Learning from Europe’s Digital Revolution of the Auto Industry

Rapid adoption and implementation of Industry 4.0 in the European Auto Industry has resulted in emergence of new value chains, new policy regulations, a shift in consumer attitudes and a rapid change in technology experienced in the industry. 

Indian CIOs can learn a lot from this and inculcate the trends in the auto sector in the country.

The European auto digital revolution has set a new trend in the automobile industry all throughout the world. There is an emergence of new value chains, new policy regulations, a shift in consumer attitudes and a rapid change in technology experienced in the European auto industry. This has been possible due to the rapid adoption and implementation of Industry 4.0 in the European Auto Industry which has contributed to the following important trends in the sector.

“CIOs need to pick up the most important and relevant technology to bring about the required level of efficiency and capability in their manufacturing process. They also need to work closely with product design and development teams to discuss the security aspects of the automobile.”

Milan Kumar
Global CIO
WABCO

Europe’s top digital transformation trends in Automobiles

“Digital” Car Purchases: Unlike the olden days, consumers nowadays research a vehicle thoroughly on websites like TrueCar and Edmunds before entering a car showroom. Such websites provide all the information for drawing a decision at the click of a mouse. Next, a lot of car showrooms in Europe have implemented virtual reality to showcase the available car models rather than stuffing real vehicles into the showroom. Virtual reality enables prospective buyers to feel a vehicle in all aspects with capabilities of opening the car door, a 360° panoramic explorative view of the car internal features, hear authentic engine and muffler sounds.

Autonomous Driving: Cars are driving by themselves– thanks to GPS, sensors, cameras, advanced circuitry and other tracking devices that have made driverless cars a reality. The objective of autonomous driving is to decrease accidents and fatalities. This is a boon for physically challenged individuals apart from the normal people. Another feature– assisted driving– is also assuming importance fast. This will help individuals experience better drivability and control on the vehicle which will have the effect of lesser insurance costs due to a reduction in the number of accidents over the next 15 years.

Networked Supply Chain: Digital transformation is known to customise a consumer’s experience about a product or service. A well networked and digital supply chain has an impact on reducing significant costs and engaging the customer in a better way by collecting important statistics and data to ensure consumer loyalty. This also leads to a high level of visibility and transparency in the entire supply chain and optimising design, production and distribution. Social media listening combined with IoT will provide the much-needed feedback to the automotive smart factory which has all the features of a typical industry 4.0 implementation.

Predictive Maintenance: Vehicles used advanced self-diagnostic systems which alert the driver in advance of an oncoming failure. This leads to proactive check-ups and servicing of the vehicle that prevents future mechanical failures and fatal accidents.

Security: Since today’s advanced automobiles collect a lot of data related to its drivers, destinations, geography, climate etc., it is imperative that this data be kept secure and free from hackers. The European auto industry is constantly innovating and researching to keep data privacy at the highest level.

What should Indian manufacturers learn from this?

With concepts like self-driving cars and shared mobility gaining a strong foothold in the global automobile sector, the Indian automakers are forced to reconsider their future business strategies and how they can make the best use of new concepts and technologies in the overseas markets.

For the Indian auto industry to scale new heights as seen in the European auto sector, auto manufacturers in India need to change their mindset from a product-based business model to a service-oriented one. For disruption to take place in the auto industry, the customer has to be placed as the nucleus of the industry which warrants a service-based approach.

Secondly, an India-first approach is the need of the hour. Traditionally, Indian auto manufacturers have been importing the latest technology for manufacturing their vehicle models for overseas markets. Then they would align these technologies to the Indian markets. To achieve economies of scale, this process has to be reversed. For an auto-populous country like India, the auto manufacturing process should be designed for the Indian market first with the latest technologies. Any auto product manufactured in India for a highly demanding local market would be comfortably accepted in less demanding overseas markets.

Thirdly, Indian auto giants should share technology with each other by way of a productive collaboration rather than intensifying business rivalries, in the interest of the country. Such collaboration can be extended to IT companies as well. This will lead to sharing of heavy investment on technological innovation to match European auto standards.

Lastly, the Indian auto manufacturers should think big. By that, they need to look forward to creating a disruptive product and not spend economically on innovating technologies which don’t have a wide impact. They need to go beyond thrifty innovations like interchangeable batteries, radio apps and so on. Needless to say, they need to allocate bigger budgets for innovation and research.

It is time for the Indian automotive sector to step up with their innovative thinking especially with help coming by way of certain government regulations and subsidies. The “Make in India” initiative and the “Niti Aayog” by the government of India have provided for the auto industry to a considerable extent, especially electric vehicles.

How should the CIO contribute?

At this moment, there is a dearth of good resources in the Indian auto industry with a technological background. CIOs must focus on getting the right talent of human resources in the organisation. A key area that needs immediate attention is software development. It is imperative to have the best resources from the software industry for the organisation to help create better, advanced vehicle designs and providing solutions at an economical cost. This would consequently lead to higher profits or lesser time to break even in case of heavy investment in technology. In order to achieve this, CIOs must collaborate with professional recruitment agencies to source the right talent for the organisation. They should also identify training and upgrade needs of existing employees through professional mentorship and guidance. Apart from this, CIOs should also identify high performing individuals from different departments of the organisation like IT, business analysis, research, etc. Innovation laboratories can be setup for creating and assigning small, short projects involving new technologies to deserving internal employees to increase their exposure.

Data analysis is still at the heart of understanding customers in the automobile market as much as in any other industry. IoT will play an important role in facilitating asset utilisation in the auto industry. CIOs must come up with a strategy that focuses on analysing and interpreting customer data collected from IoT devices. Apart from this, the objectives of analysing such data and the beneficiaries of this data should also be planned in advance.

To hop onto the digital bandwagon, Indian auto industries need to allocate separate, big budgets for technology which will encompass categories like ERP, automation, manufacturing executed systems (MES), cybersecurity, IoT and business intelligence. CIOs need to pick up in the most important and relevant technology from the above list to bring about the required level of efficiency and capability in their manufacturing process. They also need to work closely with product design and development teams to discuss the security aspects of the automobile. This is especially important for an auto manufacturer who wants to manufacture a highly connected vehicle using cloud technology which is prone to attacks. Strategies will have to be developed for studying data generated at manufacturing plants and by the automobile for analytical reasons and determining technology standards for the automobile.

A Digital revolution leads to the enormous amount of data being generated at various points. This requires careful data storage and management for analytical reasons in the future. For security reasons, this data is stored in organisation-owned data centres. But this can be costly as data will keep rising in gigantic numbers over the years.CIO should be investing more in cloud storage and to some extent in own data centres. A lot of third-party service providers in India offer data centre services at affordable rates.

Digitalization is a long journey and can be mind-boggling. CIOs should set small milestones to achieve the objectives in phases and win support from employees and top management. Bigger milestones should come later with increased confidence and participation from all business units. The CIO must act as a strategic enabler for all aspects of the business.