Deloitte: Connected Car Tech Is Disrupting Auto Supply

Autonomous vehicle technology and infrastructure is to be among the biggest areas of opportunity for automotive suppliers, according to a new market analyst from analyst firm Deloitte.

The Deloitte report study found global automotive supplier revenue opportunities could exceed $700 billion over the next decade, with nearly a quarter (24%) of respondents saying electronics, infotainment and communication are among the key concerns for their company’s or client’s buying agents.

The results are based on answers from what Deloitte deemed global “Tier-One” automotive suppliers.

More than a quarter (26.7%) reported that they perceive electric vehicle technology and infrastructure as the area with the most opportunities in the next ten to 15 years, followed by 22.4% who believe autonomous vehicle technology and infrastructure to be the biggest area of opportunity.

Neal Ganguli, Deloitte’s US automotive practice leader, told The Connected Car that the rise of autonomous vehicle technology has already affected the existing supplier space in numerous ways.

He explained it has disrupted the tradition linear automotive value chain as many non-traditional players, such as consumer technology companies, enter the automotive market.

“This has added fresh competition that doesn’t necessarily follow the rules of the traditional automobile supply chain,” Ganguli said.

Ganguli noted there are already partnerships between OEMs and consumer electronics and media companies, which span across several areas, including new technologies for in-car connectivity for entertainment and services consumption, vehicle-to-infrastructure connectivity and autonomous and driver assistance enablers.

“These partnerships are likely to become more prevalent as traditional OEMs adopt more and more connected vehicle technology and embed mobile services such as phones, apps and media streaming into vehicles,” Ganguli said. “Partnerships with more unexpected players, such as payments companies, will likely expand as consumers’ expectations for their vehicles rise, bringing more segments into the mix.”

According to polling data connected to the study, approximately one-third of executives Deloitte questioned believe that flat volume and high disruption is the most likely scenario to occur in the space over the next ten to 15 years.

With the automotive industry at the cusp of a major transformation, the report highlighted key forces that could cause disruption in the near and long-term future.

The report warned volume headwinds could persist over the long term as a result of autonomous vehicle developments and car-sharing services that could dampen enthusiasm for self-ownership.

However, Ganguli said he believes there will be new growth opportunities for suppliers as new business models emerge in “come-to-you” mobile services, remote diagnostics, aftermarket parts and services and so on.

“One scenario examined in our study paints a picture of highly connected, shared, and autonomous cars making a large dent in car volume, placing certain segments under significant pressure,” he explained. “However, this scenario would also create new opportunities for automotive suppliers to grow in tandem with new technologies.”

The study on automotive supplier performance follows a Deloitte global automotive consumer study released earlier this month.

It indicated that autonomous vehicle technology represents a huge opportunity to fundamentally change the competitive playing field, and revealed brand trust, cost and safety are all major factors determining consumer acceptance of autonomous vehicle technology.

More than half (54%) of US consumers in the 2017 study admitting they would be more likely to ride in an self-driving vehicle if it was offered by a brand they trust — that number jumped to 63% in the 2018 study.

— Nathan Eddy is a filmmaker and freelance journalist based in Berlin. Follow him on Twitter @dropdeaded209_LR.