Digital revolution is transforming the automotive industry as a whole, creating incredible opportunities for business and real benefits for customers. Car-generated data may become a $450-750 billion market by 2030, raising a key question: how might industry players in the evolving automotive ecosystem turn this huge amount of data into valuable products and services?
In this interview carried out at the Auto@Google event, Michele Bertoncello, Partner at McKinsey & Company, focuses on the opportunities that are opening up to players and how they should prepare to catch them.
A real revolution is taking place in the mobility and automotive sector, perhaps the largest ever seen in the car history. Cars generate data about how they are used, where they are, and who is behind the wheel. With greater proliferation of shared mobility, progress in powertrain electrification, car autonomy, and vehicle connectivity, the amount of data coming from vehicles will grow exponentially, changing the way in which cars are designed, produced and sold.
“There are enormous opportunities out there. According to McKinsey research, the overall revenue pool from car data monetization at a global scale might add up to $450-750 billion by 2030. This market will be mainly propelled by the use of big data and advanced analytics to offer new car services and features, reduce investments and operational costs, and improve driver and passenger safety”, says Bertoncello.
The opportunity for industry players relies on their ability to face four big challenges. The first is creating a compelling value proposition, communicating exactly “what is in it for customers”. The exchange of data for benefits lies at the very heart of the value creation process related to car data, as benefits for consumers typically fall into four broad categories: safety, convenience, time savings, and cost reduction. The second challenge deals with the definition of data-related use cases and business models able to generate value for end customers and industry players. Thirdly, putting the enablers in place, both on the technological and regulatory side, will be a fundamental step in opening up the data-related opportunity. Last but not least, putting in place suitable organizational models and capabilities to monetize car data, through the development of specific capabilities, either internally – hiring, developing, and retaining digital talent in data analytics, software programming and digital services – or externally – signing partnership with high-tech giants and digital-native players.
In this sense, the high-tech giants like Google play a fundamental role as enabler and accelerator of the progressive digitization of the car, but also contribute with their direct grip on end-customers through their digital platforms, something that traditional automotive players historically struggled to build.
“Car data monetization will challenge all of the current realities and compel automotive incumbent players to quickly make pragmatic changes to their approaches: many of them have only recently begun to develop services and products that can extract value from this amount of data. The ability to adapt and transform their business model will make the difference, and in this sense the collaboration with high-tech players like Google might be a significant accelerator”, concludes Bertoncello.