Reach out and touch the future: Connected vehicle solutions in China

Fuelled by the rapid development of the Internet of Things, the connected vehicle solution is developing fast. Indeed, the development of technologies for the connected vehicle is seen as critical for winning the competition in the future.

Overview

Mr. Zhang Bo is driving his new car on the superhighway when its intelligent navigation system sends out a warning about an accident ahead. This immediately sets in motion the car’s interactive vehicle information system, which alerts the vehicles nearby about the current location and speed of his car so that another accident is averted. At the same time, the navigation terminal automatically sends a message to the hotel where Mr. Zhang has reserved a room that he will be delayed and updates the arrival time in the navigation system. While he waits for the traffic to clear up, Mr. Zhang completes the last chapter of his favorite audiobook selected from the car’s entertainment terminal.

This is an age of connectivity and information explosion, with various digital technologies touching almost every aspect of our life. The automobile industry is no exception to this connected world. Fuelled by the rapid development of the Internet of Things, the connected vehicle solution is developing fast. Indeed, the development of technologies for the connected vehicle is seen as critical for winning the competition in the future. But this will involve all kinds of industry players, both old and new. Unlike traditional technology upgrade that occurs from the inside to the outside, the emerging connected vehicle follows a path of development from the outside to the inside. With Big Data transforming how we live and work, it is necessary that automobile companies have an in-depth understanding of various digital forces, and employ them to reinvent and integrate themselves into the new digital ecosystem.

Background

A survey on connected vehicle solutions conducted by Accenture shows that for many consumers a primary consideration in choosing a new automobile is in-car technologies. China’s car owners have the strongest interest in these technologies compared with their counterparts in other countries. In making their purchases, they place more emphasis on in-car technologies than on the car’s performance. This presents a huge opportunity for the connected car industry. As urbanization speeds up in China, the country’s love for automobiles has grown rapidly. In 2013, China’s auto production and sales exceeded 20 million units. It has already replaced the United States as the world’s largest auto market.

Analysis

New industrial rules spawn new business models. Automakers, car dealers/4S shops, auto parts manufacturers, insurance companies and other stakeholders are trying to create their own niche in the new industrial ecosystem. Leading players should endeavor to provide customized innovative services to various stakeholders and facilitate cooperation in the new industrial system, thus promoting development of connected vehicle solutions and helping build a vibrant industrial chain.

Currently, connected vehicle solutions are in the process of rapid development, being driven by diverse forces. In riding the Internet wave, automobile manufacturers are faced with a variety of challenges. On one hand, while applying cutting-edge technologies, they need to meet stringent regulatory and policy requirements. On the other hand, they need to cope with competition from emerging enterprises. In the new competitive landscape, all players need to rethink their strategies and look at things from new perspectives in their efforts to expand services and create innovative business models. To meet the challenges posed by the changing rules of the game, it is crucial that companies position themselves well and seize opportunities. Accenture has come up with the following findings based on a review of the automotive industry.

Recommendations

Recently, Alibaba and Shanghai Automotive Industry Corporation have formed a strategic alliance to jointly manufacture cars with Internet connections. And both Dongfeng and Changan automobile manufacturers have signed agreements on technological cooperation with Huawei Technological Co. Ltd. The open market environment promised by connected vehicles puts traditional automobile makers at a strategic bend. How can they expand information and data sources? How can they ensure that operational processes are safe and efficient? These are challenges to be tackled. Also, which direction will the auto industry head for as the connected vehicle forges ahead? Will pre-installation determine post-installation or post-installation dictate pre-installation? Who will dominate the new marketplace? We may not have the answers yet but we are convinced that only those who successfully ride the information technology wave will emerge as winners in the future.