What Will the Future Bring for Consumers, Auto Industry?

August 14, 2008

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TRAVERSE CITY, Mich. — What will the auto industry look like in a little over a decade? What will be important to consumers in 2020? IBM recently set out to find out.

After talking with 125 global industry leaders, the company was able to identify some future trends with its IBM Automotive 2020 study.

Some top predictions: Apparently, flexible transportation services will replace the purchase of personal vehicles for multiple uses, and intelligent vehicles will cater to consumer demands for greater information, safety and environmental responsibility.

First off, as customers become better informed and more demanding, the study predicts there will be expectations for a purchase or lease to include a "diverse garage of vehicles."

In other words, IBM believes that consumers will drive a primary vehicle for their day-to-day needs, but also have the option to switch to a different model when specific needs call for it.

Offering an example, IBM explained that a consumer may drive a fuel-efficient small car to work, but will likely want to switch to an SUV for a ski weekend

"Basic transportation will no longer be enough for increasingly empowered consumers," pointed out Sanjay Rishi, vice president and global automotive industry leader for IBM.

"They want an automotive experience that matches their lifestyles and lets them move seamlessly from life inside the vehicle to their world outside," he added.

The study also predicts that vehicles will continue to become more intelligent, as consumers seek enhanced features related to information, entertainment, safety, economy and eco-responsibility.

Essentially, these intelligent vehicles will rely on electronics to improve navigation assistance, information and connectivity.

Specifically, IBM projects the technologies with the greatest growth by 2020 will involve telematics, such as remote vehicle prognostics and active safety, in addition to available entertainment data downloads and streaming media. Also, they will want power train enhancements.

Furthermore, greater connectivity between vehicles as well as between vehicles and road infrastructure will be another important factor in the future. This means that if there is an accident that backs up traffic, improved connectivity can provide drivers with alternate routes.

As for energy, those questioned project that all vehicles will have at least some degree of hybridization in the next 12 years.

In particular, they anticipate biofuels and non-food-based biofuels will see continued growth.
Hydrogen fuel cells are expected to be a "viable alternative," but because of high costs and new infrastructures, auto professionals said they don't anticipate large production numbers for this technology.

"In the face of such significant and chaotic change, finding clarity will require the automotive industry to take sweeping and rapid action. Two of the greatest areas of opportunity are meeting consumer demands for environmental accountability and using technology to transform the way the industry develops products and goes to market," said Rishi.

So, if these predictions hold true, how then can the industry adapt?

IBM suggests that companies do the following:

—Advance mobility. Embrace of new mobility models, such as new ownership and usage models. Also, companies need to integrate products with other modes of transportation.

—Transform retail. Finding new ways to connect with well-informed consumers is essential for dealerships, as well as developing new value propositions.

—Simplify complexity. Obviously, the more complex and intelligent that vehicles become, the more complicated operating their electronics and embedded software can be. Therefore, IBM urges manufacturers to establish easily understood processes and standards for vehicle technology, so that innovations can be rapidly implemented.

—Partner extensively. Innovation comes with increased costs, so companies should widen their innovation networks. Expand partnerships to establish close relationships with companies in other industries, such as electronics, energy and utilities.

—Execute globally. OEMs and suppliers should set their sites on balanced, flexible operations. They need to align themselves with local economies, but also have a positive social impact wherever business takes them.

For more information, visit www.ibm.com.