Auto: Digitization is table stakes; platforms are the future

Auto customers today are digitally native, time starved and expect a high degree of personalization. 9 out of 10 customers look through several options for vehicles and related services online before making a purchase. BCG’s recent report, “Auto: Business Platforms are the Future” reflects on how a platform approach can generate exponential value and customer loyalty in an industry faced with evolving expectations, data explosion and rapid innovation. It outlines the value of platforms to OEMs and its various partners that will work together to meet customer needs across discovery, purchase and ownership.

The report also highlights the urgency for OEMs to act now, or risk being outmoded by other OEM driven and Third-party platforms. Today, OEMs capture only 25-35% of the lifecycle spend of the auto customer; adopting a platform approach will help them participate in the remaining spend even in domains beyond their traditional areas of expertise. While this doesn’t diminish the need for the OEM’s core products to be more competitive and appealing to their targets, delivering a comprehensive set of services that cater to every need of the customer throughout the lifecycle will open-up new revenue streams and help the OEMs deeply entrench themselves in the customers’ lives. If done well, this will create a one stop-shop for customers and lead to network effects – success will attract more partners, innovators and customers to the platform – and happy customers will refer it to their friends and families driving faster adoption and growth.

Vikram Janakiraman, Managing Director and Partner & India Lead for Auto Sector, said, “It is critical for OEMs, regardless of their size, to adopt the platform approach and participate in a larger part of the lifecycle spend of customer. While this is no sure-shot panacea to continued or greater success, doing nothing is a risky option.”

The authors have outlined the elements which need to be carefully designed and executed to build a successful platform. The value proposition will have to be designed (and refined over time) to suit the target customer segments being addressed. Personalized offers, fulfilment, monetization, and partnerships will all need to be carefully engineered. These, in turn, need to be built on a robust technology and data architecture that would form the foundation for the platform along with a set of vastly expanded and different organizational capabilities needed to nurture the platform and collaborate effectively with the new age firms.

Auto platforms are inevitable; “doing nothing” isn’t an option! OEMs can lead this strategic shift and orchestrate these platforms, but in the process will need to reimagine themselves at multiple levels for adapting to the new future.

Leave a Reply

Your email address will not be published. Required fields are marked *