Digitalization Spurs Disruption and Growth in the Automotive Services Market

OEM and Service Provider Revenue from Downstream Services will Exceed $3 Trillion by 2030, finds Frost & Sullivan

Digital disruption is revolutionizing the automotive industry, enabling a value shift from individual consumption to collaborative consumption. As a result, original equipment manufacturers (OEMs) are looking at alternative sources of revenue, such as shared mobility, connected car services, financial services, and logistics services. The demand for shared mobility services, such as carsharing, ride-hailing, and dynamic shuttle, is increasing, with these services expanding globally. To compete effectively, OEMs are launching their own mobility services, partnering with mobility start-ups that are providing these services, as well as launching their own mobility sub-brands under which all mobility-related projects will be unified.

Read More: Interview with Eran Liron, EVP, Marketing & Corporate Development, NICE

“We observe increasing efforts from OEMs, Tier 1 suppliers, and startups to enter the car data monetization space through various verticals, such as developing new apps, hardware/interfaces (smartphone pairing), and offering services related to the type of data collected,” said Abhishek Iyer, Mobility Research Analyst at Frost & Sullivan.

Abhishek added, “OEMs are partnering with technology companies to share data (with customer consent) to recommended third-party service providers, such as insurance companies and smart parking service providers. Tier 1 companies are investing in start-ups that focus on data-driven platforms, AI, and machine learning to leverage IoT applications.”

Frost & Sullivan’s recent analysis, Mobility and Other Downstream Services Market, Forecast to 2030, provides a comprehensive analysis of trends, perspectives, and market forecasts through 2030. As OEMs continue to focus on Connected, Autonomous, Shared and Electric (CASE) strategies and automotive technology companies shift toward becoming providers of mobility and related services, the core focus of the mobility industry will be on providing a completely shared and connected ecosystem for the future.

Between 2017 and 2022, OEMs will seek to develop capabilities from a suite of solution providers and aggregators of data to offer effective information to consumers across industries and smart city projects.

There are three key strategies Frost & Sullivan experts identify as growth paths for automotive companies in the shared mobility market:

• Be a shared mobility operator
• Serve as a fleet provider to operators
• Manufacture custom-made vehicles for shared mobility operators

Read More: Without A Global Company Strategy, AI Will Not Deliver On Its Promises

“In addition, OEMs in the shared mobility space need to transition to subscription-based, event-based, and revenue-sharing business models,” said Iyer.

Iyer added, “The automotive supply chain is changing drastically, driven by new players and big bets in new technology areas. OEMs need to take appropriate steps now to fill the gaps and stay on par with the competition.”

For over five decades, Frost & Sullivan has become world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Recommended: Interview With Ray Zhou, Co-Founder At Affinity