Digital Disruption in the Automotive Industry

Digital disruption is a mindset that ultimately leads to a way of behaving”

 James McQuivey, Digital Disruption: Unleashing the Next Wave of Innovation

Everything is connected today – phones, computers, and even cars. Because digital technology is constantly advancing and changing the way we interact with the world around us, industry experts are ceaselessly trying to find new ways to stay abreast. It seems impossible to plan for the future when not even the automotive industry is exempt from the disruption caused by the dawn of the digital age.

Why does digital disruption matter to the automotive industry?

Traditional marketing strategies have been turned upside-down by the influx of companies like Uber and Lyft. An increasing amount of media platforms are also advocating for more sustainable means of living, which includes cutting down on pollution caused by heavy traffic. Cities like Cape Town and Johannesburg have started sustainable transport initiatives like the MyCiti BRT System and the Gautrain, respectively.  This social connectivity offered by today’s technology means that more and more people are relying on alternative means of transportation. This gives rise to using apps like Uber or finding what IBM calls ‘the car of the future’.

What exactly is the car of the future?

This car would be fuel-efficient, eco-friendly and most importantly, connected. Automotive manufacturers are not only expected to follow this trend of ‘connecting’ their vehicles through means of in-vehicle navigation, Bluetooth, etc., but also make sure that their vehicles are ‘upgradeable’. According to Deloitte, technology advances so quickly that auto manufacturers need to speed up their design process to keep up. Unlike mobile devices and software that are updated as often as every year, vehicles can take up to 6 or 7 years to be designed and manufactured. This means that these vehicles need to still be compatible with technology that evolves much faster than the vehicle itself does. IBM has called this problem the ‘battle between […] the dumb car and the smartphone’.

Why should I care?

Digital disruption not only changes the cars we buy, but also how we choose to buy them. Instead of working with a dealership to find a suitable vehicle, people are now relying on online sources and reviews to help them decide for themselves. This often eliminates the need for in-person communication and customers often only meet once they’ve decided on exactly what they’d like to buy. This forces automotive dealers to digitize their customer services and have a user-friendly interface that allows clients to choose between browsing vehicle options and speaking directly to an adviser. Those companies that fail to keep their customers engaged and do not provide information platforms run the risk of falling behind.

Keeping up with perpetually advancing technology is a daunting task and businesses cannot have a fixed plan for the future when the future is constantly changing. That being said, a fluid market and unfixed future also gives one the opportunity to test and develop products that have never been seen before. Digital disruption could simultaneously be a threat and an opportunity and its impact differs from industry to industry.