The automotive experience reimagined

1 Rising expectations around Within weeks of the pandemic’s start, $1,321.74 billion in 2020—was being tipped to sustainability, new definitions of luxury three of Japan’s largest carmakers—Nissan increase at a compound annual growth rate and digitally-enhanced vehicles are Motor Co., Mitsubishi Motors Corp. and (CAGR) of 9.3% this year and at a CAGR of 8% set to change the way people think Mazda Motor Corp.—had put 20,000 to $1,988.72 billion by 2025, according to one about cars forever. Now is the time for of their workers on temporary leave.4 In survey of the global passenger car market the automotive industry to reimagine Germany, meanwhile, COVID-19 compelled published in February 2021.7 products, services and experiences that an estimated 95% of automotive-related deliver against customers’ new values, companies to put their workforces on part- Now, as OEMs look ahead to a future beyond wants and needs. time schedules during the shutdown— the pandemic, the time is right to reimagine and people who were temporarily laid off the role of cars in our daily lives for good— Connectivity, autonomous vehicles recieved a substantial amount of their pay reestablishing their value and rebuilding the and electric and shared driving are four government-subsidized.5 emotional infrastructure and relationships megatrends that had been disrupting humans have with them. the automotive industry—causing Lockdowns and social distancing measures unprecedented technology and business used to stem the spread of COVID-19 also It’s a shift that can be likened to the humble model transformation—for a while.1 Then a sped up important shifts in consumer horse evolving beyond simply being viewed global pandemic magnified these pressures, behavior that were already set to have a and used as a functional “beast of burden.” forcing organizations to rethink many significant impact on original equipment In the same way, people will expect more aspects of how they do business. manufacturers’ (OEMs’) futures. of their cars in the future—more safety, more experience, more flexibility and more COVID-19 quickly devastated industry Conscious consumption, shopping local and integration into our daily lives beyond simply growth by almost instantly stalling consumer e-commerce have all grown significantly being a mode of transportation. demand. In the U.K., sales of new cars were over the past year and the acceleration down 50% year-over-year by the end of the of these trends are set to continue.6 While Moving forward, OEMs need to organize first national lockdown, in June 2020.2 And by just a year or two ago attentions were fixed the whole business around the delivery of February 2021, British new-car registrations on convenience and simplicity, now it’s all exceptional experiences, which is what we for that month had slumped to the lowest for about rapidly evolving priorities around call the Business of Experience. It means a February since 1959.3 sustainability and redefining notions of rewiring the customer-facing functions of the “ownership.” organization: marketing, commerce, sales On top of this, there was widespread and service. The Business of Experience is disruption to supply chains in an industry A year from the start of the first lockdown, an approach that allows organizations to all about “just in time” production, global automotive sales were starting to rally. become customer-obsessed and reignite networks and lean inventory. their growth. The global passenger car market—valued at

2 Here, we identify four opportunity areas. Yet to date, many services and offers have As a result, people feel torn between wanting Each is significant and important in its struggled to deliver against what change to embrace greener lifestyles and not own right. Combined, they represent a demands, creating a perception that singular wanting to forgo the daily convenience of reimagination of the whole automotive and one-sided solutions are not up to the private mobility. They want everything at the domain. This is the time for OEMs to job because personal mobility is just too same time and they expect OEMs to expand take innovation seriously and holistically complex, too contextual and too diverse. their offerings accordingly. reimagine the automotive experience in line with technological progress and human Meanwhile, consumers’ expectations Meanwhile, cars are taking on new roles in change. continue to rise—especially around people’s daily lives. Increasingly, they’re being sustainability. People want more from their reconsidered in terms of both functionality 1. New sales experiences cars, and they want the companies behind and usage. And as cars become more 2. Change for good: The road to zero them to deliver more, too. connected, flexible and adaptive, they’re emissions offering many of the features of a home 3. From lost time to prime time: Cars as OEMs need broad-based openness and away from home. experience platforms courage to leave the beaten track and 4. Software-defined vehicles: From embrace the era of technology in order to Business trends: predictive personalization to rebuild automotive from the core. They need individualized interaction to integrate personal, shared and public OEMs need to rethink their entire business transportation infrastructure into a seamless around people’s new demands and respond experience that adapts to the different needs to the value created by digital experiences. Radical change of consumers. And they must address a set of underlying, accelerating trends that fall To do this, they need to scale flexible digital driven by realism into two broad categories. capabilities across both their main business and the entire value chain—from new points Human trends: of sale and payment models to logistics, The automotive industry has long been production and product innovation. powered—and characterized—by change. People are reluctant to accept compromises From shared mobility to carpooling and around mobility—a necessary part of modern Challenged by new entrants, new digital communal mobility, there has been a life and society—and they are often blind to disruptors and new partnerships, incumbents massive shift in how people move from point the contradictions that exist. For instance, also need to embrace agile software delivery, A to B. Now, the industry stands on the brink on one hand they strive for the luxury and fast iteration cycles and constant expansion of a radical change in attitudes toward car flexibility of owning a car, on the other of digital services as areas of growth. ownership. hand they’re increasingly demanding more sustainable mobility solutions.

3 Striving for a holistic view

What’s needed now is nothing less than a will be paved with electric options, circular reimagining of the automotive industry’s production and new models of shared foundational building blocks to explore mobility, going from one-time purchases completely new areas of value and expand to total cost of ownership. Meanwhile, the range of experiences in the daily lives of expanding the car into a more versatile tech their customers. device will turn it into a true life companion.

It’s too easy to focus on incremental areas of Understanding how the decoupling of improvement. Instead, what’s needed is an software and hardware can help us wrap understanding of mobility as an integrative consumers in a software bubble that moves layer of working, living, social experiences with them from vehicle to vehicle will create and health. This understanding will offer a whole new paradigm. progressive OEMs the opportunity to redefine their value propositions, set new OEMs that have high ambitions for human industry standards and reimagine the future experience and embrace this kind of of mobility. meaningful innovation will grow and sustain their mission while leading a positive shift New digital sales experiences will make in the automotive domain. They’ll need to choosing and buying cars as smooth as the be ambitious, because radical expectations drive itself by offering radical transparency demand radical ideas. and letting people experience the vehicle in a virtual setting. Reimagined physical touchpoints will evolve from singular options to interconnected points that support and elevate the digital experience in the offline world.

As we move into new frontiers of sustainability, the road to zero emissions

4 Experience Reimagination Automotive - The new sales experience 01 The new sales experience

When buying a car, customers What’s going on want a digital-first experience The automotive sales model is primed for that combines the flexibility change.

of virtual product interaction Today, almost 90% of customers use online with the convenience of channels in the early stages of their decision- making journeys. While previously customers buying online and the personal visited dealerships on average eight times consultancy of a dealer. before deciding what vehicle to buy, today With the use of e-commerce the average is somewhere between one and two times.1 and expectations of brand experiences driven to new heights by the pandemic, now is the time to reimagine the car sales experience.

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Meanwhile, many large original equipment On top of this, the plethora of information manufacturers (OEMs) expect to achieve and reviews available online had flipped the 25% of global passenger car sales through symmetry of information between dealers online channels with their trading partners and buyers on its head. by 2025.2 In the world’s largest auto market, China, digital sales are expected to account Yet despite all this, the quality of the car- for 10% of new vehicle sales by 2025 and buying experience was falling short. 43% by 2035. Then came COVID-19, and some important Yet currently, most of the automotive aspects of the automotive sales experience industry’s established OEMs still rely on a were highlighted. The first is the value of traditional sales model. Typically, this involves the digital experience in choosing and an OEM selling its cars to an independent buying a car, which was magnified during dealer—with the dealer playing a central role the pandemic—a time when traditional real- in pricing, marketing and sales—then the world showrooms were forced to close. dealer selling direct to the consumer. Volkswagen and FAW’s joint venture virtual New players such as Tesla, NIO and Canoo, showroom in China, for example, attracted however, are now challenging established 2.5 million customer views at its peak. More OEMs and their dealers with a direct than 2,000 Volkswagen dealerships are customer approach that offers convenient presenting the current model line-up via sales and mobility experiences.3 And OEMs livestreams.4 are starting to design new, more customer- centric sales models in response. During 2020, car brands including Mercedes- Benz, Honda, Volkswagen and BMW Before 2020, digitization was evolving the car launched online portals and embarked on sales experience and expectations around it. an accelerated digitization of consumer touchpoints. Mercedes-Benz, meanwhile, It was clear that selling cars online wasn’t launched a host of remote customer as simple as putting inventory on a website initiatives under the umbrella theme Merc or offering a sleek configurator, and that from Home, which used digital tools to boost digital experiences that empowered and ease of purchase.5 entertained were needed to transport people from browse to buy.

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The second issue raised by COVID-19 was the importance of OEMs meeting customers’ rising expectations of the quality of the experiences associated with buying a car— expectations raised by the high-quality experiences provided by brands in other industries where digitization was more advanced.

When it comes to buying a car, customers no longer just want to be inspired and informed online. Increasingly, they want a digital-first experience that combines virtual interaction with the car with the convenience of buying online, plus the personal consultancy of a dealer. What’s next Further, they expect all related experiences— from digital brochures all the way through to The current sales model is likely to remain Deserted showrooms have left lots full of after-sales—to be joined up. in place for some time. However, the time is cars and salespeople idle at a time when right for OEMs to accelerate their efforts to COVID-19 has accelerated people’s desire Now, as OEMs assess the lasting impact tackle its many shortcomings. for many more products and services to be of shifts in consumer behavior caused by delivered to them at home. the global pandemic, the stage is set to Among the most important are an address the shortcomings of the traditional unsatisfying customer journey caused by The relationships the sales model fosters in sales model and pave the way for new sales limited online options; an inconvenient its present form are also lacking. experiences. purchasing experience and insufficient channel alignment; inconsistent pricing, The fact that customers visit car dealerships which results in intra-brand competition; infrequently—when they’re shopping for and little engagement between OEMs and a car or for a service or they’re “locked in” customers, which limits OEMs’ access to with a particular dealer or OEM—makes customer information and so the capability the customer-dealer relationship purely for truly data-driven sales.6 transactional.

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Further, car buyers are spending less time misaligned digital and physical sales vehicles (EVs)—the sales of which are now shopping and spending fewer days in experiences can leave people feeling predicted to grow by 22% by 2026—as EVs market—during which time they are visiting shortchanged. need less aftercare.10 a smaller number of dealers and making their purchasing decisions more quickly.7 The All too often a customer who has configured Yet while many dealers admit that new car knock-on effect of this is reduced time for a car online is either unable to access the sales are not profitable for them and want dealers to build relationships. additional information they need or test drive to change business models, they struggle the precise desired car once they visit the to change due to capital investments, fixed Finding new ways to engage with customers dealership. sales territories and OEM relationships.11 more effectively—be that more personalized advertising or more convenient interactive At the same time, it will be important to Looking ahead, further pressure to change sales journeys online—is an obvious continue to evolve physical touchpoints the current sales model will come from the opportunity. and their role in customer decision- growing sales of EVs—which typically last making and the sales journey. Some 70% longer and have less wear and tear—and Meanwhile, the limited contact OEMs have of consumers find the concept of a brand rising subscription usage models, such with their end customers impacts the experience center appealing, research by as Canoo’s mobility in exchange for a relationship between the brand and the Cox Automotive shows.9 Boutique-style city membership fee proposition.12 This will need customer. center locations for brand experiences such to be balanced with the sale of services and as Tesla Stores, Audi City Cyber Stores and experiences. Customers don’t really want to negotiate Mercedes-Benz Visionary Stores are a few on price, research shows. When asked, 81% examples of new retail formats. prefer fixed transparent prices, for example, yet they do want a physical, visceral The case for change is further strengthened interaction with the car as part of the sales by how challenging it has become for process: 77% of consumers still want to buy dealers to turn a profit on new car sales as in a physical store.8 competition erodes their margins.

Then there’s the disconnect that often Another challenge associated with the exists between the digital and physical existing model is that dealerships make more components of the car-buying customer profit from aftercare service than the sale journey. With the majority of customers of the asset. This revenue pressure will only starting their car-buying journeys online, increase, however, with the rise of electric

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Opportunities for reimagination Tesla’s touchless delivery experience, In India, Renault has trialed mobile meanwhile, involves test-drive vehicles left showrooms, for example,16 blending 1. Meeting customers in parking lots at Tesla locations, each with convenience with the tactile nature of car where they really are its unique QR code posted in the window. buying. Interested parties scan the code, enter their information and get started on a test With a mobile showroom, the dealer can drive without talking or even seeing a Tesla draw on a larger pool of cars to bring 2020 brought many changes to the retail employee.15 the closest car a prospective buyer has experience, especially when it comes to configured online to their home for a what consumers will venture out for and It will also be important for organizations safe and convenient test drive. With the what they expect to be delivered to their to respond to habitual changes and meet opportunity to touch and feel different homes. Anxiety about health and safety will customers where they can be found now: at vehicles and options seamlessly delivered ease over time. Yet many shifts in behavior home and online. This will require a seamless to their door, the disconnect between the and expectations now look likely to endure integration of the digital channel with the online and physical experience for the buyer beyond the pandemic. physical, which will continue to have an is closed. important role to play. It will be critical for OEMs to learn lessons In the U.S., a number of dealerships are from the pandemic. New digital retailing While customers browse and increasingly testing similar models in response to the tools drove process efficiencies and shop for their mobility online, there will still success of new entrants. Carvana, for achieved higher buyer satisfaction, for be important physical touchpoints. And it will example, has innovated with its car vending example, improving the automobile buying 13 be important that these physical touchpoints machines, multi-story structures holding process during the prolonged downturn. don’t feel like starting from scratch or an dozens of cars where buyers pick up their interruption of the process. online purchases. It’s operated using a Early in the pandemic, FCA UK launched special oversized coin the buyer puts into the Car@Home, a service that allows dealers Dealers need to take on new roles in machine, and out comes their car.17 to sell vehicles and communicate with 14 the experience and have full access to customers remotely via videoconferencing. customer data, preferences and choices in Finally, nearly half of drivers want after- It also introduced a chat function across order to amplify the user’s experience, not sales services to be integrated seamlessly all of its brand and retailer websites so, just merely complement or fulfil it. In this way, into their daily lives, saving them the time like visiting a showroom, customers on disconnected and separate points of sales and effort of having to go in person to the website can engage with their retailers will turn dealerships into locations people a workshop or dealer service location, in real time, receiving engaging, relevant use to explore their personalized mobility. according to internal Accenture research. information when they need it.

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2. Experience concierges

Today’s car dealer plays the role of sales Dealers need to double down on their point and gatekeeper to vehicle ownership. profitable service business but not restrict But what if their role evolved to being a this to pure car service. purveyor of experience? Some dealerships already invite existing As Experience Concierge to all our mobility and prospective customers to track days experiences, a car dealer or OEM could to test the full potential of a car in a safe create more reasons for authentic customer environment. Such experiences are often interactions and develop longer-term limited due to cost, however, which means relationships based on trust. The opportunity opportunities to experience the car in a more is for them to play a greater role in helping immersive way are missed. consumers experience the car and truly feel what it would be like to own that vehicle. If a dealer were to help a customer arrange a night on the town—organizing dinner Mercedes-Benz’s User Experience team set reservations, a show, perhaps even an three goals for the development of its in-car overnight stay as part of an elongated test- voice experience: drive experience—the customer could have a deeper, richer experience of what owning 1. Allow drivers to talk as naturally as they that car could really feel like. The dealer, would to another person. meanwhile, could collect commission for the 2. Support more types of queries than third-party referrals they’ve aligned to the typical voice services. interests of that customer. 3. Integrate voice more naturally into the overall in-car experience so users can Rethinking how dealerships create seamlessly switch between voice and experiences in which the car plays an touch control.18 important part can help drive car sales, improve dealers’ margins and provide customers with more emotional connection than achievable with a 30-minute test drive.

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3. Partnering to evolve the dealer model

New entrants such as Tesla have proven that BMW is using a collaborative digital the direct sales model has benefits for both experience management platform to solidify the OEM and the customer, starting with relationships with its dealers and customers. the lower cost of sales. Traditional OEMs Dealers and manufacturers collaboratively are encumbered with an existing dealer cultivate relationships with the customers network, however. This means that they need they seek, using consent-based marketing to evolve the role of and relationship with and advanced analytics to engage with dealers over and beyond simply running pinpoint accuracy.20 small pilots. Further, the company has used customer OEMs have an opportunity to partner with data to create relevant digital experiences dealers and move from a wholesale model that have resulted in higher levels of online to a retail model where they may finance the conversation.21 dealer inventory, reducing dealer costs or subsidizing online advertising costs. Evolving the dealer model to a retail model will also help reconnect the customer Ford, for example, partnered with dealers directly with the OEM and stabilize or fix the during the pandemic to offer new vehicle sale price. To achieve this, OEMs will need home delivery. Those who agreed to to invest in central customer management participate were offered incentives for systems and help evolve the financial model completing the entire purchase process to fix pricing and mitigate discounts, creating online.19 an opportunity for dealers to maintain their current 1-3% margins.

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Taobao shopping platform, which attracted 4 4. Customer million viewers in April 2020.23 ambassadors Chery, meanwhile, launched its new Tiggo 7/7 PRO model exclusively via livestream, Borrowing from different consumer sales generating more than 7,000 sales leads, models will unlock other opportunities. according to official data.24

A satisfied customer could become a customer ambassador who shows off their own vehicle in return for a small commission— 5. Data transparency something some enthusiastic Tesla owners have been willing to do for free. This model Customers are demanding greater would reduce costs and create an authentic transparency around how their data is used connection between consumers. It could also by organizations. These organizations need help new customers by connecting them with data—and more of the most useful data— relatable people with whom they can discuss to develop the new value-added, more vehicles and product features. personalized and relevant offerings customers now expect. A rich area to explore sits where Chinese EV company NIO is leveraging its these two needs collide.25 many customers, who pride themselves on their loyalty to the brand, by building Inspiration can be found with the data- online communities of satisfied customers focused start-ups that have already emerged to encourage them to act as sales in this space. representatives. Existing owner referrals accounted for more than 45% of its cars sold Cloud-based software start-up Otonomo, in 2019.22 for example, helps companies capture and monetize connected car data by harnessing Other brands are partnering with social media and anonymizing it for use to create apps influencers to leverage their followings and to provide services like EV management, generate sales leads. For example, Tesla usage-based insurance or subscription-based worked with the Chinese online celebrity Wei fueling.26 Ya to present the brand’s models, specs and prices in an hour-long video stream on China’s

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CarDr.com provides artificial intelligence- powered transparent and comprehensive 6. Recharging used-car inspections.27 It benefits dealers by drivers and cars enabling them to accurately appraise trade- ins and existing used-car inventory, as well as detect odometer and VIN fraud. It benefits With the rise of EVs, the time it takes to buyers by giving greater transparency into the charge their batteries and the number health of a used car. of charging stations mean there’s an opportunity for dealers and OEMs to The experience of buying a used car is often integrate charging into customers’ daily lives. overlooked. Yet it’s growing in importance due to sustainability concerns, and it’s ripe for Imagine if during the time that the car reimagining. was charging, a customer could grab their favorite Starbucks coffee, access some salon As with new cars, much information services and even plan their weekend with concerning used cars has been an on-site Experience Concierge? Done well, democratized. Yet with critical data still such services could be not only a reason to trapped in OEM and dealer systems, pockets visit, but possibly even more compelling than of opaqueness remain. Systems like Carfax simply fueling the car. already provide some level of transparency.28 Now, community-generated insight models are also evolving.

One example of this is the bringatrailer.com community—a rich set of aficionados who regularly dissect images of cars put up for auction to offer counsel and confidence to potential bidders around issues that can arise. Many of those providing these insights have actually owned similar vehicles so speak from experience.

Community-generated validation models like this are cost effective and can help build trust for OEMs. 13 Experience Reimagination Automotive - The new sales experience

What automotive leaders can do next

1. Experiment and pilot By building a centralized database to better retrieve and analyze customer data, an OEM Small-scale pilots are a useful starting point, can cut siloed data waste. and many brands are already trying to do some or all of these things in markets like 3. Bridge the divide Scandinavia and South Africa. Customers want a digital-first experience To pilot moving from a wholesale to a retail that combines virtual product interaction model, start a dialog with dealerships to with the convenience of buying online and change the commercial model by finding a the personal consultancy of a dealer. So, find middle ground. ways to bridge the existing digital-physical divide. To explore potential for creating experiences that allow a customer to feel what it’s like to Create new experiences around taking own a car, take inspiration from Airbnb-style products and services to where customers experiences—a long weekend camping in a are: in their homes. Take inspiration from Subaru Outback, for example, or a racetrack online used-car dealer Carvana, a new experience bringing people together to test- entrant already doing this—with showrooms drive a high-speed, high-performance car. located wherever its customers are, from living rooms to mobile devices—to prove the 2. Create direct relationships with model works.29 customers

Today’s car dealers are the middlemen between OEMs and customers. But what if OEMs built more direct relationships or provided the glue between the digital channel and the dealerships, like a customer relationship management (CRM) system that builds one view of the customer? 14 Experience Reimagination Automotive - Change for good: The road to zero emissions 02 Change for good: The road to zero emissions

When it comes to sustainability, What’s going on the automotive industry doesn’t Consumer demands have driven sustainable have a great track record. But automobile solutions to become a matter of at a time when consumers survival for the industry. don’t just want change but are Globally, 66% of car buyers consider sustainability when deciding if and what to demanding it, organizations buy.1 On top of this, there’s pressure from have a powerful opportunity governments on manufacturers to support to take the lead in driving the sustainability initiatives. Norway, for example, now plans to raise the per-ton carbon tax sustainability agenda forward from $95 to $240 by 2030 to help reach its through the products, services climate goals.2 and experiences they create.

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Momentum for change is building. And However, if the automotive industry is to Whatever the solution, it will need to match with nearly 40% of people worldwide open truly maximize value to society and the people’s lifestyles. to innovative e-mobility solutions, the environment, it needs to adopt circular pressure is on automotive original equipment economy practices—or a so-called “circular The most effective strategies will involve manufacturers (OEMs) to change and car” approach. exploring a variety of smart tools and options adapt—fast.3 to adopt more sustainable life choices, What’s next progressively shifting toward more ethical The road to zero emissions is paved with and ecological options along the way, so that innovation and it’s being powered by A circular car approach means the efficient it fits seamlessly into people’s everyday lives. electricity. Electric vehicles (EVs) are one part use of resources and public goods and of the solution, and many manufacturers are measuring success in terms of the ability moving toward EV fleets. The share of total to provide mobility and reduce carbon EV car sales is now predicted to be 10% by emissions and non-circular resource 2025, increasing to 28% by 2030 and 58% by consumption.8 2040, though predictions vary by region and by OEM.4 This starts from an organization’s business model and extends across car production Ford, which is on track to fulfill its through distribution to miles driven. commitment of an $11.5 billion investment Achieving circularity is not a one-time effort, in electrification through 2022, recently however. Instead, it’ll require collaboration doubled its commitment to $22 billion across the automotive ecosystem over the and extended the timeline to 2025 while years and decades ahead.9 also investing an additional $7 billion in autonomous vehicles.5 This will be a major priority for OEMs in the coming years. BMW plans to double its fully EV sales this year, which already accounts for 15% of its Because people like convenience and sales in Europe.6 Tesla led the race in 2020 want greater sustainability, a significant by ramping up production to just under opportunity lies in new sustainability 500,000 full electric vehicles by the year’s solutions that are pragmatic enough to end.7 survive the flow of daily life.

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Opportunities for reimagination

1. It’s electric

EVs are a great start for the industry to Yet the batteries that power EVs have a become less of a catalyst for climate change, way to go, which is why many brands are with research now proving that EVs reduce investing in research and development into emissions. battery manufacturing that can achieve truly clean energy solutions. For some years, it was suggested that emissions produced during EV Chinese EV giant BYD and Japan-based manufacturing combined with the electricity Toyota, for example, are now partnering for needed to power the vehicles once on the EV battery R&D. Stellantis and Total/Saft road made EVs bigger polluters. But in 53 have created joint venture Automotive Cells of 59 global regions—making up 95% of Company to do the same.13 the world—EVs and electric household heat pumps produce fewer emissions and are In Germany, Opel has created a better for the environment than fossil fuel refurbishment center near its production alternatives, according to a recent study.10 plant for end-of-life batteries. This paves the way for second-life use by creating a OEMs are stepping up. Daimler is now charging point from used battery packs and working toward having an electric or hybrid by recycling spare parts to return to the first- version of each of its models by 2022. life battery cycle.14 Volkswagen has pledged to achieve the same by 2030. General Motors, meanwhile, Such initiatives prove that investing in a recently announced it will only sell zero- cleaner power source positions the entire emission vehicles from 2035 on.11 industry for success. They also help in setting standards beneficial to all regarding topics such as charging and payment regulations and grid integration, which is essential for ensuring sufficient infrastructure.

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2. The circular economy

The automotive industry’s philosophy activities. With the re-factory, we are also on the value chain has already shifted reaffirming our industrial footprint in France fundamentally—from “take-make-waste” and are working with our unions to maintain linear production and consumption models the jobs that were originally dedicated to car to “reduce, reuse, recycle.”15 Yet though EVs manufacturing.” are leading the charge, they alone cannot save the day. Circular economy strategies have the potential to reduce carbon emissions per With projections suggesting that EVs will passenger kilometer by up to 75% and non- account for 28% of all car sales by 2030, circular resource consumption by up to 80% sustainable success will also depend by 2030, according to Accenture research.19 on achieving a true circular economy.16 This means leveraging circular economy With cars increasingly bought online and strategies to transform products, as well as flexibly subscribed to for shorter time the way the products are used. periods, revenue streams are shifting toward the use phase, and the drive toward To move from sustainable ambition to circularity is slowly picking up speed. Already, reality, there are four main transformation most automotive materials are recyclable. pathways to increase circularity: energy Meanwhile, more and more cars are being decarbonization, material circularity, lifetime built to last and to be repaired. optimization and utilization improvement.17 These are all important aspects of circularity. “Renault has long been dedicated to making But more work will be necessary to its business model more circular,” said Jean- fundamentally reimagine the value chain Philippe Hermine, Renault’s vice president, to minimize lifetime carbon emissions and Strategic Environmental Planning.18 resource consumption. “Extending vehicle lifetime, providing a second life for parts and recycling, as well as new innovations, will be at the core of these

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3. Redefining luxury

Today, 88% of consumers look to brands to compressed timber product made from a help them be more environmentally friendly sustainably harvested rattan called karuun.22 in their daily lives.20 Delivering on this is therefore quickly becoming essential for a Volvo Car Group’s EV sub-brand Polestar, brand’s future success. But when it comes to which is exploring materials ranging from cars, going green goes far beyond greening flax to recycled bottles and fishing nets, a car’s power source. has a state-of-the-art manufacturing plant in Chengdu, China. The plant showcases Eco-conscious consumers expect to see every aspect of the brand’s sustainability change from the inside out. Considering focus—from improved efficiencies in energy that the materials and manufacturing expended in its factories to the wellness of burdens of a new vehicle can account for its employees.23 anywhere from 6% to 25% of its lifetime carbon footprint, both can have a material Using new materials can also increase the effect on sustainability.21 energy efficiency of vehicles by saving weight, which is becoming even more critical OEMs need to drive holistically sustainable as battery technology matures. “Our material solutions across the supply chain, and with can cut the weight of interior panels by up their innovative use of more environment- to 50%,” said Per Martensson, chief sales friendly materials, luxury auto brands are officer at Bcomp—the Swiss supplier of a leading the way. flax-based composite Polestar is using.24 “So, we reduce the plastic content drastically, and Mercedes-Benz has incorporated a host of we increase the performance.” new materials. For example, Dinamica—a sueded fabric made from recycled plastic bottles and clothing fibers—is used for covering seats. On floorboards and dashboard trim Mercedes-Benz uses a

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What automotive leaders can do

1. Give innovation the backing it deserves circularity. And this framework should raise industry ambition from merely doing less Innovation is a top priority. In fact, 71% of harm to building a truly sustainable global automotive executives believe that the stakes economy. for innovation have never been higher.25 So, it’s imperative that multifaceted innovation Remember, sustainability starts with design— is not only funded but incorporated into a not just product design, but also all the brand’s core operation. different design components that go into creating mobility solutions. Think beyond the hunk of metal that is the car to see how you can innovate within 2. Walk the walk the production process: in the factory, along the supply chain, in your approach It’s essential that OEMs act, rather than to partnerships—for example, collaborating simply pledge, to make the world better and with other organizations you might consider that they’re transparent about what they do. competitors. Today’s consumers—younger groups As technology continues to evolve and new especially—want positive actions on materials are uncovered, it’s a smart move to sustainability from brands, not just words. In invest in strengthening research partnerships fact, 87% of Generation Z are worried for the with ecosystem partners and third-party environment and the planet, and 90% believe organizations. Combining powers is key to companies must drive action on social and unlocking new insights and know-how, as environmental issues.26 already seen in the race to better battery production for EVs. However, true success lies in agreeing upon a common framework for guiding and measuring progress toward

20 Experience Reimagination Automotive - Change for good: The road to zero emissions

For OEMs this means viewing everything ten biggest automakers are working to drive they do through a sustainability lens. sustainability through the supply chain, is a This should begin with the source materials great example of this.29 OEMs use—questioning what they’re made from, how they’re produced, how long Car brands must go the extra mile in creating they’ll last, if they’re recyclable, or at least a more sustainable tomorrow. This could biodegradable, and so on—and extend even mean investing in helping strengthen a to engaging with industry bodies and city’s infrastructure for charging or becoming governments to find effective ways to enable more engaged in the design of smart cities. EVs to be on the road. Toyota, for example, recently rebranded Be transparent. For instance, develop itself as a mobility company with a focus on strategies that enable increased data developing new technology to change the transparency and information sharing with way people move.30 Then in February 2021, it other players along the automobility supply broke ground on the construction of Woven chain up to, and perhaps including, joint City—a prototype city of the future that’s standards.27 being built from scratch at the bottom of Mount Fuji in Japan.31 3. Widen your horizons As well as being home to an initial 2,000 Sustainability doesn’t just mean better for the residents, Woven City will be a living environment—it’s also better for the greater laboratory where Toyota can test the latest good. OEMs should, therefore, ensure smart technologies. sustainable mobility strategies that also address the need to benefit communities.

Partner with others to meet and then exceed people’s growing sustainability expectations—like EV software companies Hubject and ev.energy did to simplify home and public EV charging.28 Consider public- private partnerships. And partner with competitors for the greater good. The Drive Sustainability partnership, where the world’s

21 Experience Reimagination Automotive - From lost time to prime time: Cars as an experience platform 03 From lost time to prime time: Cars as an experience platform

Cars no longer just get us What’s going on from point A to B. Today, they Not so long ago, the car was simply how act as a charger or hot spot, we got from one place (and experience) to another. The time spent riding in them was an office, a place to relax, or effectively wasted. However, this has been even an entertainment venue. totally upturned by technology, especially With cars now valued not just connectivity. for convenience but also their Today’s vehicles are becoming an extension safety (over public modes of of our homes. Increasingly, cars are seen as another valued member of our digital device mobility), the time is right to family—much like an Alexa or iRobot vacuum upscale ambitions for what the cleaner—they’re a way for us to connect with our lives at home even while we’re away. future in-car experience can and should be.

22 Experience Reimagination Automotive - From lost time to prime time: Cars as an experience platform

BMW has been leading the way for years touchscreen. The car’s dashboard goes way What’s next with BMW ConnectedDrive.1 This digital, beyond providing car information—rather, connected “drive-o-tainment” and services it’s a concierge that helps drivers navigate While varying degrees of connected vehicles suite allows the user to control in-car everyday life.4 currently cruise the roads, forecasts suggest comfort, entertainment and security, and an installed base of 700 million units of also manage multiple facets of their daily Much like our phones, car dashboards connected vehicles by 2030, with all new life—from configuring at-home devices to now go far beyond their initial use. And cars being connected from 2020 and booking services—all while on the road. when connected with mobile devices that beyond.6 help us control our lives at home—such as Subsequently, BMW brought on board Alexa or Nest—the ability to incorporate a Historically, connectivity and integrated key strategic partners to expand home’s functionality into a car’s functionality flexible software platforms limited adoption. ConnectedDrive’s connected services and promises a whole new world to explore from experience ecosystem. Particularly notable is behind the wheel. With the advent of 5G, Android-based its integration into Tmall Genie, the first smart car platforms and Apple Play integration, voice assistant developed by China’s Alibaba Benefits to the user range from optimizing for example, automotive industry original AI Labs.2 errands with shopping and pick-up equipment manufacturers (OEMs) will functionalities to feeling confident in develop new ways vehicles can increase General Motors’ GM Marketplace, the conducting meetings on the go, knowing productivity and build value over and above industry’s first in-car commerce platform, you can check on home from miles away. their transportation capability. is the next step in brand experiences for And people’s appetites for this in-car customers. It connects users with the brands functionality are growing. All of this creates the ideal environment for they love, providing offers and discounts, the automotive industry to reimagine the loyalty programs, restaurant reservations, In the long term, cars will offer the biggest in-car experience and upscale ambitions for parking spot bookings and a curb-side opportunity for 5G Internet of Things and, by what its future can and should be. concierge for retail pickup and orders to go.3 2023, the automotive industry will become the largest market for 5G IoT solutions, Meanwhile, in the U.S., Fiat Chrysler Gartner predicts.5 Automotive has introduced Uconnect Market, a commerce platform that facilitates services like ordering food conveniently, finding the nearest gas station, or making dinner reservations using the vehicle

23 Experience Reimagination Automotive - From lost time to prime time: Cars as an experience platform

Opportunities for reimagination space. In fact, just as the home’s role in an Opportunities will also arise from OEMs array of our daily activities has grown, so too partnering with third parties that are already will we see the car’s role extended. One-fifth doing voice-activated services well in other 1. Car as extended of British motorists used their cars as a spare sectors. The key will be not building bespoke, living space room over the first half of 2020, according to siloed gardens that might limit future options a Skoda study.11 Alternative uses ranged from while broadening the array of aspects of catching up on work to watching TV, taking a daily life their customers can control from nap or creating a play space for kids. inside their car. Before the pandemic, consumers were 7 spending more time at home. Then, as we Airo, a concept car from London-based The question for OEMs, then, is: What new were forced to engage with more of the Heatherwick Studio for a Chinese-built green products, services and experiences can they external world from inside our personal car, includes flexible interior features easily create around the car’s new role as extended spaces, this shift was further accelerated in reconfigured to suit different needs. These living space? 2020 by COVID-19. include a dining table and swivel chairs and reclining seats that can convert to a double Today, the home is the place where most bed.12 of our experiences in work, health and play reside—not just for now, but for the Voice-activated services—increasingly used foreseeable future. Some 43% of people who in a growing number of homes via smart had never worked from home pre-COVID speakers like Echo and Alexa—and the now say their preferred working pattern potential to integrate them more deeply post-pandemic would involve working from across home and car are important parts of home at least once a week, our own research this opportunity. shows.8 Mercedes-Benz’s bespoke in-car voice Among employers, there are now indications technology system, Mercedes-Benz User that many businesses may never go back 9 Experience (MBUX), is one of the most to traditional ways of working. Unilever 13 10 intelligent voice assistants on the road. and Nationwide are among those to have MBUX is a concierge in the dashboard recently confirmed plans to change post- that caters to a wide range of driver and pandemic working patterns. passenger needs. By leveraging a variety of biometric technologies, it also provides a Our spending more time at home has given new level of personalization and security that our cars the chance to shine as an additional are quickly accessed using voice.

24 Experience Reimagination Automotive - From lost time to prime time: Cars as an experience platform

2. It’s game time 3. Safe and sound

Many have talked of the potential for a For years, in-car safety has been about new world of in-car entertainment once airbags, crumple zones and driver assistance autonomous cars become an everyday systems. Then customers’ health and reality and drivers become passengers with safety concerns changed as a result of the extra time on their hands. pandemic.

But why wait? The in-car entertainment Today, physical safety features remain just as experience is already ripe for reimagining. important. But we’re now more likely to see There’s plenty of scope to create more our cars as safety bubbles that can protect immersive experiences for passengers, us from an invisible virus more effectively which is what Holoride is now doing. than shared public transportation, for example. Holoride’s mission is to turn vehicles into moving theme parks.14 By combining real- Chinese automaker Geely Auto, whose time vehicle data with XR, it offers a dynamic parent company owns high-end brands backseat experience that matches every Volvo Cars and Lotus, announced in February movement of the car to turn each ride into 2020 that in response to the coronavirus, its a thrill. By harnessing the data and idleness forthcoming Icon electric SUV would feature at hand to create experiences ranging from an N95-certified air purification system gaming to educational tours, it’s transforming that could “isolate and eliminate harmful 15 dead time into time well spent. elements in the cabin air,” including viruses. But what about beyond the pandemic? How could OEMs evolve health and safety within the car further and make it more enjoyable? Smarter cars mean smoother rides and the promise of relief from motion sickness. In fact, advanced driver assistance vehicles showed a 27% reduction in bodily injury claim frequency and a 19% reduction in property damage frequency, according to a report from LexisNexis Risk Solutions.16

25 Experience Reimagination Automotive - From lost time to prime time: Cars as an experience platform

What automotive 2. Remember: 1 + 1 > 2 leaders can do next From fleets to app development and beyond, the key to future industry success lies in OEMs’ ability to form partnerships that 1. Empower autonomy supersede their past collaboration efforts. In a complex system of emerging tech, it’s Autonomous vehicles will create many only logical that companies look to third- opportunities to connect to adjacent areas party collaborators. While the past was about like wellness, entertainment, and beyond. secrecy, the trend toward multiparty systems To prepare, OEMs need to actively provides a shared data infrastructure experiment in these spaces and start to enhance trust, transparency and understanding consumer needs in a much collaboration—even among competitors.19 wider context than just getting from point A to B. And they need to partner up across The benefits of sharing data extend beyond industries to make it happen—following the outcomes and efficiencies. Sharing data example set by the likes of Waymo or Cruise also contributes to a more connected 17 for their development of self-driving cars. society and, in the case of advanced driver- Toyota’s e-Palette self-driving vehicle was assistance systems (ADAS), safer and more developed with partners like Amazon and satisfied consumers. Uber.18 3. Think big, act bigger In the future, mobility needs to reach beyond automotive partnerships: Think big. It’s time to think bigger than the sale of a is neatly demonstrated by Turo, which is Imagine restaurants sending a car to pick single car as a main objective. capitalizing on rental car companies slashing you up for a truly door-to-door experience, their fleets during the pandemic with its app dealers sending cars to your door for a Nearly half of all drivers in a multicountry that enables private car owners to rent out test drive and many more multilayered survey of 7,000 consumers said they would their private vehicles.21 experiences. consider giving up vehicle ownership in favor of autonomous mobility.20 To keep customers in the future of autonomous mobility, experimenting and OEMs need to fully commit to embracing dabbling in ideas now isn’t enough. OEMs alternatives to the ownership model. need to start positioning mobility services as The power of thinking big and acting bigger a valid alternative to car ownership.

26 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction 04 Software-defined vehicles: From predictive personalization to individualized interaction

As OEMs shift their business What’s going on model from product-focused The automotive industry has pivoted to software services, business from hardware creation to software optimization. Not so long ago, the car was is no longer “as usual.” a feat of mechanical engineering. Today, Software-defined vehicles not it’s a connected machine that has a lot in common with a consumer electronics only require new production device.1 approaches and ways of working, but also a paradigm Car buyers no longer base their purchasing decisions on horsepower and unique seat shift in how drivers and innovations. Instead, in-car technologies passengers experience vehicles have become a primary consideration for consumers when buying a car, an Accenture and what they can do above survey on connected vehicle solutions and beyond transportation. shows.2

27 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction

Digital services are what matter. Some 59% In China, now the world’s largest car market, of buyers consider a car’s connectivity Shanghai Automotive Industry Corporate in their purchasing decisions—a huge and Alibaba have a strategic alliance to opportunity for the connected car industry.3 jointly manufacture cars with an internet connection. Both Dongfeng and Changan Empathetic car interiors are already a reality. automobile manufacturers, meanwhile, Such interiors respond to an individual’s have technological agreements with Huawei in-car experience and preferences using an Technological Co. Ltd.5 array of sensors to pick up nonverbal as well as verbal cues. But they don’t just enable an In short, the industry has undergone a enhanced in-car experience today; they also fundamental shift, creating a desire for pave the way for far greater personalization new business models and new driving in the near future. experiences based not on buying and selling a car, but on mobility services. New technologies have driven OEMs to Never has it been more critical for OEMs to rethink the way they design, manufacture optimize their digital capabilities and plan for and distribute cars from the ground up, new connected automotive experiences and across both the supply chain and the the smart mobility services that lie ahead. customer journey. They have increased the availability and value of data, fueling the evolution of a new generation of more tailored and responsive propositions and services.

Meanwhile, the ability to update your car over the air (OTA) is driving software-centric OEMs such as Tesla—an early adopter of the capacity to push OTA software updates to its vehicles, which it first did in 2012—to the top.4

28 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction

What’s next

The automotive software market is set for include the stringent regulatory and policy significant further growth. requirements they must meet while applying cutting-edge technologies and competition Globally, the connected car market is from emerging enterprises. Further, they expected to reach just under 353 million must confront the fact that digitization is units by 2023—a threefold increase in just about more than reinvention. five years—with China already the fastest- growing market, and Europe expected to be As their ability to keep pace with change the largest.6 will be critical for their survival, OEMs must adapt accordingly—upgrading current By 2025, in-car integrated marketplace apps architectures to support the artificial will account for $17.3 billion of vehicle-related intelligence software that will be needed for purchases and personal consumer spending autonomous vehicles, for example, which by 2025, one estimate suggests.7 will make traveling by car safer and more efficient.10 In the U.S. alone, where 135 million workers pre-pandemic spent 51 minutes on average Standardized platforms for smart mobility in their cars for their daily commutes, services will be defined, paving the way for commuter commerce (transactions a reimagination of automotive experiences. conducted in-car while on the go) is Internet of Things (IoT) capabilities will calculated as a $230 billion opportunity.8 advance, which will enable data to be transmitted securely across more complex By 2025, the global automotive software ecosystems of interconnected devices. market will be worth $56 million—up from $19 million in 2019, at a CAGR of 19.7%, The future of mobility promises a driving according to one estimate.9 experience that is automated, seamless, personalized and on-demand. In the new race to OEM digitization, the stakes are high, however. OEMs face a variety of challenges. These

29 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction

Opportunities for reimagination

1. Growing demands for personalized experience

In a world of liquid expectations, the Consider heated seats. Beyond making them success of today’s brands—irrespective of adjustable to an individual’s temperature their industry—is dictated by the adaptive preference, what if an OEM better leveraged personalized experiences they provide. And that customer’s data to remind them of the OEMs are no exception. feature if left unused, tailor it according to needs or location, and even package it When reimagining the automotive as part of a premium in-car personalized experience, two particular areas worth environment proposition? exploring stand out. Transferable personalization is a second area The first is OTAs and where they might take worthy of closer consideration. you. With vehicles increasingly defined by their Today’s standard cars have approximately software and operating systems becoming it could learn which are most used, then 100 million lines of code—up to 1 billion common in cars, there’s an opportunity prioritize the display for easy access through for autonomous vehicles.11 Yet, when it to reimagine how software can be used an adaptive menu. The ability to transfer comes to OEMs using software for updating to create a consistent set of personalized on-demand preferences and functions from and enhancing the customer experience, experiences. These could be centered one vehicle to another creates opportunity development is embryonic. around the driver or passenger, with each for a host of new customer propositions—for individual able to migrate their profile from example, a subscription for fast Wi-Fi in all Tesla aside, too many OEMs are content vehicle to vehicle. your Uber rides for a month. with OTAs that are, at best, superficial— mainly only experienced by the customer With advances in machine learning, this In this way, OEMs can redefine their core as an onscreen update. But what if an OEM profile could learn and adapt to users’ value propositions to align with where other leveraged some of its cars’ built-in features needs. By saving core preferences (e.g., consumer industries have already migrated. more wisely? temperature, seat posture, button size),

30 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction 2. The OTA mindset

For decades, car features were updated technological platform solutions for with each model. Now, vehicles receive OTA data-driven business models and group updates, with features added bimonthly. innovation. It expects to increase its in-house This keeps customers satisfied and the software development up to 60% by 2025; competition on its toes. Therefore, a speedy the proportion today is less than 10%.13 and agile response are essential if OEMs want to keep up—and lead—in tomorrow’s Daimler has committed more than €70 automotive marketplace. billion (est. $85 billion) to digitization and electrification.14 It plans to cut out traditional OEMs will need to embrace and foster parts makers in order to fund a software agile working environments, data-driven development push that will involve hiring decision-making and the rapid speed at thousands of coders to build an operating which business will increasingly be done. system that rivals that of Tesla. It has also To make these updates and iterations brought key strategic partners such as Nvidia possible, companies need to prioritize digital onboard to expand its software ecosystem reinvention and operate more like start-ups, over the last couple of years.15 with agility and innovation at the heart of their operations. An OTA mindset is about approaching agile as a way of life, which is essential if an OEM is Volkswagen has established CARIAD, which to achieve the organizational—and cultural— employs about 5,000 people and develops transformation it will need for future success. the VW.OS automotive operating system, to develop common software for all brands and markets to prepare for the future.12

VW plans to invest €7 billion in this organization by 2025—money that will be spent on activities such as its VW.OS automotive operating system, connecting with VW’s automotive cloud, consolidating

31 Experience Reimagination Automotive - Software-defined vehicles: From predictive personalization to individualized interaction

can be faster and more effective to adopt rather than ceding control to big tech. Gain What automotive new technology from dedicated, focused access to previously inaccessible customer leaders can do next and agile external teams. OEMs can rapidly insights and transactional data.19 access new technologies—often at a lower cost than if they’d developed the technology To turn that data into valuable market 1. Identify which strengths to play to in-house or commissioned it from their insights for economic growth, create new traditional supply chain partners. functions and an operating model that By 2030, 30% of an OEM’s revenues will enables data analysis and a data-driven come from services, so identifying the 2. Optimize for partnership decision-making process—around pricing, right services to develop and appropriately for example, or production volumes and 16 resourcing their development is key. OEMs will not be able to succeed in the stock configuration planning.20 future alone. They’ll need partners. Consider which areas or domains of your 3. Rethink vehicle and vehicle function vehicle’s operating system you want to This may mean striking partnerships with development cycles control or monetize. Speech control, for organizations they see as competitors, such example, or account log-ins, customer data, as other OEMs or big tech. But they need With the development of EVs, which etc. Choose which to prioritize and which to to push themselves to do so even if it feels have very few moving parts, the physical relinquish. uncomfortable. And they have to tackle the engineering of cars is becoming simpler— thorny issue of revenue sharing with partners at a time when automobiles’ software is Then, tool up. head on, and how best to do it. growing ever more important and complex.21

Speed up the transformation to digitization Choose your platform partner(s) wisely. With software and electronics becoming and electrification. Become an ambidextrous Automakers will rarely be able to become more crucial differentiators than hardware, organization that’s more agile and reactive software-driven alone. AWS, Google, decouple vehicle and vehicle function 17 to changing customer expectations. Focus Microsoft, Tencent and Baidu are just some development cycles. your talent strategy to attract the best data/ of the main platform providers looking computer scientists to meet these new to occupy this space. When selecting a To eliminate the “dilemma of smart things”— priorities. Invest in new skills. Restructure for software platform, it’s important to determine the need for constant upgrades caused 18 more collaboration. which one offers the most versatility and by the constant innovation required to security in the region in which you plan to keep pace with constant technological Select the right partners, too. operate. advances—work to enable software and hardware updatability and upgradability.22 Rather than compete internally for limited At the same time, work toward becoming budget against internal bureaucracies, it the owner of all your customer touchpoints,

32 The new sales experience Change for good: From lost time to prime time: The road to zero emissions Cars as an experience platform

Authors Authors Authors

Axel Schmidt Axel Schmidt Axel Schmidt Senior Managing Director Senior Managing Director Senior Managing Director – Strategy & Consulting, Global – Strategy & Consulting, Global – Strategy & Consulting, Global Lead, Automotive Lead, Automotive Lead, Automotive

Joel Van Durme Joel Van Durme Joel Van Durme Managing Director – Interactive Managing Director – Interactive Managing Director – Interactive

Kristina Bonitz Kristina Bonitz Ankur Mathur Managing Director Managing Director Managing Director – Interactive – SinnerSchrader, a part of – SinnerSchrader, a part of Accenture Interactive Accenture Interactive

Tobias Kruse Tobias Kruse Managing Director – Fjord, Managing Director – Fjord, a part of Accenture Interactive a part of Accenture Interactive

Anna Allen Anna Allen Creative Strategist Creative Strategist – SinnerSchrader, a part of – SinnerSchrader, a part of Accenture Interactive Accenture Interactive

33 Automotive - Software-defined vehicles: From predictive personalization to individualized interaction About Accenture Introduction References

Authors Accenture is a global professional services company with leading capa- 1 Impact On The Automotive Industry: Navigating The Human And bilities in digital, cloud and security. Combining unmatched experience Business Impact of COVID-19 (Accenture, April 2020, Link) and specialized skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services — all 2 How Lockdowns Affected The Automotive Industry (carmoney. powered by the world’s largest network of Advanced Technology and co.uk, Link) Intelligent Operations centers. Our 537,000 people deliver on the Axel Schmidt promise of technology and human ingenuity every day, serving clients 3 Lowest UK February New Car Sales Since 1959 (Reuters, March 4, in more than 120 countries. We embrace the power of change to create 2021, Link) Senior Managing Director value and shared success for our clients, people, shareholders, partners – Strategy & Consulting, Global and communities. Visit us at www.accenture.com. 4 Japanese Carmakers Plan To Put 20,000 On Temporary Leave With Lead, Automotive Partial Pay To Deal With Virus (The Japan Times, April 9, 2020, Link) Accenture Interactive 5 McKinsey & Co: Reimagining The Car Industry’s future (Automotive Accenture Interactive helps the world’s leading brands transform their World, October 27, 2020, Link) customer experiences across the entire customer journey. Through our Joel Van Durme connected offerings in design, marketing, content and commerce, we 6 Brand Relevance Rules in Consumers Goods & Services, (Accen- create new ways to win in today’s experience-led economy. Accenture ture, 2020, Link) Managing Director – Interactive Interactive was ranked the world’s largest and fastest-growing digital agency in the latest Ad Age Agency Report. To learn more follow us @ 7 Global Passenger Car Market Report 2021: COVID-19 Impact and accentureACTIVE and visit www.accenture.com/interactive. Recovery to 2030 for Major Players Such as Volkswagen, Toyota, General Motors, Renault-Nissan and Hyundai-Kia - ResearchAnd- This content is provided for general information purposes and is not Markets.com (BusinessWire.com, February 26, 2021, Link) Gabriel Seiberth intended to be used in place of consultation with our professional advisors. Managing Director The new sales experience References: – Strategy & Consulting This document refers to marks owned by third parties. All such third-party marks are the property of their respective owners. No 1 COVID-19 pandemic: Accelerating digitalization in sales and sponsorship, endorsement or approval of this content by the owners of after-sales: Executive Update on ‘Best Customer Experience 4.0’ such marks is intended, expressed or implied. (Daimler, July 2020 Link) Kristina Bonitz Copyright © 2021, Accenture. All rights reserved. Accenture and its 2 The Future Of Automotive Sales (Accenture, February 24, 2021, Managing Director logo are registered trademarks of Accenture. Link) – SinnerSchrader, a part of Images from ©AdobeStock 3 The Future Of Automotive Sales (Accenture, February 24, 2021, Accenture Interactive Link)

4 China’s Shift To Online Sales (Volkswagenag.com, May 12, 2020, Link) Tobias Kruse 5 Mercedes-Benz India Launches Merc From Home Digital Retail Managing Director – Fjord, Campaign (AutoCar Professional, April 27, 2020, Link) a part of Accenture Interactive 6 The Future Of Automotive Sales (Accenture, February 24, 2021, Link)

Anna Allen 7 2019 Car Buyer Journey Study (Cox Automotive, June 4, 2019, Link)

Creative Strategist 8 The Future of Automotive Sales In China (Accenture, February 18, – SinnerSchrader, a part of 2021, Link) Accenture Interactive

34 9 Reimagining The Automotive Consumer Experience (Cox Automo- 27 CarDr.com (Link) 15 From ‘Take-Make-Waste’ to Sustainable Systems (Accenture, March tive, February 21, 2020, Link) 7, 2019, Link) 28 Carfax (Link) 10 Global Sales of Electric Vehicles/Cars to Grow at 22% Market CAGR 16 Electric Vehicles: Setting a Course for 2030 (Deloitte, July 28, 2020, Share to Reach USD 700 Billion By 2026: Facts & Factors (Intrado, 29 After The Quarantines We May All Buy And Sell Cars The Carvana Link) March 2, 2021, Link) Way (Forbes, April 27, 2020, Link) 17 Raising Ambitions: A new roadmap for the automotive circular 11 The Future of Automotive Sales In China (Accenture, February 18, economy (World Economic Forum, January 14, 2021, Link) 2021, Link) Change for good: The road to zero emissions References: 18 Renault, Volvo, PSA, Daimler, BMW and Volkswagen Have Already 12 The Future Of Automotive Sales (Accenture, February 24, 2021, Set Ambitious Targets Towards Carbon Neutrality (Publishing.GR, 1 Impact of Sustainability on Purchase Decision Worldwide in 2017, Link) January 18, 2021, Link) By Product Category (Statista Research Department, Nov 27, 2020, Link) 13 Cox Automotive Study Finds Car Buying Process Improved During 19 A New Roadmap for the Automotive Circular Economy (Accenture, COVID-19 Pandemic (Cision PR Newswire, February 23, 2021, Link) March 1, 2021, Link) 2 Norway’s Plans to Raise Carbon Tax Draw Oil Industry Ire (Reuters, January 8, 2021, Link) 14 FCA Group Connects Dealers With Buyers Using Online Video Chat 20 88% of Consumers Want You to Help Them Make a Difference (Automotive Management Online, April 27, 2020, Link) (Forbes, November 21, 2018, Link) 3 Sustainable Transport on Track to Overtake Cars by 2030 in the World’s Largest Cities (Kantar, February 10, 2020, Link) 15 Tesla Replaces Humans With Technology In New Touchless, Hu- 21 Luxury Cars Go Sustainable from the Inside Out (New York Times, manless Test Drives (clenatechnica.com, September 16, 2020, Link) June 4, 2020, Link) 4 Electric Vehicle Outlook 2020 (Bloomberg NEF, Link) 16 Renault India Initiates Mobile Showroom (AutoX.com, May 23, 2017, Link) 22 Luxury Cars Go Sustainable from the Inside Out (New York Times, 5 Ford Plans $11bn Investment, 40 Electrified Vehicles by 2022 (Reu- June 4, 2020, Link) ters, January 14, 2018, Link) 17 Buy A Used Car Online And Pick It Up At This 8-story Vending Machine (Mashable, March 29, 2018, Link) 23 Polestar Celebrates Opening of New Assembly Plant in Chengdu 6 BMW Aims to Double Fully Electric Vehicle Sales in 2021 (Reuters, China (Cnet.com, August 26, 2019, Link) January 15, 2021, Link) 18 Mercedes-Benz’s New MBUX In-car Assistant And Smart UI Rocks (TechCrunch, January 12, 2018, Link) 24 Luxury Cars Go Sustainable from the Inside Out (New York Times, 7 Tesla Delivers Nearly 500,000 Vehicles in 2020 (TechCrunch, Janu- June 4, 2020, Link) ary 2, 2021, Link) 19 Coronavirus and car buying: Every automaker offering home deliv- ery (Roadshow by CNET, April 7, 2020, Link) 25 Driving Toward a Post-digital Future (Accenture, November 3, 2020, 8 Raising Ambitions: A New Roadmap for the Automotive Circular Link) Economy (Accenture Strategy/World Economic Forum, December A Much Needed Alignment For Dealers And OEMS (Auto Dealer 20 2020, Link) Today, Link) 26 2019 Porter Novelli/Cone Gen Z Purpose Study (Link) 9 Raising Ambitions: A New Roadmap for the Automotive Circular BMW: Using Data To Transform Attitudes And Evolve Experiences Raising Ambitions: A New Roadmap for the Automotive Circular 21 Economy (Accenture Strategy/World Economic Forum, December 27 (Adobe, Link) Economy (Accenture Strategy/World Economic Forum, December 2020, Link) 2020, Link) 22 NIOs Affluent Fanbase Might Save It From Failure, (TechNode, 10 EVs Reduce Emissions Study Finds (RoyalAuto, May 12, 2020, Link) January 14, 2020, Link) 28 Hubject and ev.energy Announce Partnership to Simplify EV Charging (current-news.co.uk, March 2021, Link) 11 GM Will Sell Zero-emission Vehicles by 2035 (New York Times, Livestreaming Ecommerce Is The Rage In China. Is The US Next? 23 January 28, 2021, Link) (Forbes, December 10, 2020, Link) 29 Toyota, BMW, Daimler Join Forces to Drive Sustainability in the Auto industry (SustainableBrands.com, 2017, Link) 12 BYD, Toyota Charged for Cooperation in New Energy JV (ChinaDai- The Future of Automotive Sales In China (Accenture, February 18, 24 ly.com, April 13, 2020, Link) 2021, Link) 30 Can Toyota Turn Its Utopian Ideal into a Real City? (Bloomberg, January 24, 2020, Link) 13 Groupe PSA and Total Create Automotive Cells Company, a JV Otonomo Raises $46 million To Expand Its Automotive Data Mar- 25 Dedicated to the Manufacture of Batteries in Europe (Total, Sep- ketplace (TechCrunch, May 2, 2020, Link) Toyota Breaks Ground for Woven City (Toyota, February 23, 2021, tember 3, 2020, Link) 31 Link) 26 Otonomo Raises $46 million To Expand Its Automotive Data Mar- 14 The Case for a Circular Economy in Electric Vehicle Batteries (Bos- ketplace (TechCrunch, May 2, 2020, Link) ton Consulting Group, September 14, 2020, Link)

35 From lost time to prime time: Cars as an experience platform 17 Self-driving Tech Is Becoming A Game Of Partnerships (Wired, July 11 How Much Code? Cars (Code Institute, Link) References: 7, 2020, Link) 12 Volkswagen Plans To Challenge Google With Own Autonomous 1 BMW ConnectedDrive (Link) 18 The Unlikely Partnerships That Are Shaping The Car Industry Car Software (Reuters, February 2, 2021, Link) (Financial Times, January 18, 2020, Link) 2 BMW China Integrates BMW Connected Into Tmall Genie (BMW 13 Markus Duesmann leads Car.Software Organisation at Volkswagen Group, April 25, 2018, Link) 19 Here Are The Keys To Driving Epic Change In The Auto Industry Group (Cariad Technology, July 15, 2020 Link) (Accenture, September 14, 2020, Link) 3 GM Launches Marketplace For In-car Shopping And Reservations 14 Daimler Commits $85 Billion To Electrification And Digitalization (TechCrunch, December 5, 2017, Link) 20 Nearly Half of Drivers in Multi-Country Survey Indicate Willingness (AmericanMachinist.com, December 7, 2020, Link) to Give Up Car Ownership in the Future in Favor of Autonomous 4 FCA To Launch New In-vehicle Unconnect Market Commerce Mobility Solutions, Accenture Report Finds (Accenture, October 10, 15 Daimler And Nvidia Team Up To Close Tech Gap With Tesla (Reu- Platform (FCA, June 24, 2019, Link) 2019, Link) ters, June 24, 2020, Link)

5 Gartner Predicts Outdoor Surveillance Cameras Will Be Largest 21 Rental Car Shortage Is A Boon For Turo – The Airbnb Of Cars (CNN. 16 The Future Of Automotive Sales (Accenture, February 24, 2021, Market for 5G Internet of Things Solutions Over Next Three Years com, March 29, 2021, Link) Link) (Gartner, October 17, 2019, Link) 17 Rethink. Reinvent. Realize: How To Successfully Scale Digital Inno- 6 Connected And Autonomous Cars Have Arrived, And They Are Software-defined vehicles: From predictive personalization vation To Drive Growth – Automotive OEM (Accenture, 2019, Link) Forcing Car Companies To Build New Vehicle Architectures to individualized interaction References: (Forbes, November 11, 2019, Link) 18 Knowing The Risks: Relationships Between Startups & Auto Sector 1 The Reimagining Automotive Report (PSFK with Microsoft, Link) (EET Asia, December 25, 2020, Link) 7 The Big Home Reboot Has Started (IKEA, October 16, 2020 Link) 2 Reach Out And Touch The Future: Connected Vehicle Solutions In 19 The Future Of Automotive Sales (Accenture, February 24, 2021, 8 Technology Vision 2021 (Accenture, January 2021, Link) China (Accenture, November 2014, Link) Link)

9 Unilever Workers Will Never Return To Desk Full-time (The Guardian, 3 OEMs and connected-cars: time to seize the connected future 20 Rethink. Reinvent. Realize: How To Successfully Scale Digital Inno- January 13, 2021, Link) (Bearing Point, September 2015, Link) vation To Drive Growth – Automotive OEM (Accenture, 2019, Link)

10 Nationwide Says 13,000 Staff Can Work From Home Even After the 4 Tesla Can Change So Much With Over-the-air Updates That It’s 21 MachinePix Weekly #36: Milo Werner, former Head of New Product Pandemic (Yahoo Finance, March 25, 2021, Link) Messing With Some Owners’ Heads (The Verge, June 2, 2018, Link) Introduction, Tesla (MachinePix Weekly, March 23, 2021, Link)

11 Skoda Auto In 2020 (Skoda, May 7, 2020 Link) 5 Reach Out And Touch The Future: Connected Vehicle Solutions In 22 Designing Smart, ‘Unfinished Products’ Opens New Career Paths China (Accenture, November 2014, Link) (Accenture, February 26, 2020, Link) 12 New Electric Car Hoovers Up Pollution From Other Vehicles (The 6 Breakdown Of The Global Connected Car Fleet 201-2023 (Statista, Times, April 26 2021, Link) August 21, 2020, Link)

13 World Premier Of The MBUX At CES (Mercedes-Benz, January 2018, 7 Global In-Car Marketplace, Forecast to 2025 – Approx $17.3 Billion Link) of Vehicle-related Purchases & Personal Consumer Spending Will Be Allocated to Cars Through Integrated Marketplace Applications 14 Holoride (Link) by 2025 (PR Newswire, January 7, 2020, Link)

15 Geely Auto Newest Icon Released, (Global Media Center, February 8 Commuter Commerce Represents $230 Billion Opportunity (Retail 24, 2020, Link) Dive, January 10, 2019, Link)

16 LexisNexis Risk Solutions Launches Vehicle Build Product to Offer 9 Automotive Software Market Research Report by Vehicle, by Prod- U.S. Insurers Much Needed ADAS Details for Better Premium Evalu- uct, by Application - Global Forecast to 2025 - Cumulative Impact ation and Pricing Segmentation (LexisNexis, June 18, 2020, Link) of COVID-19 (ReportLinker, January 2020, Link)

10 The Future Of Automotive Is Software-defined (Springer, Decem- ber 4, 2020, Link)

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