunities.
Shifting OEM incentives
OEMS are starting to actively explore and implement
variable margin programs whereby dealer profit
margins are linked to processes, customer feedback
and compliance-type outcomes. Dealers are being
rewarded not just for how many vehicles they sell,
but for how effectively they position the brand.
Shifting Vehicle Technology
Vehicles are changing in significant ways
through autonomous driving technology, electric
powertrains, hybrid power sources and connected
driving ecosystems. This impacts employee
recruitment and training and results in longer
service intervals.
Five disruptors shape the way forward
MSX International

No other country in the world has as intimate a
relationship with the automobile as the United States. To
say that they have had a ‘love affair with the automobile’
is an understatement. The pick-up truck, the muscle car,
the station wagon and the minivan were all products of
a love between the spirit of adventure and the pursuit
of the American dream. The auto industry captured the
country’s hearts and minds, and created a new lifestyle and
a way to connect. It also created and solidified America’s
reputation for innovation and market dominance. Now
internet technology provides the industry new ways to
innovate and transform the way we love our vehicles.
By 2020, 75% of new vehicles sold will be shipped with
Internet connectivity (Source: BI Intelligence), making the
connected vehicle mainstream. Looking forward, what
SPOTLIGHT USA
AUTOMOTIVE LEADER STILL KING
OF THE ROAD IN THE AGE OF
CONNECTED VEHICLES
will the arrival of the connected car mean to the U.S.
marketplace? What must OEMs and tier one suppliers do
to thrive and prosper, and continue to capture the hearts and
minds of current and future consumers?
Andrea Sorrenti
Vice President North America
Andrea Sorrenti has been Vice President of Retail Network Solutions
in North America since October 2010. In this role, he is responsible
for managing operations and customer relationships. In the first
quarter of 2015, Andrea was also named Global Account Executive,
coordinating worldwide sales and operations for one of MSXI’s major
customers. He can be reached at asorrenti@msxi-euro.com
BY 2020, 75%
of new vehicles sold will be shipped with Internet
connectivity (Source: BI Intelligence), making the
connected vehicle mainstream
INSIGHT

USA Germany Japan China
countryperformance(innovationindexpointsIIP)
South Korea France India Italy
100%
90%
80%
70%
60%
50%
40%
20%
10%
0%
30%
1
2
3 4
5
6 7 8
69%
59%
49%
45%
24%
19% 15% 14%
Maximize the use of data to reach consumers
The adoption of this technology will pave the way for
companies that collect vehicle data to reach consumers, better
understand their needs and capture new revenue streams
generated through mobility, personalized services, and
advertising.
As they face this transformation, in addition to revenues from
the traditional transaction on the sale of the vehicle, parts and
FI, the industry players will have to find ways to monetize
every mile driven. Companies will be competing for a share of
the consumer’s wallet and will have to act quickly enough to
meet the needs of the connected mobility consumer.
Improve the customer experience during sales and
service
The competitive advantage of the OEMs will continue to lie in
the relationship with their existing customers and the footprint
of their dealer networks. Cars need to be delivered and
serviced and this may represent a significant barrier to entry
for new players. Furthermore, if the current relationship can be
strengthened through an outstanding customer experience,
enhanced by access to data, the competition will have to fight
harder to win.
Today, dealers collect and own most of the consumer’s data,
but as they gain access to connected vehicle information, OEMs
will be able to establish and sustain a more direct connection
with the consumer. Although the dealer will continue to manage
the face-to-face interaction, the OEM will be able to provide
insights into consumer needs and behaviors, offering more
customized experiences and services throughout the vehicle
lifecycle. In order to accomplish this, OEMs will need to learn to
better leverage data to their advantage.
The competitive landscape will change dramatically with
mobility players like Uber and Lyft growing, but also with new
competitors in the market such as Google and Apple that have
been dominating the playing field of personalized consumer
experiences through their devices, apps, and digital services.
As the vehicle becomes a platform for the delivery of services,
the risk for the automotive OEMs and tier ones is becoming
commoditized and confined to the role of the hardware
manufacturer. To counter this trend OEMs are investing heavily
in mobility and exploring new business models and partnerships:
GM’s investment in Maven and Lyft, Ford’s investment in Chariot
and the partnership between FCA and Google are a few examples.
Tier one suppliers such as Continental, Lear, and Delphi are just as
active as they venture into the connectivity space.
LTE is forecast to reach
452 million connections
in the USA at the end of 2021
Source: 5GAmericas.org
Source: CAM
Ranking Connected Car Index based on overall country performance 2015/2016

How can OEMs and their dealers leverage
connected vehicle data to offer an outstanding
Customer Experience?
The experience starts with stocking the right vehicle at the
store. U.S. customers buy from the dealer’s lot, because they
like to drive away the with their new car. Thanks to customer
data, OEMs can more accurately allocate their production
to the correct dealer. The sales process itself can also be
improved. Currently, the typical US consumer spends an
average of 2 to 3 hours in the showroom prior to driving away
with their new vehicle. The slow sales process is a major source
of dissatisfaction, and some of the largest dealer groups,
like AutoNation, are trying to take the problem head-on. By
identifying the customer and their needs in advance and
taking care of some of the paperwork online, waiting times at
the dealership are strongly reduced.
The evolution of the connected car
The U.S. is spearheading
vehicle-to-infrastructure connectivity
1966-1995
Examples:
GM Onstar
Examples: Ford SYNC,
Kia UVO,GM MyLink
1995-2002 2007-2012 2012-ongoing 2020-ongoing
1 2 3 4 5
Examples:
GM‘s DAIR system
The RD era The embedded era The infotainment era
Examples:
Tesla app, Nissan Nismo,
Progressive Snapshot
The V2X era
Examples:
Tesla Autopilot,
self-driving initiatives
by Google, Audi,
Daimler
The new mobility era
Connected vehicle data will also make it possible to streamline
service and maintenance. Monitoring mileage, oil levels and
system health, OEMs can predict service needs and more
conveniently schedule service appointments and pre-order
parts before the vehicles arrives at the shop. This may help
position dealers ahead of the quick oil change shops, as well
as on-location vehicle servicing such as those provided by
Yourmechanic.com. The same vehicle data will also be fed
back to engineering to ensure early identification of quality
concerns and continuous improvement in manufacturing.
Overcome data security issues
As more connected vehicles are placed on the road, an
increasing volume of proprietary and personal information
will be exchanged across systems and networks. Recently a
group of hackers demonstrated how easy it is to take control
of a vehicle through its connectivity systems. The industry
will need to increase its focus on the protection of consumer
data and on making vehicles hacker-proof. The challenge is
also an opportunity for new entrants in the cybersecurity
space which is attracting significant investment in the U.S.
Continue to spearhead vehicle-to-infrastructure
connectivity
Connected vehicle technologies are becoming some of the
most heavily researched and tested. There are currently 18
states in the U.S. that have passed legislation related to
connected/autonomous vehicles; and the U.S. DOT chose
10 pilot sites across the U.S. to encourage testing and
information sharing around automated vehicle technologies.
In the fall of 2017, the students at the University of Michigan
will be able to get around campus in a completely autonomous
shuttle bus that is being deployed in partnership with Mcity,
the university’s 32-acre testing facility.
Additionally, ITS International reports that the Michigan
Department of Transportation has begun work on a vehicle-
to-infrastructure (V2I) communications project in which
3M will provide lane markings, smart sign technology and
dedicated short-range communication devices for a three-
mile stretch of I-75. Once these items are installed, the
Oakland County stretch of highway will allow the testing
of advanced V2I communications, and continue to propel
Detroit into the forefront of this exciting revolution.
These examples show that, even though companies from all
over the world are making unique and valuable contributions
to the connected car, the U.S., with its large standardized
market, the absence of language barriers and a more flexible
regulatory framework can be expected to lead the pack in the
successful roll out of connected vehicle technology.
MSX International

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Editorial Team
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Pieter van Rosmalen colleagues
pvanrosmalen@msxi-euro.com
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