The transition toward vehicles that are defined by their digital services—including safety, comfort, operational and entertainment features—promises to bring significant new revenue pools to the automotive industry. Within the next two decades, digital services could generate as much as US$3.5 trillion in additional revenue for the industry globally.1
Yet while automakers are investing billions of dollars in digital services, these services only generate about 3% of automakers’ revenues globally today—not nearly enough to cover the huge investments.
To monetize digital services, automakers need to overcome two major challenges. First, despite efforts to digitally transform parts of their organizations, most are not yet truly tech-savvy. To keep up, companies will need a strong digital core that gathers and provides relevant information, offering accurate insights into rapidly evolving customer preferences. In fact, we believe that the winners will be those that develop and leverage the digital core to its full potential—where it enables constant renewal. (See our thought leadership on Total Enterprise Reinvention to learn more.)
Second, most automotive executives lack a clear plan for monetizing digital services. They need to address several key questions: Do they build the services themselves or buy them from third parties? Which services will resonate with existing and new customers? Which will align best with the brand? And how do they price the services—should they be sold through subscriptions, in bundles, or perhaps individually? This report examines the different paths to monetizing digital services successfully.