Self-driving cars, altered buying behaviour and the continued push for connectivity are a few of the factors driving big change in the auto industry, according to a new report.

Global audit, tax and advisory firm, KPMG has released a comprehensive automotive insights report, providing fascinating insights into the future of the automotive industry and the new opportunities that are surfacing.

Titled, Me, My Car, My Life, the report suggests that ‘the era of ubiquitous connectivity – the moment when you, your car and your life are one – has arrived.’

Take a moment to really ponder that claim, because its implications are massive.

To take it even further, do a quick YouTube search for Me, My Car, My Life and you’ll get a crystal-ball glimpse of exactly what KPMG is imagining. The four minute video depicts a day in the life of a typical woman whose car drives her to work (and picks her up afterwards), helps sort through emails, schedules calendar events and facilitates a video conference with her husband. Perhaps the most profound thing about the video is that most of its content doesn’t seem that far-out at all – in fact, much of the technology we see is already being pioneered.

According to KPMG, as autonomous driving and connectivity technology continues to filter into the mainstream; our basic notions about mobility will completely change. It will revolutionise the way we think about and use cars – no longer viewed as a means to get from point A to point B, but rather a control centre for our mobile lives.

‘At this moment every aspect of the automotive business is changing; from how cars are designed, produced and built, to how they are marketed and sold, to the underlying economics,’ said Gary Silberg, national automotive industry leader for KPMG. ‘Not since the first automotive revolution has there been such massive innovation and displacement of the status quo, where we will see new players surge forth, some old players reinvent themselves and others totally left behind.’

As a result, the automotive industry is in the midst of a massive evolution.

This is echoed by KPMG Automotive Partner, Aaron Street who contends that consumer desires are increasingly shaping the technology in our new cars.

‘There are so many new choices for all different demographic needs, wants and desires that are affordable and flexible. The industry is moving to a model of demand driving supply and not the other way around,’ he said.
So what are the key findings from Me, My Car, My Life and what could they mean for automotive dealers of the future?

1. The era of the two-car family will likely decline. In fact, the argument for owning a car gets weaker by the moment. Spending approximately $30k for an asset that loses 11 per cent of its value the minute you drive it off the lot isn’t the most rational economic decision. Mobility-on-demand companies like Uber and Zipcar now provide compelling alternatives to ownership, especially in urban areas. With the potential shift in ownership demand, OEMs may very well need to update their economic models.
2. Enormous opportunities in new markets. Mature markets are becoming saturated, while new markets are emerging. History teaches that when people make it into the middle-class, they go shopping for cars. In China, India and sub-Saharan Africa, millions, if not billions of new buyers are reaching that threshold. But the future won’t look like the past, because just as these new buyers get ready to open their wallets, new alternatives to ownership are popping up and gaining traction.
3. Tame complexity or lose your customers. Some high-end cars now have more lines of code than fighter jets, and the complexity is wreaking havoc on production costs and new product launches. Vehicle recalls are at a record high, and customers are complaining about the design and usability of in-vehicle infotainment. The value of a car now resides in software and electronics – and how well they work together. Get it right or lose your customers.
4. OEMs are falling from the top of the pyramid. In fact, there isn’t going to be a pyramid any more. The structure of the automotive ecosystem is changing fast. Designing and producing new vehicles have become far too complex and expensive for any one company to manage all on its own, and in the future, horsepower may matter less than processing power. The winning companies will be nimble, future-oriented – and prepared to invest in new technologies, new talent and new strategic alliances. This confluence of factors will forever change the way automakers view product development, the traditional automotive supply chain models, their customer sales and service models, and even their organisational structures.

According to KPMG, the companies who’ll emerge from this evolution as winners will be early technology adopters, who accurately react to changing market desires. Of course on the flip side, those who act slowly risk being left behind.
Several critical areas have been identified where companies will need to focus in order to stay relevant and capitalise on emerging opportunities.

Forming new alliances and collaborative partnerships is one such area. As the structure of the automotive industry continues to change, designing and producing new vehicles is becoming too complex and expensive for any one company to manage on its own. Those prepared to invest in new technologies, talent and strategic alliances will be advantaged.
Other areas include accurately measuring and understanding customer data to learn about shifting wants and needs, updating economic models and taming complexity – that is, creating the best, most customised and accessible connectivity interface (before the competition).

KPMG also identifies the need to create an adaptable organisation. For many older, established companies, this means culture change, bringing in new talent, and rethinking every aspect of process and people management.

With technologically-advanced offerings already available from car makers like Mercedes-Benz, Teslar and General Motors, the next decade no doubt holds many exciting opportunities and we will see more jaw-dropping technology emerge.
But the million-dollar question remains: which car makers will thrive as the ‘connected-car’ era dawns and which will wane?

To obtain a copy of Me, My Car, My Life go to kpmg.com