THINKAUTOMOTIVE INSIGHTS

ACT AUTOMATED DRIVING Winning strategies for suppliers

INTERVIEW Uber's Christian Freese about a new mobility OND MAINSTREAM OND market BEY

2015

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DIGITAL DRIVE The future of automotive 2 Blindtext

3 KEY TAKEAWAYS The future of automotive is digital. By analyzing, developing new approaches and understanding changing mindsets Roland Berger experts help create value and change the game.

Analyzing – Digitization The digital transformation also gives the automotive industry the chance to generate new business. Based on the trends we identified, we see four key areas where resolute action is needed: Digital data, automation, digital customer interface and connectivity.

THE DAWN OF THE DIGITAL CAR

Rethinking – Mobility "We are witnessing a radical change in the way people behave in conurbations. Trips are no longer planned and pre-ordered in advance. Ad hoc availability is the key."

UBER GERMANY'S MANAGING DIRECTOR CHRISTIAN FREESE

Practicing – Automated driving Any supplier with aspirations to become a full systems provider – complete with all the vehicle and integration skills required – will have to master three new areas of technology: Navigation, vehicle control and human-machine interface.

WHO WILL BE IN THE DRIVER'S SEAT? Focus Kapitza/Agentur Enno Photo: Terré; – Illustrators Kinky illustration: Cover

Automotive Insights 1 | 2015 Editorial 3

DEAR READER,

DIGITIZATION has captured the imagination of the ­automotive industry. The signs are visible everywhere – and not just at this year's International Motor Show in Frankfurt. ­Industry 4.0 is making production smarter, vehicles are being connected to their environment, and customers can draw on a plethora of channels to find out what they need to know about cars, buy them or have them maintained. To put it simply: Data is in- creasingly ­shaping the automotive industry's business models.

TAKEN TOGETHER, these developments have the ­potential to bring sweeping changes to your industry. As we have seen in the telecommunications, music and publishing industries radical upheavals are usual- ly preceded by gradual development in several phases. Technologies mature, social acceptance grows and ­initial competitors from converging industries try their hand at new business models. Think of Uber! (See our interview with Christian Freese, head of Uber in Germany, on page 24.)

ARE WE TALKING ABOUT A REVOLUTION, then, or a process of evolution? And what will the coming ­changes mean for you and your company?

Marcus Berret is head of the global Automotive CC at To begin to answer these questions, the latest issue Roland Berger and head of the company's supervisory board. of our Automotive Insights magazine– entitled "The digital drive" – is devoted to the topic of digitization. "The digital drive" sketches the wider scope of changes taking place right now, zooms in on individual country markets (the U.S., China and Brazil) and examines how the automotive industry is doing in areas such Talking as multichannel retail, electromobility and automated driving. No one knows exactly where the road will lead. Yet there are clear markers and road signs along the way. about a These must be heeded if we are to shape the future of the market together.

Enjoy your read! revolution? Marcus Berret Cover illustration: Kinky Illustrators – Terré; Photo: Enno Kapitza/Agentur Focus Kapitza/Agentur Enno Photo: Terré; – Illustrators Kinky illustration: Cover

Automotive Insights 1 | 2015 4 USA: There will still be cars on U.S. roads – but how many and which ones? 44 12

%(aged 14-28) would buy a car online

32

New world: Data-driven innovations will change the automotive business. 18

China: Buying a car could be more convenient in the future. 8 Photos: Audi AG; Daniele Mattioli/Anzenberger Agency; Gene Glover/Agentur Focus; Andy Phan, Page; Illustration: Kinky Illustrators - Terré - Illustrators Kinky Illustration: Phan, Page; Andy Focus; Gene Glover/Agentur Agency; Mattioli/Anzenberger Daniele AG; Audi Photos:

Automotive Insights 1 | 2015 "Are we talking of a revolution 5 or a process of evolution?" Marcus Berret, page 3

CONTENT

PLACES 6 Automotive pinboard Trends, facts and figures on the brink of a new automotive world 8 Click and drive How Chinese players are revolutionizing e-commerce in their automotive market Represents the new players in the industry: Christian Freese 12 Owners, drivers and urban traffic of the future In our U.S. market scenario we take an educated guess on three 24 key performance indicators 16 Spotlight Brazil The new vehicles market is losing momentum – but the aftermarket is vibrant. Handpicked results of our study

PERSPECTIVES 18 The dawn of the digital car Digital customer, connectivity, automation and digital data – OEMs and suppliers need to gear up for automotive 4.0 24 "Ad hoc mobility" explained In our interview Uber Germany's Managing Director, Christian Freese, on where new entrants shake up traditional markets 27 Who will be in the driver‘s seat? System provider or niche player in automated driving – it is time for suppliers to position themselves

PLAYERS 30 Japan under siege Our ranking compares leading nations in terms of market reach, technological maturity and industrial power 32 Reconnect with your customers New ways to orchestrate multichannel retailing

36 Food for thought Roland Berger's latest thinking on automotive and other industries 38 Famous cars: Golf A "generation car", perhaps the last of its kind

Photos: Audi AG; Daniele Mattioli/Anzenberger Agency; Gene Glover/Agentur Focus; Andy Phan, Page; Illustration: Kinky Illustrators - Terré - Illustrators Kinky Illustration: Phan, Page; Andy Focus; Gene Glover/Agentur Agency; Mattioli/Anzenberger Daniele AG; Audi Photos: 39 Contacts and authors

Automotive Insights 1 | 2015 6 AUTOMOTIVE PINBOARD We collected insightful trends, facts and figures that may impact the industry

CHANGING MINDSETS

MIXED FEELINGS: TRUST DECLINE: NEED TO UP AND COMING: IN AUTOMATED DRIVING OWN A CAR DIVERSITY IN AUTO FIRMS According to a Cisco study By 2025, the percentage of car owners aged 39 or younger will drop GM names Mary Barra as from today's 63% (female) and 60% 57% (male) to 58% and 54%, respectively. the car industry's first woman of people globally would CEO. In 2014, six of the com­ put their trust in a driverless vehicle. pany's 25 corporate officers 63 60 were women.

male 58 Honda taps its first female female 95%of Brazilians embrace the concept. board member: Hideko Kunii, 2025 54 66. She is the first female In Japan only ­director at a big Japanese carmaker.­ While some 20 years ago most teens 28% and tweens aspired to own a car, today's of people are willing to give up direct young people would rather spend their control of their cars. time interacting on social networks. Toyota named Julie Hamp, a senior official at Toyota The U.S. acceptance rate of 70% of adults globally say they are open to unconventional methods of Motor North America, as a transportation. managing officer, making the American the company‘s 60% Sources: WSJ, Autonews, Reuters, TomTom, Forbes, FT, was above the global average. WEF, Ford Trends Survey, Cisco and Roland Berger. first female executive.­ AG Photo: BMW

Automotive Insights 1 | 2015 Pinboard 7

A GLIMPSE INTO THE LABORATORIES

LIGHT BY SIGHT Intelligent light systems Made by Opel: A new technology will enable drivers to direct the headlights to wherever their eyes are looking.

SMART EYES MADE OF FLAX Mini unveils Augmented Vision For the Peugeot 308, Faurecia has supplied an injection-­ eyewear: The technology molded part that consists of 20% natural materials, packed into the glasses projects such as hemp. Other new products containing hemp fibers relevant information into the are set to follow later in 2015 or 2016. driver's direct field of vision.

POWER REVOLUTION Bosch ushers in a battery revolution, offering double the range at half the price: Batteries for electric cars are going to get considerably better by 2020 – with negative consequences for the residual value of today's electric cars.

POINTS OF INTEREST

TURKEY CHINA The TomTom Traffic Index China may surpass the U.S. 2015 reveals that as the world's largest Istanbul is the global leader market for electric vehicles UNITED STATES in congestion. in 2015. With improvements in vehicle fuel economy, U.S. drivers' average gasoline consumption is the lowest it's been in at least 30 years, according to research by the University of Michigan. INDIA India's automotive industry is expected to reach 7 million vehicles by 2020, making the country the third-largest auto manufacturer in the world

Photo: BMW AG Photo: BMW behind the U.S. and China.

Automotive Insights 1 | 2015 8 Click and drive

E-commerce meets offline touchpoints: Many customers had experience with owning a car in the last decade. This is necessary if manufacturers are to merge offline and online channels. Photos: Wang Zhao/AFP/Getty Images, Daniele Mattioli / Anzenberger Agency Anzenberger Mattioli / Daniele Images, Zhao/AFP/Getty Wang Photos:

Automotive Insights 1 | 2015 9 Click and drive China's automotive e-commerce is gaining traction. The challenge is to connect offline and online activities and create an entire retail ecosystem. We illustrate future business models and draw conclusions on how OEMs can equip their platforms.

by Junyi Zhang and Fanny Cao

hina is crazy about "Double Eleven": windfall revenue for retailers, with 24.3 Chinese automotive industry need to ad- C on November 11, the largest online billion yuan (CNY) worth of orders record- vance to the next stage and who will be the shopping day in the world, China’s auto- ed in a single day, the surge of festival mo- winners in that race? motive industry looks to set new records in mentum invariably wanes. Average daily online orders. One of the biggest plat- auto sales at websites, portals and online CONNECT OFFLINE AND ONLINE forms – Autohome – sold more than 30,000 dealers continue to remain anemic. But we When buying a passenger car, most Chi- cars online on Double Eleven 2014 alone, believe that China's automotive e-com- nese customers tend to get their informa- about 2,500 of them with full payment on- merce is ­ready for liftoff in the coming tion by conducting research on the inter- line. This success shows that Chinese con- years – experts forecast annual growth net, often using social media and mobile sumers are passionate online shoppers. rates between 30 percent this year and 40 apps. Previously, automotive e-commerce Today, roughly 45 percent already consider percent for the next, which in absolute was essentially limited to several special- purchasing a car online. While the shop- numbers could amount to CNY 225 billion ized online marketing platforms for car

Photos: Wang Zhao/AFP/Getty Images, Daniele Mattioli / Anzenberger Agency Anzenberger Mattioli / Daniele Images, Zhao/AFP/Getty Wang Photos: ping craze on 11/11 can briefly generate in 2016. What would e-commerce in the dealers, with the biggest players being

Automotive Insights 1 | 2015 10 Click and drive

Online portals: Car dealers are looking for new business models.

Autohome and Bitauto. Through their of sale to purchase a car conveniently and large user base, they could offer automo- without cash by simply swiping their bank- tive manufacturers access to potential Paving the way to cards. In the long run, customers would buyers and help dealers extend the reach e-commerce not have to go to the showroom at all, but of their physical showrooms by providing pay the full price online. This would also be The development of automotive a centralized marketing platform. Via an a win for the online dealer: Customers e-­­commerce is fueled by two changes in application interface, dealers could create the regulatory environment. Those are leave behind a valuable data footprint that online show­rooms hosted on Autohome considered as favorable for e-commerce provides information about the effective- or Bitauto websites­ where they would up- development: ness of marketing activities. load their automotiv­ e inventories, pricing According to China's "Enforcement and promotional information. The busi- FIRST MOVERS GUIDE THE WAY Measures on Administration of Automobile ness model of these sites has been based Some OEMs, such as Geely, Guangqi Hon- Brands Sales" (2005), dealers can sell cars on generating profits from advertising as only after authorization by the OEM. da and Chevrolet, have started to promote well as collecting referral fees from deal- Additionally, the rule puts automakers in se­lected models via their own e-commerce ers. Online sales, however, were handled charge of establishing business forecasts, platforms. VW and BMW are also well separately from offline sales in the indus- dealer locations and standards for setting up aware of the opportunities and are teaming try, because they were generally viewed by stores. Chinese authorities are now up with e-commerce platforms such as OEMs and dealers as playing only a sup- considering, however, whether to relax Tmall or Yiche to promote selected models. porting role. restrictions on car dealers. So in the future But activities are still far from being fully Over the past few years, however, with ma- they would be able to sell vehicles from integrated. Fundament­ al issues such as the jor e-commerce platforms realizing the im- multiple brands in the same store. low transac­tion conversion rate and the portance of leveraging customer data from China's government is taking steps to challenge of incorporating online sales both virtual and physical stores, a com- introduce more transparency into parts into daily operations have not yet been re- plete automotive e-commerce ecosystem supply. It published a joint statement on solved. Managing such large inventories has gradually begun to take shape. In the "Guiding Opinions on Promoting and offering aftermarket services are also next phase, dealers are trying to integrate the Automotive Repair Industry Trans- virgin territory for e-commerce platforms. the two channels more closely into an on- formation and Upgrading to Improve Part of the difficulty stems from the fact the Quality of Service." Carmakers will be line-to-offline (O2O) model. that an automobile today seems to be too required to release vehicle maintenance and Alibaba's B2C online retail platform, Tmall, complex to be priced and sold online in technical information about newly marked its first involvement in payment introduced models, thereby facilitating the the same way as consumer goods like transactions. The first step is that buyers sale of car parts by third parties. books or DVDs. In the coming stages of can make an upfront payment online or development, OEMs will need to know use Alipay machines located near the point Sources: Bloomberg, Forbes how to address consumers directly, try to Images Getty Photo:

Automotive Insights 1 | 2015 Click and drive 11

use online and mobile platforms, and es- Cheyian and Chemayi are consumer - and with offline service providers like garages, tablish direct B2C channels in order to service provider-driven platforms, respec- 4S stores or fast-fit chains, which will support their offline dealer network. tively. They host contributions about ser- make it possible to provide services with- These activities enhance the customer ex- vice experiences, offer expert advice and out the need to maintain their own inven- perience, enable community-building, provide a network of different service of- tory and logistics structures. and improve the exchange of information fers. Their success will depend on their To address future challenges properly by over the complete product lifecycle. ability to mobilize a threshold of active building on their own capabilities, we rec- users to unleash a network effect. Their ommend that OEMs take to the following INTEGRATE AFTERMARKETS aim is to set up standardized services, a approach: China may be the world's biggest market transparent pricing system and a commu- for new car sales. But as more and more nity that is willing to share expertise and SHORT TERM households own a car, demand will also experience. Currently they earn the main Excite and retain online users rise for maintenance repairs and other af- part of their income from dealers' service As platforms improve, channels will diver- termarket services. A look at the complete commissions. In the future they may ben- sify and there will be many opportunities ownership lifecycle of a car reveals that the efit even more from their function as ag- for users to get online. For any player that sources of profit in China's automotive gregators of customer needs. However, wants to make profits in automotive market are quite different from those they will need to cooperate more closely e-commerce, getting users online and re- found in Western countries. The aftermar- taining them is a must, especially in the ket has traditionally been highly fragment- aftermarket. ed and lacking information on the service and repair history of the vehicles being MEDIUM TERM sold. This segment, which includes main- Rebalance the Build an ecosystem tenance, repair, replacement parts and ac- value chain Use a membership system to build user cessories, holds vast potential for growth. communities related to the purchase of A new sales ecosystem could boost Data show that every CNY 100 spent pur- new cars, vehicle use, maintenance, used China's aftermarket chasing a car would generate CNY 65 in cars, financing and other businesses. At- revenue from aftermarket service. By 2020, [Net profit in CNY bn] tract partners from other industries, such turnover from the used car and after-sales as travel, hospitality, outdoor activities, etc. markets is expected to grow at a rate of 19 percent annually compared to just six per- 9,420 LONG TERM cent from the new car market. Intertwine online and offline activities Several online players are on their way to ▶ Rental of used cars Completely connect online and offline

harvesting profits on the aftermarket, ▶ After-sales service mar­keting, not only in terms of new cars such as Chexiang, Cheyian and Chemayi. and aftermarket service but also in terms ▶ Automotive Chexiang, established by Shanghai's insurance of the used car business. The result will be 58% state-owned carmaker SAIC Motor, is a a car-service-mobility lifecycle. OEMs, deal- ▶ Automotive dealer-driven platform extended to in- retail finance ers, service providers and platform compa- clude aftermarket service functions. The nies can benefit from that. platform has a critical mass of users al- 4,296 We believe that OEMs will have advantages ready, but it will have to invest in mobile ▶ Automotive in the new automotive retail ecosystem, apps and membership systems to retain manufacturing which makes speeding up their e-com- and sales customers after the first car purchase. 40% merce easier. First, they can draw on a solid Furthermore it will be crucial to link off- customer base, which saves on costs for line and online activities in a more intelli- new user acquisition. Second, they can use gent way and create a sustainable profit sources of customer data such as CRM sys- model. OEMs currently dominate the tems, their dealer relationships and the wholesale business to dealers. Between data from onboard systems. Third, they them and the end customer are various possess the market visibility and brand eq- 2013 layers of dealers, and profits diminish in 2020 uity to enhance valuable cross-industry every transaction. Creating a leaner distri- partnerships, e.g. with garages as well as bution structure is therefore an easy way hotels, manufacturers of outdoor equip-

Photo: Getty Images Getty Photo: to optimize profits. Source: Roland Berger ment, or self-driving tour operators.

Automotive Insights 1 | 2015 12 U.S. market scenario: Owners, drivers and urban traffic of the future

Shared or bought? In the future using a car will not necessarily mean owning it.

A new automotive era characterized by connectivity, shared mobility and automated­ driving may change the automotive market as we know it – but to what extent? We crunched the numbers for the U.S. market and analyzed how drivers, sales and car ownership will evolve in the light of these trends.

by Marc Winterhoff Photos: Mark Peterson/Corbis; Andy Phan, Page Andy Peterson/Corbis; Mark Photos:

Automotive Insights 1 | 2015 U.S. market 13

Houston: A huge parking lot was turned into a park named "Discovery Green". Could this be the way forward if less space is needed for inactive cars in U.S. cities? Photos: Mark Peterson/Corbis; Andy Phan, Page Andy Peterson/Corbis; Mark Photos:

Automotive Insights 1 | 2015 14 U.S. market

o examine the impact of new trends distance rail and air travel. Why spend mobility-on-demand services will be T on the automotive market, we have hours in airports and cramped airplanes to far-reaching, but they will be seen espe- selected the U.S. as a focal point: It is a travel 250 miles when mobility-on-demand cially in urban areas, dense and sparse global trendsetter, one of the world's larg- can pick you up and take you to your desti- alike. These areas, home to a third of the est car market and typically one of the first nation in roughly the same time, while you population, can alleviate congestion to be disrupted by new business models. work or relax in a comfortable, private set- through mobility-on-demand, which pos- Here one can find innovative automotive ting? es a more viable alternative to the poor OEMs who compete with mobility start- Second: More people will be able to ­"drive" public transit infrastructure native to ups and tech giants such as Google and cars if licenses are not a limiting factor. places like Los Angeles. Apple that are encroaching on the car in- This is especially true for very young ­people Connectivity technologies would further dustry. At the same time, Uber is develop- and people over 65. Early teens and many reduce traffic as fewer drivers have to ing a de facto standard for ride-hailing. others will be able to ride in vehicles with- search for a place to park their own car, Given the high reliance on individually out having to depend on licensed drivers, which typically then remains unused for owned vehicles in the U.S. and the wide and parents might be less inclined to car- 23 of the 24 hours in a day. However, it is range of geographic regions with varying pool to Saturday morning soccer practice important to note that even in areas ideal population densities, it is a particularly in- when their children can travel inde- for mobility-on-demand adoption, many teresting test market. We have identified pendently while being monitored for safe- US consumers will continue to opt in favor three key trends – connectivity, mobility-­ ty. Those effects add to smaller increases in of owning a car for reasons including pri- on-demand and automated driving – as we other population groups. vacy, comfort and status. We expect that expect those to have the biggest impact up to 36 percent of individually owned ve- ­throughout the automotive value chain in NEW VEHICLE OWNERSHIP PATTERN hicles will be automated to ease the bur- the long run. This significant change will Theoretically, each shared vehicle can re- den on drivers, especially those dealing occur for two main reasons. place up to eight individually owned vehi- with congestion and longer commutes. First, the new automotive era has the abil- cles. In our progressive scenario, the total For consumers and municipalities, the ity to attract consumers away from public number of cars on U.S. roads would be new mobility era is an opportunity to im- transportation and even short- to medium-­ reduced by 8 percent (49 m). The effects of prove the quality of life in urban areas.

More car users Fewer cars per owner Increasing sales volumes Users in the U.S. by age group [m] Vehicle parc in the U.S. [m units] Annual sales volume in the U.S. [m units]

249.1 254.4 17.6 30.1 16.8 7.7 2.8 216.8 38.9 2.0 224.3 205.8 35.1 42.5 14.8 9.8 121.3 110.4 147.8

0–14 37.8 15–24 5.0 34.3 Premium Premium 25–54 43.4 Volume Volume 37.0 55–64 Mobility-on- Mobility-on- 65+ 15.4 demand pods demand pods Today Auto 4.0 Today Auto 4.0 Today Auto 4.0

Automated driving and ride-sharing create 49 m fewer cars Increase in premium segment cars and new user segments Sharp decline in volume segment sharp decline in volume segment Significantly greater participation of the Each shared vehicle would replace up  New mobility-on-demand pods would youth (early teens) and elderly (65+) to 8 individually owned ones. cater to shared mobility. Photo: goZOOMA Photo: Source: Press articles, annual reports, US Census, NHTSA , FHWA , IHS , Automotive Fleet, Roland Berger

Automotive Insights 1 | 2015 U.S. market 15

New York City: What will roads in U.S. metropolises look like in the future?

There would be room for more parks, available to spend on the vehicles that are future trends we describe, as they will be walking areas and biking lanes. Improv- purchased. Therefore we expect an increase sandwiched between premium and low- ing public transit requires substantial in sales in higher-trim vehicles or consum­ cost competitors. We estimate that five public investment, whereas the more effi- ers trading up to the premium segment. million purpose-built, efficiency-opti- cient usage of existing roadways and vehi- What will be the net effect? Traditionally, mized pods will be be sold every year; this cles that are otherwise parked is destined the amount of vehicles sold has always will come directly out of OEMs' annual to be a win-win for all parties. been a function of the number of car own- volumes and deprive them of more than ers or operators. In the future, we will have USD 33 billion in added value. ANNUAL VEHICLE SALES INCREASE to look at it from a different perspective: As their primary market shrinks, they There will be major shifts in the vehicle The number of miles traveled will be the could consider combinations of pushing portfolio of the U.S. market. We estimate key predictor of vehicle sales. Provided further into the premium segment, lever­ that 28 percent of vehicle sales (in units) that sharing vehicles is convenient enough aging their manufacturing efficiencies to will eventually shift to "pods" – the fleet of not to reduce the miles consumers travel move downmarket by building low-cost mobility-on-demand service providers. in vehicles, the number of cars on the road mobility-on-demand pods, or shifting their Who will own those cars in the future? will shrink. But a new source of demand focus from manufacturing cars to provid- OEMs, ride-sharing players or leasing com- – the effect of new "users" who previously ing holistic mobility solutions. Mobil­ity- panies? We don't know yet. But we've al­ relied on public transit or their families on-demand services are expected to be­ ready seen how some players envision for transportation – will outweigh the ef- come a market worth USD 113 billion ­these pods in Chevy's EN-V 2.0, Toyota's fects of the reduced car parc. annu­ally. In the face of the biggest disrup- i-ROAD and Google's driverless car. We tion the automotive industry has ever seen, ­expect the demise of the American two-car THE FUTURE OF BUSINESS MODELS the race is on to capture future customers household in many areas, given that the Volume OEMs – those that generate less and profits – but the difference between "second car" is partially replaced by mobil­ than ten percent of their revenues from winning and losing will be determined by ity-on-demand. With fewer cars being premium brands such as Ford and FCA – an OEM's readiness to adapt and the ability

Photo: goZOOMA Photo: bought per household, more money will be face the biggest challenge from the three to transform its business model.

Automotive Insights 1 | 2015 16 Blindtext SPOTLIGHT BRAZIL With decreasing new vehicle sales, the focus is now on the aftermarket. We look at market development, distribution trends and customers – Here are some study highlights.

MARKET PLAYERS Electric and electronic components make up The independent aftermarket, which accounts approximately 15% of the Brazilian aftermarket for about 80% of the total market, lies in the today. The amount of embedded technology hands of small and medium-sized businesses. in vehicles is increasing, so this segment in particular is expected to grow significantly. 100,000 10% 13% repair shops

RIOR BO TE DY IN

/ 15% C IC I R N F L T O U 14% C R 35,000 TOTAL I E T D L C S E E

2 L

MARKET E

retailers

1

VALUE

= BRL 23.1 bn

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% = sales share

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I

A

R

T

R

E

W

U

O

N

P

D

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R 17% 300

CA 3 R 31% distributors

1 Number includes OES and IAM market volume, locally produced or imported, but 1,200 excludes tires and accessories. 2 Lubricants, hydraulic fluids 3 Undercar/chassis parts (suspension, brakes, wheels, steering system, structural parts) suppliers Doce Reuters/Nacho Photo:

Automotive Insights 1 | 2015 SpotlightBlindtext Brazil 17

TRENDS Brazil is still a maturing market. Some aspects of the ongoing transformation:

VW do Brazil: The Beetle was built CHALLENGES in Brazil from 1959 to 1996. - Parts availability: complexity here is due to the proliferation of vehicle models in the fleet, difficulties in identifying the right part and - given the scale of the country - have it delivered in GROWTH reasonable time. The total vehicle fleet in Brazil is growing, its - Inventory management: Cost of capital and obsolescence loss are significant for both profile is changing towards more sophisticated distributors and retailers. technology and consumers show new patterns - Professionalization: Companies across the whole of behavior. These developments will further chain need to enhance efficiency, stability and drive the aftermarket. Passenger cars and profitability. light commercial vehicles (LCV) will see slightly - Warranty: Unclear roles and responsibilities generate risks at different levels of the chain. stronger growth than trucks and buses.

CAGR OUTLOOK 2014-20 - The distinction between distributors and retailers 30.2 + 4.6% is slowly disappearing. 27.8 - OEMs are trying to expand their share. 25.2 23.1 4.8% - Small repair shops are losing business to professional chains. 16.7

15.2 - The online channel is gaining importance over the

13.7 long term.

PASSENGER 20.5 CARS AND LCV Even in the current difficult economic ­situation, the growth prospects and the 4.4% 13.5 TRUCKS 12.7 dynamics of the Brazilian aftermarket's 11.5

AND BUSES 10.5 distribution chain will create numerous

[in BRL bn] opportunities for local and international businesses and investors. 2014 2016 2018 2020

ABOUT THE STUDY For our comprehensive study on Brazil’s automotive aftermarket, Authored by Stephan Keese and Martin Bodewig we partnered with three main industry associations: Sindipeças, Sincopeças and Sindirepa. Together they represent more than The full study (in English or Portuguese) is available for purchase at: 130,000 companies ranging from part suppliers to repair shops. http://www.rolandberger.com/media/publications/ Photo: Reuters/Nacho Doce Reuters/Nacho Photo:

Source: Roland Berger

Automotive Insights 1 | 2015 The dawn of the digital car A real revolution? When does it start? We analyze how the digital transformation will change the auto- motive industry, outline where the journey could lead, and show what incumbents can do to stay in the race.

by Marc Winterhoff Illustrations: Terré Illustrations: Kinky Illustrators – Terré – Illustrators Kinky Illustrations:

Automotive Insights 1 | 2015 Digital car 19 Illustrations: Kinky Illustrators – Terré – Illustrators Kinky Illustrations:

Automotive Insights 1 | 2015 Future maintenance experience: Robots and automated diagnosing systems could make life more convenient for the driver

omething is brewing in the auto areas that will determine the future make- gies reach a certain level of maturity. Sec- industry. The "New Mobility up of the supply chain – or even spawn ond, when a significant shift in consumer World"-area on this years' Interna- completely new business models. Uber is habits becomes apparent. Third, when Stional Motor Show in Frankfurt currently creating a ride-hailing worldwide disruptive innovations come from adja- (IAA) is a get-together for new mobility (see our interview with Christian Freese on cent industries – instead of established players like BlaBlaCar, moovel or Drivy. Or page 24). Car sharing has already become players. take the haggling over Nokia's mapping established as a new business line for a That is precisely what has happened in the service Here. Chinese internet giants (Alib- number of OEMs, as well as for other mo- automotive industry. It has opened its aba, Baidu) were bidding alongside Uber, bility providers. arms wide to innovative technologies VW, Audi and Mercedes. In the latter the It all started when electronics and IT be- from other areas of application to en- incumbents have won, but the rumor mill came integral parts of in-vehicle diagnostic hance its offerings. Sensor systems, driver is working overtime. In China, internet gi- systems about 20 years ago. But only in the assistance applications, telematics ser- ant Tencent has announced it is partnering last 2-3 years has convergence made the vices and infotainment are now being with electronics supplier Foxconn to build lines between industries virtually indistin- linked together to form seamless systems. an automated car. And Apple has allegedly guishable. Potential changes in the auto- At the same time, consumers are chang- set aside no fewer than 1,000 people to motive industry are immense. There will ing their attitude to the industry's core handle its automotive activities. Maybe still be vehicles, of course, but will today's product – the car. For many younger buy- they are all just there to continue develop- big players still be the companies that ers in urban areas, owning a car is no lon- ing the CarPlay multimedia system, but make them? When complex market up- ger so important. Greater acceptance for maybe the Cupertino firm's engineers are heavals are unfolding, it is hard to sepa- automated cars can also be observed: Ac- wiring their own electric car. rate cause and effect. Developments al- cording to a Cisco study, 57% of people Yet who builds the cars has long ceased to ways seem to gather momentum when globally would put their trust in an auto- be the only issue. Other "industry outsid- three factors coincide: First, when a criti- mated car. Changes in society slowly ers" too are massing their ranks in further cal number of interrelated key technolo- translate into punctual regulatory initia-

Automotive Insights 1 | 2015 Digital car 21 tives; e.g. a public highway in Germany DIGITIZATION OF INDUSTRIES - IT HAS HAPPENED BEFORE was accepted as a place to test-drive auto- To predict the exact when and where of future development is difficult. But we can look mated vehicles in fall 2015. The age of the at showcases of industries where transformation is more advanced already. The good news digital auto industry is upon us. But are is there are new opportunities. However, some players will lose their leading position. we facing a revolution, or is it more a pro- cess of evolution? Which of the many new IT hardware Retail Cell phone Automotive developments are realistic, and which are providers manufacturers wishful thinking? As of now it is obviously hard to predict. Even so, there are some Technology change MS-DOS E-Commerce Smartphone Connected vehicle useful clues about future business. We (product/process) Reverse engineering Automated driving have trawled through a wide range of in- of BIOS dustries in search of patterns and indica- tors, and our analysis of the findings high- Entry of Acer Amazon Apple Google, Uber etc. disruptive players Dell Samsung Tesla, Qoros lights the challenges that the digital transformation presents to traditional OEMs. But it also shows where the adapt- Large incumbents Hewlett-Packard K-mart Nokia Multiple OEMs, able among them can find new opportuni- with baggage IBM Borders Motorola suppliers and dealers ties. New customer Intergrated service/ Integrated reviews Integrated digital Digital consumer LEARNING LESSONS FROM needs usage support Ease of shopping platform OTHER INDUSTRIES Larger availability

Structural transitions might irrevocably Source: Roland Berger shift the balance of power in the value chain. Players that change too slowly risk being edged out of the market by more ag- CONNECTING THE DOTS ile rivals. History is ripe with examples of In our scenario analysis we identified about a dozen trends for the future development of the industries impacted by new technologies automotive industry. Some have high some have low impact on the existing business models. and business models that opened the door Digitization is an integrator and works as a catalyst. to disruptive players. Bricks-and-mortar re- tailers were disrupted by online retailers High impact such as Amazon. Specialized retailers like bookstores were cannibalized by both on- line retailing and technologies such as Digital Connectivity e-readers. The music industry was broad- customer experience sided by Apple iTunes. We have watched the demise of companies like Nokia and Automated Smart factories Kodak. Even Microsoft had to do massive driving write-offs in the telephone business. The pattern of events that occurred in each of these industries is relatively con- Shared Non- Startup mobility traditional OEMs sistent. First, technological advances en- entrants abled the entry of disruptive players with Digitization of the Customers Production new business models that were better at- automotive industry tuned to new consumer needs. Then, in- cumbents with heavy baggage that were New retail Advances in unable to adapt to the changes or unable combusting to restructure began to see their margins engines erode. Lastly, the "old" industry suffered a Low cost Electrification Light wave of consolidation. brands weighting So what separates the winners from the los- ers? We have seen how winners such as IBM and General Electric were agile Low impact enough to reinvent themselves and adapt to a changed competitive environment. Source: Roland Berger

Automotive Insights 1 | 2015 22 Digital car

They realized in good time what new busi- FOUR SPOKES FOR THE DIGITIZATION OF AUTOMOTIVE ness models suited their corporate DNA, IT and software giants are set up and ready to produce "computers on wheels". Incumbent and they succeeded in rebuilding their val- OEMs and suppliers must react fast to maintain their position. ue chains in ways that accommodated the changes taking place around them. The timing and speed were right too: Step by utomation step, they eased out of their "old" world en- A tanglements and gained a foothold in the

"new" environment. By contrast, the losers were not quick enough to spot the need for Industry 4.0

change. For too long, they continued to in- Productivity vest in businesses where margins were

Production shrinking. Ultimately, they had to file for e

c insolvency, were broken up or were swal- a

f lowed up by their new competitors. r

e D t i

n g i Multichannel Big data A WORLD OF TRENDS i

t r

activities a

e

As a foundation for discussion, we asked CRM l

d

m Marketing/sales Potential internal and external stakeholders to iden- a

o New business

t t a

tify trends that have the potential to shape s New mobility models

u

c

the automotive world of the future. In the

l

a

end we had about a dozen pointing to digi-

t

i

g

tization as the overriding catalyst, meaning i

D

­Innovation

that the automotive future will be driven by

trends with a high degree of digitization

Automated driving

impact and will also have spillover effects

Connected

on non-digital ones.

vehicles

Two examples: Many OEMs have been in-

vesting in the development of e-cars for a

long time. Up to now electromobility (a Connec tivity non-digital trend) has not yet brought pro- nounced changes to the way the industry lines up. But now its development is being fueled by digitization. If new shared mobil- Source: Roland Berger ity providers build up fleets of primarily electric cars, this will have a material influ- ence on the quantities and models de- nities in other areas. The availability of still well placed, though they must move manded by the market. And if vehicles are multichannel offerings can then alter the fast to exploit this strong position. Other increasingly able to run driverless, the abil- balance of power within the automotive market players – the IT and software giants, ity for car makers to use this or that engine distribution landscape: If integrators pos- essentially – increasingly see cars as "com- as a differentiator may no longer be so sig- sess the crucial competitive capabilities, it puters on wheels". From their perspective, nificant – opening the door even wider to is possible for non-traditional entrants to it should no longer be bodywork, engine off-the-rack e-cars. attain far greater market significance than size and driveline technology that set a car Digitization is also closely linked to new in the past (see our article on multichan- apart from competitors, but software and retail. If significant improvements are re- nel marketing on page 32). IT functionality. In their nascent world- alized in technical ways to interconnect view, the car itself is no more than a com- customer data, and if digital experience RESPONDING TO THE DIGITAL modity. makes customers more willing to try out TRANSFORMATION For their part, the incumbents can counter new things, this will create a whole new The changes taking place are numerous by leveraging new technological possibili- playing field for innovative retail formats. and the threat of losing market share is ties to better emphasize what makes their Customers will also come to expect more real. Yet the digital transformation also automotive offerings so special. Based on of their buying experience as they become gives the automotive industry the chance the trends we identified and our under- more conversant with the digital availabil- to generate new business and tap new mar- standing of the catalyzing effects they will ity of data and online shopping opportu- kets. At the moment, the incumbents are have on automotive production and on the

Automotive Insights 1 | 2015 Digital car 23

customer, we see four key areas where res- Simultaneously tackling all these issues In the field of automated driving, coopera- olute action is needed: Digital data, auto- presents a massive challenge to OEMs in tion with supplier Delphi has put Audi in a mation, digital customer interface and general, and especially to volume manufac- good position. Extensive initial test drives connec­ ­­tivity. turers whose slender margins leave them have already been completed on public Digital data. Where the OEMs really have little room to invest. It is already becoming highways in the U.S. Mercedes' strong an advantage is in their vast reserves of apparent who is positioning themselves on truck division is yielding welcome develop- the currency of the 21st century: the tera- what topic, and who is actively soliciting ment synergies, thanks to which the com- bytes of digital data that every car pro- partners among the new crop of competi- pany's C and S classes are already on the duces. Whoever mobilizes the skills tors to keep a cap on their own investment road with semi-automated models. Ford needed to crunch all that data can har- risks. Some premium OEMs are already de- plans to bring a series of automated driving ness this precious resource to optimize voting considerable attention to connectiv- technologies to market within the next five customer relationship management. But ity, using apps to link other modes of trans- years. BMW is engaging in collaborative re- that is not all: Reports in the press sug- port to their car business, for example. search with Chinese search engine Baidu gest that VW is, for example, thinking Incumbents such as BMW, Opel and Mer- on the subject of driverless cars. about setting up the most accurate cedes also operate their own car-sharing These and other examples show that many weather information in Germany. Re- offerings that are working well. trends have already been spotted, and that al-time information gathered by wheel Still others like Toyota are focusing their the industry is busily slotting them into its sensors and digital windscreen wipers spending on alternative drivelines, amass- business models. Yet the digital transfor- would then be beamed back to HQ in ing a wealth of experience with batteries mation of the automotive industry is still Wolfsburg from in-vehicle computers. and fuel cells. In the electric cars segment, in its early days. In the face of the biggest Automation. Another opportunity is to all eyes are on how newcomer Tesla ap- disruption the industry has ever seen, the boost productivity in manufacturing. The proaches the market. Mercedes, a tradi- race is on to capture future customers and smart, connected production automation tional OEM, has invested heavily in the profits. And in the age of automotive digiti- technologies (Industry 4.0) can change the development of fuel cells, while BMW has zation, companies' readiness to adapt and competitive ball game in the car industry. done the same in electromobility. Re- their ability to transform business models One study by the Fraunhofer Institute nault/Nissan, Volkswagen and Hyundai/ will ultimately separate the winners from (FAO) and industry association Bitkom as- Kia too are still definitely in the race. the losers. serts that, thanks to Industry 4.0, the gross value added by the automotive industry in The new world of connectivity: Smart car returns to smart home. Germany could rise by as much as 20 per- cent be­tween now and 2025. 3D printing ­already offers a comparably mature tech- nology to produce low-volume parts made of complex material compositions. Digital customer interface. In the future automakers would be able to orchestrate their sales activities and the way they ap- proach customers across multiple chan- nels. Other industries are already bursting with ideas about how to accompany the customer journey – from initial desire to buy to signed maintenance agreement – both online and offline. At present, howev- er, too little use is being made of these op- portunities. Connectivity. The opportunities begin with apps that bring together information about alternative forms of mobility – from shared bikes to air travel. At the other end of the spectrum, they embrace automated driving: the vision of cars that autono- mously recognize obstacles and glide ef- fortlessly through even urban congestion without the driver having to lift a finger.

Automotive Insights 1 | 2015 24 "Ad hoc availability is the key"

Heavy smartphone user: Christian Freese is an ambassador

for a new mindset on mobility. Focus Gene Glover/Agentur Photo:

Automotive Insights 1 | 2015 Interview 25

Uber has become a role model of how disrupting individual mobility market works. Without owning a single car or employing drivers, it shook up traditional taxi transportation all over the world. And this is only the beginning. An interview with Christian Freese, head of Uber Germany

Automated driving, e-mobility, carsharing ty utilization will improve. That is because Do tomorrow's customers really no longer – the automotive sector is changing at a the way we use cars is changing so rapidly. want to own a car? phenomenal pace. It is reasonable to talk Take our UberPOOL service in San Fran- FREESE: They don't. Among city dwellers, about a revolution? cisco, for example. The passenger gets in we see a tendency at least to do without a CHRISTIAN FREESE: It certainly is! We are at point A and wants to go to point B. Once second car, and in some cases even the currently witnessing a radical change in the car sets off, an algorithm kicks in that first car. We figure that in a couple of the way people behave in conurbations. identifies a second passenger who wants years, mobility on demand will cover 20 to Trips are no longer planned and pre-­ to go in exactly the same direction, but 30 percent or more of traffic in conurba- ordered­ hours in advance: They are now who doesn't want to get out until point C. tions. That doesn't mean the end of the ­ordered directly and begun immediately. When the first passenger gets out, our privately owned car, and certainly not in Ad hoc availability is the key. Mobility on software pools the data again – and so on rural areas. Many people in these regions demand is set to flourish, although I per- and so forth. We have reached the stage will scarcely be able to get by without their sonally feel that the term "mobility on the where we have drivers who go for hours own car. In sprawling urban areas too, our spot" more accurately describes the phe­ with at least one passenger in their car. new mobility offerings will reach the lim- nomenon. And then there is the fact that its of their effectiveness, because we won't people want to travel safely and at low be able to achieve attractive vehicle densi- cost. We as a company come face to face ty everywhere. with all three demands in every region of Christian Freese How will the constantly growing share of the world. The regional differences in cus- took over as head of Uber in Germany mobility-on-demand offers in cities affect tomers' behavior are much less pro- in January 2015, having previously the sales market for automobiles? nounced than many people think. been employed by Roland Berger – FREESE: Automotive OEMs will not see What business opportunities will the mo- most recently as Principal – from their sales collapse because of mobility on bility market open up in the future? 2006 through 2014. Freese holds an demand, as the mileage clocked up by cars FREESE: Customers will want more op- MBA from the University of will remain roughly the same. In the me- tions to choose from. They want to be able Navarra's IESE Business School. He also dium term, though, there will be signifi- to decide at a moment's notice what is the studied industrial engineering at the cantly fewer cars on the roads, because best, fastest and lowest-cost alternative for Karlsruhe Institute of Technology (KIT) they will be used more efficiently than them. We are responding to that as a com- and the University of Seville. they are today. If car capacity utilization pany. We see Uber as a network of cars that increases by a factor of seven, which is are out on the road and whose capacity Uber what we as a company expect to happen, needs to be utilized. And we are in the pro- was founded by Garrett Camp and seven times more wear and tear will mean cess of organizing additional services for Travis Kalanick (its current CEO) as that new vehicles have to be bought much this network. For example, we are setting a car service in San Francisco in 2009. more quickly. That could lead to changes up UberEATS, which will let people have It develops, markets and operates the in OEMs' aftersales business. lunch and dinner delivered to them from Uber mobile app, which allows Mobility companies with a global reach are their favorite restaurants. We also see huge customers to submit trip requests that establishing powerful new players on the potential for new services in logistics, e.g. are then routed to sharing-economy market. What consequences could that the rapid delivery of letters and parcels. drivers. Today, the company operates have for the automaker? That will generate new traffic. Doesn't car taxi-like and ride-sharing services FREESE: There may be new players, but and ride sharing promise exactly the oppo- in more than 300 cities in 50 countries there won't be a really new situation for site: better utilization of cars as a resource? around the globe. the automotive companies. You've already FREESE: Both aspects are true: More peo- got global car rental firms in operation to-

Photo: Gene Glover/Agentur Focus Gene Glover/Agentur Photo: ple will be moving around and car capaci- day. Unlike the latter, Uber doesn't even

Automotive Insights 1 | 2015 26 Interview

could be a way of urging the automotive "Here and there we still OEMs to pull out all the stops and get a move on with the technology. After all, the sense opposition to big groups have been working on this kind of vehicle for a long time, but may have digitization in Germany." slackened the pace a little. Christian Freese What about the incumbents? Are the tradi- tional OEMs too confident about their own mastery of the complex automotive busi- ness? FREESE: That statement is a bit too sweep­ ing for my liking. A lot is happening at the German premium OEMs in particular. They are getting hooked up to online plat- forms and ramping up new transporta­ tion services, for example, as well as press- ing ahead with drive technologies such as e-mobility. A number of companies have set themselves up very smartly indeed. MyTaxi, a competitor of ours in Germany, plan to become a direct customer for cars. of our business model, after all. For us, it's for example, is part of the Daimler Group. At the very most, we will negotiate master important to gather knowledge about new Manufacturers such as BMW and VW are purchasing agreements for our partner technologies. By doing so, we make sure likewise very active in drive technol­ogies drivers. But we are a technology company, that new developments don't sweep us and connectivity offerings. so we definitely have a keen interest in ad- away. In the field of technology too, we In Europe, Uber is having a really hard time vancing technologies such as electromo- want at some point to commit to powerful gaining a foothold. In many places, the bility and automated driving. We also partnerships with others so that automat- model of having occasional drivers who use want to encourage OEMs to come up with ed driving is given priority and makes their own private vehicle has been banned. product innovations – to create vehicles progress. In Germany, you have now launched a ser- that are even better suited to our mobility Will self-driving cars really be ready for the vice that complies with legal requirements. services, for example. market in the foreseeable future? When Has Uber given up trying to overcome the Does that mean you would like to work to- will that be? resistance of the German regulators – or gether with OEMs to develop new vehicles? FREESE: For me, there is no question that merely put that battle off for another day? FREESE: We are an excellent point of con- this technology will become established FREESE: It is true that Germany is not an tact when it comes to finding out what the in the medium term. Around 90 percent of easy market. Some of the stipulations we ideal vehicle for this or that new mobility fatal car accidents are attributable to hu- face are way behind the times. They make segment might look like. For our part, we man error. So it makes a great deal of no provision for the ability to use an app have no concerns about getting involved. sense to replace people as a source of er- to place mobile bookings for transporta- Especially when you look below the premi- rors with self-driving systems. Having said tion services, for instance. But we are con- um class, there is still a lack of vehicle that, there are still obstacles to be over- fident that, in the months ahead, we can types that convincingly meet the demands come, especially on the legal side. It will convince the German political arena of of customers for taxi, rental and car-shar- undoubtedly still be more than five years the need to modernize the rules and regu- ing services. before self-driving cars are ready for the lations. Here and there, we still sense a Uber has announced its intention to collab- mass market. general opposition to digitization in Ger- orate with research centers on automated What part could Google play in this market? many. And the simple fact that we are an driving. Do you ultimately plan to build FREESE: I don't believe they want to be­ American company doesn't make things self-driving cars? come a transportation service provider easier with some of the people we talk to. FREESE: No, that's not what we want and themselves. But they are probably very in- But we are not prepared to walk away from that's not what we will do. Our only aim is terested in adding new car traffic data to the German market. We are here to stay. to stay abreast of new and important their own data ecosystem. The company is Once we have overcome Germany's skepti- product developments to make sure we now going all out to produce a self-driving cism, that will open doors wider in other don't miss the boat. Vehicles are the core car in its development workshop – this countries as well. Focus Gene Glover/Agentur Photo: AG Photo: BMW

Automotive Insights 1 | 2015 27 Who will be in the driver's seat?

Incumbent suppliers see automated driving as a chance to tap new revenue and earnings potential. But they don't necessarily have to become end-to-end systems integrators. We outline some alternatives.

by Wolfgang Bernhart and Markus Baum

n recent years, it was the OEMs who hit cars to operate in traffic and automatically have what it takes to handle the role of gen­ I the automated driving headlines. Late- take evasive action. Major tier-one sys- eral functional integrator. They therefore ly, however, the public gaze has increas- tems suppliers such as Bosch, Conti and see no reason whatsoever to tinker with ingly turned away from manufacturers. Delphi therefore believe they are well the traditional division of labor between Suppliers, who have invested hugely, dom- placed to play a leading role in the market OEMs and suppliers in the realms of auto- inate the news now. For example in April for automated driving. mated driving, or in any other disciplines 2015, Delphi sent a self-driving car from for that matter. This stance, of course, San Francisco to New York City. Driveline REALITY CHECK puts the former firmly in the driver's seat, company ZF Friedrichshafen has cast its So far, there is little visible evidence of this from which they merely allow partners to net wider by taking over U.S. safety tech- positioning. And there are good reasons develop individual components. (One such nology specialist TRW. The signs thus in- why it may never actually work. Under- component is the software that uses cam­ dicate that the future will shift the balance standably, large premium OEMs, but also era and other sensor data to recognize and of market power, provided the automated volume producers, are not keen to see any- classify objects.) The OEMs themselves driving market continues to develop. And one steal their thunder in such an import- take care of in-vehicle integration, which this shift could open up new opportuni- ant market. They see the integration of they also do for hardware such as the ac­ ties for suppliers. Why? Because they are automation functions as a core compe- tual sensors. Four new groups of players the ones with the knowledge of relevant tence of their own and, in the medium to are arriving on the scene, all of whom are software and sensor technologies – object long term, as a way to set themselves apart keen to offer automated driving as a com- recognition, for example. As such, they are from the competition. Moreover, most plete package to establish themselves as

Photo: Gene Glover/Agentur Focus Gene Glover/Agentur Photo: AG Photo: BMW the ones who make it at all possible for OEMs don't believe that tier-one suppliers leaders.

Automotive Insights 1 | 2015 28 Automated driving

1 Safety: The display signals to pedestrians that 1 the F 015 has "seen" them. 2

2 Touch sensor: Monitors the driver's ability to control the vehicle.

3 Cockpit of the future: Creates a comprehensive human-machine interface inside the car.

3

5

4

4 Embedded camera: Helps measure distances and recognize obstacles.

5 Head-up display: Projects content and information

about points of interest. AG Audi Photos: (3); AG (2) Daimler

Automotive Insights 1 | 2015 Automated driving 29

NEW ACTORS TAKING THE STAGE We see three strategic options for suppliers benefits such as less complexity. The world The first set of players consists of large IT to position themselves in the new market of mechanical engineering is full of exam- companies such as Google. These corpo- segment. ples of how such a model can be translated rations have defined self-driving cars as a Go for the big game. Any firm with aspira- into business success: specialists for sus- lucrative line of business for the future. tions to become a full systems provider – pension springs, chassis and engine The second group is hardware and elec- complete with all the vehicle and integra- mounts, gaskets and powertrain actuators, tronics specialists. Algorithms and the tion skills required – will have to master to name but a few. To achieve success in the ability to link and "smarten up" relatively three new areas of technology: automated driving segment with this kind basic hardware or consumer electronics → Navigation based on map, object and of positioning, suppliers must step up their components are their key strengths. In infrastructure data fusion, as well as be- development of hardware. That doesn't their chosen niches, firms such as visual havior prediction with the aid of machine-­ necessarily mean producing in house, but it information specialist Mobileye already learning algorithms does mean carefully considering which co- provide serious competition to estab­ → Vehicle control based on models and al- operative ventures with hardware develop- lished tier-one suppliers. They overcome gorithms that can set target values for hor- ers could usefully complement your own the draw­backs of using cheap hardware izontal, transversal and vertical vehicle competence and capabilities. (mono cameras instead of expensive ste- dynamics Focus on integration of the driver. In highly reo cam­eras,) by developing more com- → Human-machine interfaces (HMIs) to automated driving systems, the question of plex and powerful software. Software spe- integrate the driver into vehicle control in how to embed the driver is still a neglected cialists from robotics or the aerospace certain situations task. But it will be an important feature in and defense sector make up the third It is important to realize that the target the future. HMI is a device that allows the group. They transfer their know-how group for the complete package will be driver to provide the system with input (in from these industries to the automotive small: incumbent OEMs with a technolo- the future likely via voice or gesture recog- sector and act as integrators or software gy follower position, niche providers in nition). But this will not be a one-way algorithm special­ists on behalf of the the premium segment, and start-up man- street: the HMI will also provide informa- OEMs. ufacturers from the emerging markets tion on system status and on traffic. More The fourth group comprises chip develop- (mostly from China). importantly, it serves to monitor the driver ers such as Intel and Qualcomm, who are Focus on "specialized commodities". One in- and ensures that vehicle control can be good at developing integrated circuits for teresting alternative can be to adjust posi- handed over safely. It also helps to priori- entire in-vehicle sensor systems. Some tioning and become a "specialized com- tize information. Although the HMI will OEMs are already bypassing automotive modity" supplier – of sensors or software, remain a key differentiatior for OEMs, they suppliers and establishing direct collabo- for example. If this strategic option is im- will still need partners to realize innovative ration with these chip developers instead. plemented cleanly, it can yield considerable ideas for driver integration.

EVOLUTION OF AUTOMATED DRIVING Implementation timeline of selected automated driving functionalities

2013 2014 2015 2016 2017 2018 2019 2020 2025 2025+

Lane change assist Traffic jam assist Urban automated driving Lane keep assist Highway pilot1 DRIVING Intersection assist Highway chauffeur1 Fully automated system

Parking assist steering only Valet park assist Parking with app Fully automated parking PARKING

Construction zone assist2 Emergency power-down Emergency steer assist SAFETY Predictive emergency braking and predictive pedestrian protection Photos: Audi AG AG Audi Photos: (3); AG (2) Daimler 1) Highway pilot = highway chauffeur + higher degree of automation; 2) Tested – date of series production not available

Automotive Insights 1 | 2015 30 Blindtext JAPAN UNDER SIEGE

Reviewing electromobility – How leading automotive nations compare. An update in three dimensions.

by Wolfgang Bernhart and Thomas Schlick

THE ROLAND BERGER E-MOBILITY INDEX We regularly observe the e-mobility market, mapping the positions of leading players. Our analysis is driven by questions regarding the market, technology and industry.

MARKET Key question: Based on current customer demand, how large is demand in the domestic market? TECHNOLOGY Key questions: How far have manufacturers come in development? What is the level of state investment?

China Japan USA

Korea

France Germany Italy

The study is conducted in INDUSTRY cooperation with the Auto- motive Competence Center Key question: How much value do automotive system and component

& Forschungsgesellschaft Images via Getty JTB Photo/UIG Photo: Kraftfahrwesen mbH, Aachen manufacturers contribute to the domestic industry?

Automotive Insights 1 | 2015 E-mobilityBlindtext 31

Charging station: Infrastructure for e-car owners is improving slowly. TECHNOLOGY A NEW E-PREMIUM CLASS E-cars continue to be very expensive in Germany and the U.S.. Japan has improved its value-for-money ratio. China is the price leader, but still lags behind in terms of technology. This might change soon: China's industrial and regulatory policy pushes innovation in electro­- mobility. The government invests more than EUR 7.7 bn in this field, which is 0.1% of GDP. France and Germany rank 2nd and 3rd in terms of state investment.

Value for money [EUR/points]

MARKET Japan Low FIGHT FOR FIRST PLACE China Good France leads in terms of e-car/hybrid sales in relation to overall France sales, followed by the U.S. and Germany. However, if we take a different perspective and look at total sales the U.S. are in the lead; China - the government pushes sales of domestic brands - is able to take the second position here. Moderate Korea

E-cars/hybrid cars share of total sales [%] sale price [EUR] Avg.

1.16 Poor USA Germany France High 0 100 200 300 400 500 USA 0.71 Avg. technology level [points] 0.55 Germany

Cell manufacturers: INDUSTRY Projected global market share in 2017 [%]

POWERED BY CELLS Total: USD 4.2 bn It is not just the vehicles that are pushing the industry forward; cell Japan 32 manufacturers are crucial drivers as Panasonic/Sanyo well. Japan's Panasonic/Sanyo group is Korea 15 leading here because of TESLA supply. Samsung Korean followers Samsung and LG are Japan 15 expected to see a major leap when 2018 AESC vehicles are included. Japan

Photo: JTB Photo/UIG via Getty Images via Getty JTB Photo/UIG Photo: LG 14 Source: Roland Berger

Automotive Insights 1 | 2015 32 MultichannelBlindtext

Customer relations manager: Needs a broad range of skills to guide customers through all channels

Reconnect with your customers

Many OEMs find themselves trapped in traditional structures when trying to innovate their retail activities. To facilitate a positive customer experience, OEMs need to be open about new retail formats, but should not lose sight of network efficiency

by Jan-Philipp Hasenberg, Philipp Grosse Kleimann AG Audi Photo:

Automotive Insights 1 | 2015 Customers 33

such as physical pain. Microsoft/Wake­ In our experience, there are specific rea­ field research revealed that 70 percent view sons that explain why the process of retail dealers more as an obstacle to a fair and innovation is evolutionary rather than rev­ transparent transaction than a help, while olutionary. Path dependencies increase 67 percent believe buying a car is one of structural inertia within the retail organi­ the most intimidating purchases a person zation and prevent true innovations from can make. What this means for auto­ spreading. A comprehensive multichan­ motive players: Third party providers such nel approach would for example require a as Truecar and Autonation (U.S.) as well as meinauto.de (Germany) and Aramisauto (France) benefit from the low appeal of traditional sales channels to younger car 97% buyers. The four retailers have adapted use the internet for vehicle research their business models to these new pat­ terns of behavior. Customers can purchase closer collaboration between marketing, a car that is tailored to their exact require­ sales and aftersales, as well as a redistri- ments conveniently from their own home b­ution of power between wholesale and with complete price transparency at any ­retail operations, all of which is difficult to time of the day. implement. This is why "greenfield" solu­ tions with no legacy systems in place (e.g. BMW i and Tesla) allow for more progres­ sive solutions. As a consequence, many <1% initiatives of established OEMs remain in chose the current car buying process an experimental phase or are decentral­ as their ideal customer experience ized activities driven by the markets. Their focus often lies on digital sales and digitiz­ Whether it is moving from offline to on­ ation of the point of sale, whereas the line channels, from stationary to mobile ­actual goal should be to increase the over­ showrooms or from tangible to virtual all efficiency and effectiveness of the entire customer experiences, the winds of change retail process (e.g. reducing investment are disrupting the automotive retail in­ requirements in facilities, improving con­ dustry. Fully integrated multichannel op­ version and loyalty rates). In many cases erations (e.g. BMW i, Tesla) and en­ this leads to fragmented sales activities. hanced customer interaction centers Often the cost structure behind the inno­ (e.g. Fiat Live Store in Brazil) may still be vations is neglected and a comprehensive scarce for now, but quite a few players are vision of what the multichannel landscape rolling out new retail formats (e.g. BMW will look like in the end is lacking. uying a car could be so much fun if it Brand Experience Center in Shanghai, B didn't fill people with dread. In recent Audi City in London, Mercedes me Store years the shopping environment and cus­ in Hamburg) and setting up their own tomer needs have drifted farther apart in online sales activities (e.g. Mercedes in 42% the automotive business than in any other Germany and Poland, BMW i in many use multiple devices to shop for a car industry. Worse, some customers actually markets, Dacia in Italy, UK, Netherlands). perceive buying a car, for which they spend Modeled on Apple's soft-sell retail stores, Some premium OEMs are learning impor­ more than a year's salary, as an unpleasant BMW introduced the "Product Genius" – tant lessons by looking to other business duty instead of an exciting experience – a customer service personnel who do not sectors for inspiration. Having started ear­ bizarre paradox in a buyer's market. work on commission and consequently ly, they are at the forefront of multichannel Millennials, who are as comfortable inter­ are incentivized, not to sell to, but to sat­ retail within the industry. The advantage of acting with devices as they are with people, isfy customers. This approach is also premium OEMs lies in their financial lee­ unfortunately find the traditional car buy­ ­followed by other OEMs, such as the way to undertake comprehensive experi­ ing process a nuisance and associate the "Prod­uct Concierge" at Mercedes-­Benz or ments. The resources of volume OEMs,

Photo: Audi AG Audi Photo: sales experience with negative attributes Hyundai Rockar's "Angels". which are operating within tight margin

Automotive Insights 1 | 2015 34 Blindtext

Leather covers à la carte: Embarras de richesses (left); Clear the stage for...the new car (above)

structures, are by comparison far more motive dealers have a unique position with­ new stores or digital touchpoints. In limit­ ed. Priorities differ as well. While ­in the traditional sales process. Instead of ­order to avoid creating multiple silos, all brand experience is the focus for premium circumventing them by offering direct formats must be interconnected in an manufacturers, maintaining an affordable purchases from the OEM, e.g. via the in­ ­intelligent way. This is a prerequisite for sales network is the most important aspect ternet, they should be integrated into a ac­tive­ly guiding customers to the next for the activities of volume manufacturers. multichannel model. The initial online step across various formats (i.e. from con­ After conducting extensive research into sales experience may even exclude the ac­ figuration to test drive). Such a move ne­ retail innovations and best practices tual transaction. OEMs could allow buyers cessitates generating and distributing found in other industries, we can suggest to make most choices along the way on­ consistent data at all touchpoints linked many useful ideas that would help posi­ line – including model configuration, test to the customer based on a stable IT sys­ tion manufacturers for the next develop­ drive booking, trade-in evaluation and mental stage in automotive retail. Our credit check. For the final price negotia­ proposals are flexible enough to enable an tion and contract closure, the customer evolutionary multichannel approach for may then be handed over to a branch of­ 21% both premium and volume segments. fice or dealer. Moreover, aftersales and see independent online vendors (e.g. Amazon) service are key tools for an OEM to main­ as an alternative sales channel to the dealer 1. BE OPEN ABOUT EXPLORING tain customer loyalty, so dealers remain THE RIGHT FORMATS – BUT IN THE END an essential part of the equation. tem. This is a true challenge for OEMs: CHOOSE A MANAGEABLE PORTFOLIO it entails changi­ng their perspective on We have compiled a library of interesting 2. BASE YOUR MULTICHANNEL CONCEPT the ownership of customer data between formats for retail innovation, which can ON THE CUSTOMER JOURNEY – man­ufacturer and dealer. It also requires address various targets – but not all can BUT FOCUS ON CONNECTIONS AND specific competencies in analytics and be met at once. For example, stationary GOVERNANCE customer handling, not to mention em­ formats like brand stores increase brand Implementing new retail formats alone ploying new technologies. accessibility and exposure and support will not be enough to capitalize on the ben­ Companies also have to ensure that multi­ the premium brand experience. Another efits of a multichannel retail approach. channel activities are working as an inte­ approach would be to set up different yet The new landscape has to enable a seam­ grated system. Therefore the overall issue complementary stationary formats, such less customer journey. Implementing sta­ of governance has to be revisited, includ­ as urban sales outlets: They help to bridge ble, systematic linkages between the vari­ ing processes, organizational structure gaps in the network. ous formats and adapting the governance and and a realignment of dealer compen­ It may also be necessary to redefine the system to new technological developments sation, for example. Today, only the dealer­ role of the dealer network if OEMs do not are key to success, but often ignored by ship that successfully concludes the con­ consider a transition to direct sales. Auto­ practitioners as they are less visible than tract receives the full remuneration AG BMW Images; Stiller/Bloomberg/Getty Akos Photos:

Automotive Insights 1 | 2015 Customers 35

("winner takes all"). This is not really a 3. BE OPEN TO SIGNIFICANT the dealer margin or charging commission ­problem in today's world, as only standard CHANGES – BUT REMAIN REALISTIC fees from dealers. As a consequence, we be­ dealerships with comparable ranges of ABOUT TOP-LINE BENEFITS lieve that multichannel business cases services compete with each other. How­ We believe that multichannel retail opera­ should be calculated without the pressure ever, in a multichannel environment this tions can lead to a more effective and prof­ of generating additional top-line benefits, may change. Retail formats are then set up itable retail business than traditional such as immediately increasing sales vol­ to fulfill specific and complementary ser­ structures. However, the financial success umes or prices. A business case should not won't come in every case, especially with­ take this for granted, but rather view it as out comprehensive measures. To realize upside potential and focus on increasing benefits instead of sitting on additional efficiency of the sales system first. 44% costs, OEMs have to realign the structure would buy a car online of sales partners and points of sale. The setup of a multichannel organization can­ vices along the customer journey and may not be efficient if the new channels are 59% 1 sometimes even not include a sales func­ established on top of the old ones. Apart of young car buyers expect a response to tionality. Brand or pop-up stores be geared from additional investment costs, the email/web inquiries within 24 hours only to generating leads and not cover con­ competition between sales activities of tract conclusion. Test drive centers will be the same brand would increase. In most In the end, automotive customers should focused on a very specific step in the pur­ cases this calls for reducing and even re­ be able to enjoy buying a car or car-related chase experience. How can they be com­ placing old structures with new ones. services again. Car manufacturers should pensated for their contribution to the over­ Often neglected, the real potential of a mul­ become benchmarks for customer expe­ all sales success in a way that allows for tichannel approach lies in its lower cost of riences and offer consumers the conve­ profitable individual business cases? We retail: OEMs can offer more qualified sup­ nience they expect. They should re-connect recommend a more differentiated ap­ port to their dealers. A Customer Interac­ with their customers through tailored re­ proach. In the future, formats should earn tion Center could prequalify prospects and tail formats and individualized interac­ commission on the service they have of­ forward hot leads to the dealer, for exam­ tions without losing sight of the efficiency fered (e.g. test drive or consultation) if it ple, while a centralized test drive hub could of their retail system. leads to the successful sale of a car or ser­ cut financing costs for demo cars at dealer­ 1) aged 18-34. Sources for all figures: AutoScout 24 "Auto­ vice – no matter the format in which the ships. Higher operating costs for these new kauf in der Zukunft" (2015); Autotrader "Car Buyer of the customer finally concludes the contract. formats can be offset by retaining a share of Future" (2015); Capgemini "Cars Online" (2014)

FROM FIRST SIGHT TO LAST MILE No matter if a customer is traditional, digital-savvy or looks for convenience: A smart multichannel approach offers a very individual path through the journey with appropriate touchpoints for each type.

Pre-sales phase Sales phase Ownership phase

Pop-up store/ shop-in-shop Standard dealership

Experience Shop-in-shop STATIONARY center Drop-off point

Mobile Mobile test Mobile sales force Mobile service drive fleet sales force force MOBILE SALES CHANNEL SALES Customer Customer contact contact

VIRTUAL center Customer online portal (incl. online sales) center

Photos: Akos Stiller/Bloomberg/Getty Images; BMW AG AG BMW Images; Stiller/Bloomberg/Getty Akos Photos: Traditional customer Digital-savvy customer Convenience oriented-customer

Automotive Insights 1 | 2015 36 Food for thought Take a deep dive and find out more in related articles, studies and magazines by Roland Berger authors.

What will automotive markets of the Business opportunities in precision future look like? farming: Will big data feed the world The news is full of business models such as ad- in the future? vanced connectivity systems, innovative shared Precision farming ­refers mobility concepts, and of course, self-driving cars to a broad range of being showcased around the modern technologies ­world. The automotive indus- that enable more effi­ try certainly plays a big role, cient management of but tech companies and new agricultural land. They entrants are increasingly can be clustered into becoming the driving forces robotics and automa­ behind these developments. tion technology, ima­ Once new players enter the gery and sensors, digiti­ value chain with innovative zation and big data as business models and game-changing technologies, well as bio-engineering. the ensuing shake-up can leave prominent incum- All of these technolo­ bents irrelevant and facing consolidation or bank­ gies are interlinked via New market players ruptcy. The numerous trends impacting the auto- connectivity. Roland are pushing into the motive industry require the industry to respond Berger experts analyze market with ever — but it is the confluence of connectivity, shared the global market for great­er speed and mobility and automated driving that will truly put precision farming, look aggres­sion. Small the industry as it's known today to the test. at how the technologies wonder: The global are going to develop market vol­ume for THE WORLD OF INDUSTRY 4.0 in the period through smart agriculture Industry 4.0, the comprehensive inter- 2030, consider their applications will grow connection of processes in production, impact on traditional 12 percent per year logistics and services, is a huge issue at practically every large manufacturer and new market players ­through 2020. But in Europe. Humans, machines and alike, and present five traditional­ providers resources all communicate with each innovative business find themselves under other. Our latest magazine analyzes what this development means in particular opportunities along the increasing pressure for the COO – the Chief Operating Officer. H. Krüger, CEO of BMW agricultural value chain. in the near future.

Automotive Insights 1 | 2015 Food for thought 37

RETHINKING POWER RB'S AUTOMATED Publisher ELECTRONICS VEHICLES INDEX Roland Berger GmbH Developments in power elec­- The Automated Vehicles quar- Automotive Competence Center tronics – applications that terly index makes it possible to Sederanger 1 supply the electric power to identify the competitive posi- 80538 Munich control motors – mean a tion of the relevant automotive Germany prospective bonanza for smart countries and compare the +49 89 9230-0 players. With regulatory automotive markets on the basis www.rolandberger.com changes setting new targets for of identical global benchmarks. emissions and fuel efficiency, Germany and the US lead in the Person in charge according automotive players must step development and market launch Vehicle electronic to German press law up their investment in electric of (partially) auto­mated vehicles. Marcus Berret technology by 2020. architectures – THE DIGITAL TRANS- Consolidation Editors AUTOMOTIVE CORPORATE FORMATION OF INDUSTRY Dr. Cornelia Geißler VENTURE – A STRATEGIC How important is it? Who are ahead (Editor-in-chief) LEVER FOR AN INDUSTRY the winners? What must be IN FLUX done now? A European study The master key to un- Dr. Katherine Nölling Corporate ventures offer large commissioned by the Feder- locking value in the next (Managing editor) Johann von Georg companies a window onto ation of German Industries generation of "smart the start-up world along with (BDI) and conducted by Roland Jan-Philipp Hasenberg access to the most cutting- Berger explores the causes cars". Increasing the edge technologies and inno- and effects of the digital trans­- number and complexity Design vations. Ventures act as formation­ with regard to the of electronic control Blasius Thätter (Art director) laboratories for testing new "industrial heart" of Europe. Kathrin Schemel (Designer) ideas with minimal financial units (ECUs) is a major Susanne Nips (Photo editor) commitment. Yet the handful trend in the automotive of existing automotive corpo- industry. The industry is Printing rate venture initiatives have Pinsker Druck und Medien, now at a tipping point seen mixed results, as compa- Munich nies often struggle to over- where adding ECUs is come their bureaucratic no longer sustainable, Circulation (online/print) nature or set a clear vision. either economically or 5,500 Nevertheless, when done right, these initiatives provide functionally. Module Disclaimer not only financial returns, consolidation – the use Opinions expressed in this but critical strategic value. of a single domain con- magazine do not necessarily troller instead of an reflect the views of the publisher. Some of the content MEDIUM AND HEAVY COMMERCIAL VEHICLES IN INDIA independent processing contained in the publication is After two challenging years, the Indian economy is showing signs unit for each ECU – is subject to third-party copyrights. of modest recovery in 2015. All key indicators have improved The copyright of third parties is over the last quarter or so, e.g. GDP growth has passed 5% after a a solution already being gap of more than 2 years. India's medium & heavy commercial made available to ad- expressly indicated in the text where applicable. vehicle (M&HCV) industry is highly correlated with GDP; the cargo dress the complexity segment has a near-perfect positive correlation with GDP growth. As the economy recovers, the M&HCV cargo segment will be the issues arising from first segment within the CV industry to rebound. ­these trends.

Automotive Insights 1 | 2015 38 FamousBlindtext cars THE GOLF Moving a generation

The Golf takes what- ever you throw at it. 16 crates of beer, for example. The Golf swallows them all without a murmur. It's not just the 700-liter space in the back: The suspension too just shrugs and does its job. It's nice to have such a forgiving car that puts up with everything, of course. But we still don't want you to have to cart so much stuff around in your car. That's why the Golf is only 3.70 meters long, slipping neatly into all those lovely parking spaces that are too tight for long cars. But if you do have to load it up, the tailgate too makes things so much simpler. In fact, there is only one way to make life even easier: Take your strongest friend along with you. Getting to ride in a Golf will be more than enough reward. Golf, the compact VW. A car, an engine and a bundle of fun.

The Golf 1 marked the beginning of an had big shoes to fill when it was launched pp. 6-7), the Golf may turn out to have been era. It was the car for an entire generation. in May 1974. Yet the newcomer (and its one of the last of a dying breed. For now, Especially in Germany and Europe, it be- successors) exceeded all expectations and that doesn't seem to be a problem for came synonymous with a certain carefree, became Volkswagen's most successful car, Volkswagen: The 2015 Golf has been can-do lifestyle. Driving it made life easy selling 27.5 million models around the named North American Car of the Year™ and fun for the '70s generation. This was globe. Finding another model to become by fifty-six independent automotive - jour the car that tore down barriers, creating a the symbol of a generation will be a tough nalists. Having moved an entire generation sense of boundless freedom. Chosen to task, though. As car ownership loses its ap- – in every sense of the word – the Golf is succeed the vastly popular Beetle, the Golf peal to younger drivers (see "Trends" on obviously still going strong. Aktiengesellschaft Volkswagen Photo:

Automotive Insights 1 | 2015 39 CONTACTS AND AUTHORS

For more information about the topics covered in this issue, please contact our contributors: UNITED KINGDOM NETHERLANDS Robert Thomson René Seyger Phone +44 (20) 3075-1103 Phone +31 (20) 7960-608 [email protected] [email protected] AUSTRIA GREATER CHINA NORTH AMERICA Rupert Petry Andreas Männel Jiten Behl Phone +43 (1) 53602-101 Phone +86 (21) 5298 6677-860 Phone +1 (312) 662-5500 [email protected] [email protected] [email protected] BELGIUM Junyi Zhang Stephan Keese Didier Tshidimba Phone +86 (21) 5298 6677-860 Phone +1 (248) 729-5116 [email protected] [email protected] Phone +32 (2) 6610-0 Thomas Wendt [email protected] HUNGARY Frigyes Schannen Phone +1 (248) 729-5116 CROATIA [email protected] Vladimir Preveden Phone +36 (1) 30170-70 Marc Winterhoff [email protected] Phone +43 (1) 53602-301 Phone +1 (248) 729-5500 [email protected] INDIA [email protected] FRANCE Dr. Wilfried Aulbur ROMANIA Sebastien Amichi Phone +91 (91) 67218-171 Codrut Pascu [email protected] Phone +33 (1) 53670-479 Phone +40 (21) 30605-00 [email protected] ITALY [email protected] Max Blanchet Roberto Crapelli RUSSIA Phone +33 (1) 53670-479 Phone +39 (02) 29501-257 Eduard Cherkin [email protected] [email protected] Andrea Marinoni Phone +7 (495) 2257-645 GERMANY [email protected] Markus Baum Phone +39 (02) 29501-291 [email protected] SINGAPORE Phone +49 (89) 9230-9249 Paolo Massardi Keisuke Yamabe [email protected] Dr. Wolfgang Bernhart Phone +39 (02) 29501-218 Phone +65 (6597) 4545 [email protected] [email protected] Phone +49 (89) 9230-8909 Thomas Klotz [email protected] JAPAN Marcus Berret Dr. Satoshi Nagashima Phone +65 (6597) 4566 [email protected] Phone +49 (89) 9230-9249 Phone +81 (3) 35876-741 [email protected] [email protected] SOUTH AMERICA Alexander Brenner Yuzuru Ohashi Martin Bodewig Phone +49 (89) 9230-8511 Phone +81 (3) 35876-741 Phone +55 (11) 3046-7111 [email protected] [email protected] [email protected] Norbert Dressler Akio Okamura SOUTH KOREA Phone +49 (89) 9230-8511 Phone +81 (3) 35876-385 Soosung Lee [email protected] [email protected] Philipp Grosse Kleimann Dr. Martin Tonko Phone +82 (2) 2288-0003 [email protected] Phone +49 (89) 9230-8511 Phone +81 (3) 35876-675 [email protected] [email protected] SWEDEN Jan-Philipp Hasenberg MALAYSIA Per I. Nilsson Phone +49 (89) 9230-8511 Anthonie Versluis Phone +46 (31) 75755-14 [email protected] [email protected] Felix Mogge Phone +60 (3) 2203-8600 Per M. Nilsson [email protected] Phone +49 (89) 9230-9249 Phone +46 (31) 75755-10 [email protected] MIDDLE EAST [email protected] Jürgen Reers Tobias Plate SWITZERLAND Phone +49 (89) 9230-8909 Phone +973 (17) 5679-23 Sven Siepen [email protected] [email protected] Dr. Thomas Schlick Michael Wette Phone +41 (43) 336-8671 [email protected] Phone +49 (89) 9230-9249 Phone +41 (43) 336-8631

Photo: Volkswagen Aktiengesellschaft Volkswagen Photo: [email protected] [email protected]

Automotive Insights 1 | 2015 In the age of automotive digitization, companies' readiness to adapt will ultimately separate the winners from the losers. (Page 23)