Automotive 4.0 – The Digital Revolution

Automotive 4.0 – The Digital Revolution Views from the Top

www.automotiveIT.com

Table of contents automotiveIT international, Arjen Bongard······························································································ 4 Evercore ISI, Arndt Ellinghorst······························································································································· 6 Volkswagen UK, Ian Plummer···························································································································· 10 H.R. Owen, Chris Harris············································································································································ 14 salesforce.com, Patrick Pélata····························································································································· 18 Jaguar Land Rover, Mike Bell····························································································································· 24 Verizon Telematics, Kevin Link·························································································································· 28 Volvo Cars, Thomas Mueller································································································································· 30 MHP, Oliver Kelkar······················································································································································· 34 Qoros, Maurits Aalberse·········································································································································· 40 GENIVI, Philippe Gicquel········································································································································· 44 Google, Hugh Dickerson········································································································································ 50 McKinsey & Company, Juergen Laartz, Dominik Wee, Matthias Kaesser······························· 56 Nissan Group of Europe, Stephen Kneebone························································································ 62 CVTA, Scott J. McCormick······································································································································· 66 Lotus F1 Team, Michael Taylor···························································································································· 70 Dassault Systèmes, Olivier Sappin·················································································································· 74 Continental Automotive, Otmar Schreiner······························································································ 80 CE 21, Thomas R. Koehler········································································································································ 84 Imprint/ Contact··························································································································································· 87

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Revolution or Evolution? It wasn’t so long ago that the auto industry was all about engines and top speeds and, maybe, a little bit of safety and comfort thrown in for good measure. But that was yesterday. These days we’re talking about electrification, car-sharing, connectivity and autonomous driving. Those are the defining characteristics of today’s - and tomorrow’s - personal mobility. Technically, there are no limits to what the industry can do. But what about the practical implementations? And, more importantly, how is a traditionally conservative industry such as the car business going to adapt - and possibly even lead - the transformation we have embarked on? That’s the question we try to answer in this book, which is titled “Automotive 4.0 – The Digital Revolution.” A lot of things come together as we discuss the far-reaching changes in the personalmobility space: • Urbanization is redefining the purpose of the car • Growing air pollution drives electrification of the powertrain • Connected consumers want their personal networks to include the automobile • New IT and communication technologies help adapt business models • And 3D, simulation and the “internet of things” are moving manufacturing systems to a new level of sophistication. All these changes provide business opportunities for the auto industry, for the auto industry and for suppliers, IT service providers and telecommunications companies. And they open up the personal mobility market to a host of new players that previously focused their attention elsewhere. In theory then, there’s nothing but upside to the transformation. But risks and uncertainties abound. Scenario planners at market researchers IHS Automotive have made a map of all the global crises - or potential crises - the world faces. They include: hostilities in Ukraine, a further spreading of the Ebola virus, the continuing conflict in the Middle East, higher interest rates in the booming US market, economic downturns in Latin America, etc. The list is long.

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In this book, we focus on the actions that are being taken to change the nature of the automotive product offering to bring it in line with the demands of today’s consumers. But we also demonstrate how car companies and their partners are making the auto industry more resilient, more flexible and better prepared for whatever challenges it will face. In interviews and contributions, automaker, supplier and IT executives provide concrete examples of innovation at work, actions already taken, development in progress and opportunities being realized. Whether it’s about connectivity at the speed of light in Formula 1 racing, the power of connected retail to convince reluctant car buyers, the promise of big data or the quantum leaps in infotainment technology, the stories and interviews are an uplifting read. Which leaves the one big question we posed in many of the interviews in this book: What will the car of the future look like? The answers vary, but, as the transformation of the industry picks up speed, there is no doubt that the automobile will play a key role in tomorrow’s personal mobility. And that’s reassuring.

Arjen Bongard Editor-in-chief automotiveIT international

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" In Europe, most carmakers are losing money"

Given the structural weakness of the European market, the automotive industry is losing money on most of the cars it is selling in the region, says Arndt Ellinghorst , senior managing director and head of the Global Automotive Research Team at investment advisors Evercore ISI. As a result, automakers will have to look elsewhere – in the retail channel, for example – to find the savings needed to run a profitable European operation. Ellinghorst spoke to automotiveIT on the sidelines of the automotiveIT International Congress in London this summer.

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Evercore ISI · Arndt Ellinghorst

Mr Ellinghorst, please explain briefly what Evercore ISI does in the auto industry. We look at the automotive industry and our clients are institutional investors who ask us where they should invest. We answer questions such as: should I buy a carmaker, should I buy a supplier, what should I do now that there is an IPO coming? My job is to serve as a line of communication between the industry and the finance community. So, let’s cut to the chase and ask you: Is today’s auto industry a good and safe investment bet? That depends. Europe is recovering slowly but steadily. The US is probably at the peak of the current cycle. China just keeps growing. The supplier industry has been very, very successful. So I think the industry is in better shape today than it used to be, but in Europe most of the companies are still losing money. It’s a very challenging environment and that will probably stay so for a while. If you’re not involved with the car industry on a daily basis, you would tend to think that automakers are rich and make huge profits. But you’re telling us this isn’t necessarily the case? Look at the financials. People are always shocked when I tell them 60-to-70 percent of all cars sold in Europe are sold at a loss. Every year these carmakers are losing money in Europe. In a good year, they

probably generate a profit of 300 euros a car. That means the freedom to spend money in this industry is very, very limited. The European market doesn’t present a pretty picture then? That’s true. The Italian auto industry is losing money in Europe. The French auto industry is mostly operating at a loss in Europe. General Motors Europe and Ford Europe are losing money in Europe and so are the majority of the Asian brands. Even the Volkswagen brand is barely making any money in Europe. So if you add it all up, the industry is losing money. The European market is not in good shape. Do you see excessive European Union regulation as the main cause of the problems? The European Commission hasn’t been helpful the last 10 years in making the industry more profitable. Politicians have made sure that chronically ill companies were bailed out, even though industry consolidation was and is badly needed. At the same time Brussels came up with probably the strictest fuel efficiency regulations on the planet. The industry has to comply with a fleet average of 95 grams of CO2 per kilometer by 2020. That’s roughly a 20-to-30 percent incremental improvement in fuel efficiency from here until 2020. That’s going to cost 1,000 euros per car. If you are making a profit of 300 euros per car and someone tells you to spend 1,000 euros extra just for the powertrain and the engine, that’s tough.

Arndt Ellinghorst · Evercore ISI

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You said that, in Europe, the industry doesn’t have a lot of money left over to invest. How then will carmakers develop all those fuel-efficient technologies and how will they pay for all the new infotainment and safety features consumers expect ? If you look at the spending priorities, the industry first has to comply with regulations. There’s no discussion there. You cannot sell cars that don’t comply, so that’s where the money has to be spent first and foremost. Fuel efficiency, of course, provides a real benefit to consumers. If they can spend less on fuel, that can save a lot of money. Second, when we’re talking about the IT side of the connected car, you have to realize that everything in this area has to be paid for by the consumer. You have to make sure, therefore, that the innovations are of real use to the consumer. If car buyers don’t want to pay, the carmaker will have to find the money elsewhere, for instance in the distribution channel.

ed with iPhones or iPads or other devices. Most young people feel that the actual car is something from a different era.

Please talk us through some of the big trends you’re seeing in the car industry. The first big trend is demographics. People are getting older and older people tend to drive less. At the same time, younger people are less interested in cars. If they are, their focus is on new ways of mobility such as electric cars or car sharing. People’s mobility requirements are changing and this has a direct impact on the business model of the carmaker. The other big trend, of course, is that people want to be connect-

Tesla seems to be doing well, in part because it takes more of an IT-driven approach to the vehicle. The Tesla brand, with its Model S electric sports sedan is a huge success in the US. The overnight software update means you have new software in place when you get into the car the next morning. That could mean a new version of Google Maps or something else and that is something exciting for especially younger customers. Tesla’s founder and CEO, Elon Musk, has

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Evercore ISI · Arndt Ellinghorst

And why do they feel that way? The consumer electronics industry is changing every two or three years and the lifecycle of a car is seven years. So you buy a new car that has been developed five or seven years ago. In many cars, it’s difficult to plug in your cell phone and listen to music. What can be done to turn this trend around and what’s the role of IT in such an environment? I believe the lifecycle of the products will shorten. If you want to sell cars that meet the demands of a younger population, the cars need to be updated faster. Tesla is a good example. It can update the software of a car overnight. And not just the driving features but also the infotainment systems.

managed to come up with a competitive and exciting car. The big question is whether traditional carmakers have the mindset and the flexibility to adopt a similar approach quickly. A final question: What kind of car do you think you’ll be driving 10 or 20 years from now? I really believe in electric mobility. I think the combustion engine will increasingly be replaced, also because of the driving-pleasure potential of electric motors. Mobility will be more electric in 10 or 20 years, but I hopefully will no longer own a car then. Instead, I will pay for mobility. Imagine I’m a BMW premium customer. During the week I will probably have an electric vehicle to drive around

in the city. On weekends, I’ll need a bigger car to go into the country. Evenings I might prefer to have a driver to take me to a concert in downtown London. Owning a car is increasingly outdated, but paying for mobility is something that consumers will still be willing to do. Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com Photos by Silvia Steinbach

Arndt Ellinghorst, head of the Global Automotive Research Team at Evercore ISI, is one of Europe’s foremost global automotive analysts. Before joining Evercore ISI, Ellinghorst headed European automotive research at Credit Suisse. In earlier roles, he worked at Dresdner Kleinwort Wasserstein and WestLB Panmure. Early in his career he also worked for Volkswagen and Audi.

“Brussels hasn’t been helpful in making the industry more profitable”

Arndt Ellinghorst · Evercore ISI

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Photo: Volkswagen

"I think there‘s a real need for change"

Ian Plummer is making major changes to the way cars are sold, as consumers adopt a new approach to buying cars. The head of Volkswagen sales in the UK, believes dealers will use a lot more digital technology to better explain a host of new features that are redefining cars. And, in an interview with automotiveIT, he says he is looking forward to the day when the car will be able to drive itself.

10 VW · Ian Plummer

The world of automotive retail is undergoing big changes. As head of car sales in a major European market, what do you see as the big trends in the automotive industry today? The key trend we’re seeing on the sales side is that customers are behaving very differently compared with a few years ago. It’s not a complete revolution from one day to the next, but over the last few years we have seen a huge shift in customer behavior. Instead of a visit to a physical dealership to touch and see a car, prospective buyers are doing all their research virtually. They use social media and manufacturer and dealer web sites and tend to visit actual dealerships much less frequently. Our web traffic has doubled while our showroom visits have halved. But we sell more cars and are adapting to the changing customer approach. There are other major trends in the industry such as big data, the connected car, autonomous driving, the internet of things, machine-to-machine communications. How do these impact your operation? They add complexity and, thus, pose big challenges when it comes to explaining the customer benefits and getting the customer to use the new features. The first challenge is to get the right tools in place online. But the key to success is to enable the customer to seamlessly continue his journey from a digital start into the dealership. We don’t believe the

dealership is disappearing by any stretch and the second key differentiator has to be the quality of the physical customer experience with dealerships delivering real theater to their customers. The third element that really blends everything together is the people who have to deliver all this with passion and warmth. We’re putting a lot of focus on helping our team to actually get the points across and create the seamless journey. For example, we want customers to be able to configure the car online and then find the same configuration on the iPads we have in our showrooms. We’ve developed a warmer, more human journey from the digital start through the ownership cycle and the after-sales experience. And your sales staff presumably needs more and different training. They have to be comfortable with the communication technology in the cars to be able to show customers how to use it. They do indeed. The iPad technology we put in place at our dealerships gives sales executives much simpler access to the data they need to explain things. As customers already have rich knowledge of the cars, the sales teams need to have at least the same level of useful knowledge. And they need to be able to use media such as video technology to demonstrate certain things that are easier shown that way. Obviously touching and feeling a car in a test drive is still important, too. We found it critically important to show our

Ian Plummer · VW

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teams how to use the new tools. We have digital champions on every site and they function as change leaders, embedding changes in the teams and showing how things actually work.

Photo: Silvia Steinbach

It sounds like IT has taken on greater prominence in the sales process. Absolutely. Any key project today has a very strong component of systems and IT integration. Our challenge is always to link

our new ideas to legacy systems, which is never particularly easy. But it is absolutely critical that we do that. So our key challenge right now is to make sure that all the new ideas we are coming up with and the digital tools that I have described to enable them – are of use to the sales teams and to the customers. The benefits have to be absolutely clear. And then the challenge is to make the tools as simple to use as possible so that they can actually

“We don’t believe the dealership is disappearing by any stretch”

12 VW · Ian Plummer

deliver on the promised benefits. The role of IT is therefore absolutely critical in everything we do. You have new versions of two popular VW models, the Polo and the Passat, on the market. How are they different from the previous generation and how are you selling them today? Those are two good examples. The face-lifted Polo is just coming out in the UK and the new Passat will reach the market early next year. But you could also look at the Golf, which we launched last year. They’re all built using modular architectures that allow them to share technology. New infotainment, safety and driving assistance features, which all benefit the customers, require a lot of good explanations from sales executives. I’ll give you an example how our sales staff can connect the digital with the physical world. Sales executives can prepare an SD card with data relevant to a test-drive route. And they can add music and maybe even a video that can be shown in the car. That makes various functions and features easier to explain and provides a better test drive. Also, when you’re preparing to show a potential customer the emergency braking function, it’s quite useful to show a video first so he knows what to expect. It’s this combination of digital and real that’s quite critical. Finally, a vision question: What kind of cars will we be driving in 10, 20 or 30

years? And what will your sales operation look like then? I cover a lot of miles each year and I fancy the idea that in 10, 20 or 30 years the car will drive itself and I can sit back, work, read or sleep on the road. To sell that kind of car I think we need to do an awful lot more of the stuff we are doing right now. A Google executive told me recently that, if we think the revolution we are seeing right now is not going to affect our industry we are frankly delusional. I think that there is a real need for change and I think we will see an acceleration of the digitalization of the sales process. We’ll need to see a lot more theater in the way we actually sell cars, with the kind of things you can see, for example, in the Audi City digital showrooms. Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com

Ian Plummer became head of Volkswagen’s UK sales operations at the start of 2012. He joined VW from Renault, where he was commercial director for the UK. Earlier, he ran the Renault-Nissan Retail Group in the country. During his career, Plummer has held several international marketing and aftersales roles at Renault. He graduated from Loughborough University in 1991 and in 2002, he received a MBA degree from the Theseus International Management Institute. He lives in London.

Ian Plummer · VW

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" Email is by far the best means of communication with our customers"

Chris Harris, who is the marketing and customer director of H.R. Owen, says managing customer relationships in a smarter way is the key to success for the luxury-car dealer group. H.R. Owen sells brands that include Aston Martin, Lamborghini, Ferrari and Rolls-Royce. Customers interested in buying these cars like to be recognized and treated professionally when they enter a dealership, Harris says. The dealer executive spoke to automotiveIT on the sidelines of the automotiveIT International Congress in London.

14 H.R. Owen · Chris Harris

H.R. Owen specializes in luxury vehicles, but, as consumer attitudes to personal mobility change, is there still a future for this high-premium segment? We obviously hope so from our business point of view. But one of the advantages we have as a dealer group is that, from a brand marketing point of view, our customers really like cars. They are not choosing any kind of vehicle to simply get from A to B in the most efficient way. In fact, I would happily admit that most of our cars are probably not the most practical way of driving from A to B. But that´s not the point. It´s actually about the enjoyment of the journey, it´s about the enjoyment of the driving experience and I think there will probably always be petrol heads and people who want to drive cars that are more engaging. And obviously, it’s clear that you need a certain amount of wealth to be able to afford the cars we sell. So let’s say “wealthy petrol heads” are our target audience. What are the biggest and most important trends you see in the car industry today? I’ll answer the question from a retailer’s point of view. For us the most important thing is how we use current technology to gather and organize customer data in order to serve these customers better. Our job as a retailer is to sell the cars and selling cars is all about understanding customer needs and listening to customers. That could be in a conversation, but it could

also mean listening to them in terms of the way they interact with us via email or through our website or in other ways. And then we want to use that information to present them with interesting offers for cars at the right time. If somebody just received a year-end bonus it might be a great time to talk to him about one of our cars. If somebody was just made redundant it might be a lousy time to talk about this. Ultimately we need to work out ways of having those kinds of conversations at the right time. You obviously need a lot of data for this to work. How do you get this data and how do you secure it? We spent three years working to achieve the so-called single customer view and we’ve invested a lot in this. We have eight dealerships across 14 different sites and any of our sales people can now access our system and find any customer they want. From that customer record, they can look at when they last did a transaction with us, what cars they own, when these cars were last in service, how much that service cost. So should a customer come in to any of our dealerships, possibly even for the first time, he will be recognized and we can right away start dealing with him professionally. That’s what customers in this market segment understandably expect. It’s just as when they walk into a five-star hotel; they expect to be recognized and treated like they have been there before.

Chris Harris · H.R. Owen

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H.R. Owen represents luxury brands such as Lamborghini in the UK

And how did you accomplish this exactly? We have had to bring together lots of disparate bits of data from sales, after-sales and even email systems. Email contained lists of people who attended events, for example. We brought all that together onto one platform and we are probably the first dealer group in the world to use Salesforce.com for that purpose. There are several advantages to Salesforce software. It´s a cloud-based system, so we don´t have to maintain large amounts of infrastructure. It´s very flexible, so we´ve been able to turn it into an automotive system even when it wasn´t designed as a car system in the first place. From a security point of view, it´s a system that has a security model that is very strong. The data is stored in secure data centers, which is

16 H.R. Owen · Chris Harris

probably safer than having it on a local server at a dealership. It sounds like information technology plays a big role in making your sales operation more efficient. Can you give us some concrete examples of IT driven processes that help you in this? From the customer-service point of view, it’s all about bringing together as much information as you can in one place so you get that single customer view. But then you need the kind of tools to mine that data for intelligence that you can use to make attractive offers to customers at the right time. For example, if you consistently send someone emails about Ferrari and he has never once opened them, you can reasonably assume he’s probably not interested in Ferrari. You can then make

sure that he no longer gets Ferrari-related email. You can even take Ferrari out of intelligent emails that, for example, have four brand options listed in them. The key is using IT intelligently. In the new world of social media, email seems to be losing its relevance in private interactions, but you seem to say that in your business it’s still important. Email may be a bit of an old-fashioned technology, but for us it is far and away the best means of communication with customers. Customers tell us they like it. More than 50 percent of our customers open our emails, which is a rate I have never seen in other industries I have worked in. And less than 0.2 percent unsubscribe from our emails. We believe that the data effort we´ve made helps us produce well-targeted emails. The money we spent on writing, designing and delivering emails well is paying off for us. Our customers are voting with their mouse clicks in terms of opening and reading them. Finally, we would like to ask you what kind of car will people interested in the top end of the market be driving in 10, 20 or 30 years? As I mentioned, our customers are first and foremost what I would call wealthy petrol heads. They’re interested in the experience of the drive, so I think they are going to be driving cars that are fun and exciting and involving to drive. Cars will have more

and more electronic systems that will make them easier to drive. But you have the option to turn these systems off and then it will get more exciting. The brands we represent are going in that direction. If you take a technology like electric cars, these are not only about city driving with lower emissions. Look at the new La Ferrari, which is a high-performance hybrid. The technology is deployed to propel you from 0 to 60 mph faster than ever before. Obviously that’s because electric motors have instant 100 percent torque. In our segment, electrification will help build extremely exciting cars that can also be more efficient and produce fewer exhaust emissions. I predict we’re going to drive exciting cars with all kinds of powertrains, including full electric and hybrid. They will still be great to drive. Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com Photos provided by H.R. Owen

Chris Harris became marketing and customer director of H.R. Owen in October, 2011. He joined the British luxury dealership from Nokia, where he was global marketing strategy director. Earlier, Harris worked at Vertu, Thomas Cook and P&G, with responsibilities that took him across Europe, the Middle East and Asia.

Chris Harris · H.R. Owen

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Building the Platform to Provide a New Automotive Experience By Patrick Pélata, EVP and Chief Automotive Officer, Salesforce

Patrick Pélata is responsible for leading Salesforce’s strategy for the automotive industry. He joined Salesforce with 28 years of leadership experience in the global automotive industry at Nissan and Renault, where he served as chief operating officer.

18 salesforce · Patrick Pélata

This spring, Martin Winterkorn, chairman of the management board of the Volkswagen Group, made a prophetic statement: “Over the next few years, our industry will face one of the greatest upheavals since the invention of the automobile.” We are indeed in the midst of an epic transformation: energy, mobility, connected cars, automated driving, a surge of cloud computing and of “software everywhere,” workplace transformation, new ways to collaborate, new ways to partner, newcomers in the automotive ecosystem. The upheaval is happening in many areas and the digital revolution plays a role in all of them. But I will concentrate here on just one: the need to adapt to new customer demands and redesign the customer automotive experience to address them. New Customer Expectations Auto customers’ behavior and expectations have fundamentally changed. They now choose from many channels to communicate about the car they want or the one they use: not just over the phone or through a visit to the dealer, but increasingly via mobile, web, SMS, email and soon through the car itself. The automotive brand, for them, is expected to take care of them during any interaction, over any channel-dealer or direct. Customers want the brand to always know them wherever and whenever they connect with it. They want their experience to be consistent, and they want the brand actions to always be relevant to them. They want to feel like it’s a one-to-one experience; they want a fast response. They want the interaction and experience to be effortless, and, if they need help, they want the brand to always be there to support them. Today’s Highly Diverse Customer Journeys There are many moments of interaction with the brand during a typical automotive customer journey – often more than a hundred. It starts when a prospective buyer searches for information about a new vehicle and continues through test drive, purchase, finance, service, buying accessories, and new purchase. The journey includes multiple channels, both online and offline. Some interactions are handled by carmakers, some by dealers, and some by both. All are rapidly becoming digital, even more so with connected cars. No two customer journeys are alike. Just as automotive engineers design every detail of the car and driving experience, carmakers need to carefully design the end-to-end experience their customers have with their brand. What’s more, key “moments of truth” must be identified to surprise and delight customers.

Patrick Pélata · salesforce

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The most successful carmakers will take advantage of the new channels and opportunities to connect with their customers in a whole new way to deliver a consistent experience that matches their needs and the brand promise. By giving them more information and more ways to stay in touch, they can create a new type of relationship with the customer. Engineering a New Type of Automotive Experience To be successful, carmakers, dealers and other players in the ecosystem need to design processes, systems, and competences to deliver a one-to-one, consistent, relevant, fast, 24x7 customer experience. It starts with a unique 360-degree view of the customer, with real-time insight into channel contacts, social posts, time spent with specific models on a web page, app utilization, and new information captured by the sales or service people. It continues with rapid test and implementation of new applications made possible by today’s cloud computing platforms. A key challenge to executing the new automotive experience lies in the numerous but partially or totally disconnected databases and applications of today, managed by differ-

Email

Contact Center

Web

Social

Apps

Brand Portal

Motor Show

Connected Car

Dealership

360° Customer Profile Customer Success Platform 360-degree customer profile

Legacy Systems

Carmakers need a customer success platform

20 salesforce · Patrick Pélata

ent functions inside the carmaker or the dealers. The hope is that the same technology that drives the digital revolution for customers (mobile, cloud, social, apps, artifical intelligence and big data) will enable automotive companies and their dealers to deliver it. But they need to integrate these new technologies with the legacy ones and create the right tools to succeed. Build A Customer Success Platform What’s needed is a multi-channel platform that integrates technologies around the whole customer experience, not around legacy systems or silos. At Salesforce, we call this the Customer Success Platform. An automotive customer success platform complements most legacy systems. It is a data and application layer with APIs that sits on top of them, and a middleware layer interfaces with appropriate APIs. For automotive applications, it delivers the following six core capabilities: • 1:1 and Social Marketing: Carmakers are able to listen to and engage customers and potential customers on social media. They can address issues and identify and nurture leads in a personalized manner. But just as important, they can also amplify positive messages, react quickly to address bad ones, publish content, and actively participate in social discussions about the company and its products and services. • Dealer Sales: Whether owned or influenced, automotive retail is literally where the rubber hits the road. With strong lead management, retailers can catch potential customers who might otherwise slip through the cracks. With a shared 360-degree view of the customer, carmakers and dealers can sell more intelligently. Mobile tools allow salespeople to interact and close sales in real-time, even away from the dealership. • Connected Services: Dealers, carmaker engagement centers, and social listening teams are able to answer and serve customers anytime, anywhere, through any device – including their connected car. These teams can access up-to-date customer information so they know who the customers are, their history with the brand and its dealer network, and even what their connected car has to “say.” • Owner Portal and Communities: Car owners need a single interface so they can see and take action on the important details of their relationship with the brand, the dealers, the service department, and finance department. In addition, a community functionality allows owners, dealers, service personnel, and employees to share infor-

Patrick Pélata · salesforce

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mation, opinions, reviews, and media in an open forum. The interface needs to be on the web, on mobile, or on the car display. • Analytics: Car manufacturers, their suppliers, and dealers can get new insight through the huge amount of data made available from customers, cars and legacy data. • Apps: Developers can create and deploy new app experiences at lightning speed to take advantage of new value-added services and maintain an active relationship with customers.   Connecting And Supporting Cars And Drivers The connected car channel poses a difficult challenge for carmakers. The development cycle is separate from that of smartphones, and except for Tesla, carmakers have little experience updating their cars over the air. Moreover, since customers are not accustomed to paying carmakers for services inside their vehicles, developing a new business model on a new generation of telematics is quite a blind bet for top management. But connected cars are becoming a reality, and players like Apple and Google are joining the fray. Many new connected car service providers have started to invade this space. They are entering the automotive value chain and starting to monetize it. They sell car data acquired through OBD2 plugged-in devices. They are selling crash data and driver behavior data to insurance companies. They are selling vehicle maintenance programs and in-car advertising, and they deliver free navigation and good traffic information. What if they happen to know more about car users and car buyers than the dealers and the carmakers? Even though carmakers need to act faster, they struggle to develop business strategies to capitalize on this opportunity. They need to integrate the connected car with their customer experience platform. A Company Transformation A major upheaval is under way. Carmakers and dealers are challenged and must act now. They need a platform with applications to redesign the customer experience and address the new needs of today’s customers. They also need to learn how to leverage cloud computing on top of legacy systems so they can drastically cut development and implementation time. That way they can swiftly innovate, test and scale (or stop) to continuously bring new choices to automotive customers.

22 salesforce · Patrick Pélata

But technology is not the only issue. Car companies need to align their organizations to become fully customer-centric, dealing in a more holistic way with these new customer experiences. They need a much more cross-functional approach. For example, social listening and social engagement shouldn’t only be done by marketers and telematics shouldn’t only be done by engineering. Similarly, sales and service processes at dealers need to be addressed in a very new and more holistic way by the dealers and the different departments of carmakers. Conclusion Designing a best-in-class automotive customer journey and rolling it out across different geographies is possible today. But it requires transformational thinking, the technology tools to make it happen, and alignment of talent, organization, and processes to support it. It requires a customer success platform. With the right leadership, an automotive customer journey will create new opportunities for carmakers and dealers to generate new revenue and create loyal and engaged customers for life.

Photos provided by salesforce

Patrick Pélata · salesforce

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" Digital natives do not buy the vehicle if it lacks smartphone compatibility"

Mike Bell, global connected car director at Jaguar Land Rover (JLR), is responsible for managing the end-to-end connected car business service for the British automaker. In an interview with automotiveIT, he explains how JLR caters to clients who increasingly consider connectivity one of the key factors in the buying decision. Bell also talks about the company’s data policy and shares his views on how cars will evolve over the next 25 years.

24 Jaguar Land Rover · Mike Bell

Mr. Bell, please explain briefly what Jaguar Land Rover is offering in the area of car connectivity? Our connectivity strategy covers four core technologies. Three of them we bring to market now: telematics, mobile devices and connected infotainment. The telematics component includes eCall, bCall and stolen vehicle tracking; mobile device support includes InControl Apps and a WiFi hotspot. With our new XE model we also offer a new mid-range infotainment system that includes all three components. A new highline system will be announced soon. The fourth technology is V2X communication. We’re are working on a number of collaborative research projects but do not have a launch timing. How important is the connected car for Jaguar Land Rover? Connectivity is a critical capability for our vehicles. It is one of the top 10 reasons to buy a vehicle today. We need to ensure we are amongst the leaders in the premium segment. We do so with built-in connectivity. I already mentioned the term “telematics” before. This includes eCall functionality as well as stolen vehicle tracking, roadside assistance and remote vehicle control. We also do so with brought-in technology. We also support what we call “beamed-in” technology: to allow the control of standard iOS and Android Apps in a driver-focused manner. This system was co-developed with Bosch. We offer WiFi hotspot capabilities together with a roof antenna

and the possibility to connect several devices via a single connection. In some markets we also offer special data plans, for example in North America and China, but not in Europe yet. How important is connectivity for the average Jaguar and Land Rover driver? That’s easy: Digital natives do not buy the vehicle if it lacks smartphone compatibility. Of course not all of our buyers are that young. But there are differences between the local buying habits in different parts of the world. In China people buying the same type of vehicle are typically 1015 years younger than in the rest of the world. In general, older people are more interested in security features. But if you take a look at a typical Range Rover or Jaguar XJ customer, they are very often on a “CXO” level. That brings with it a high technology expectancy and demand, even if the driver himself is in his late 50s or 60s. Connectivity matters for all age groups. Only a small number of buyers are not interested at all. With all cars getting connected, where does JLR feel it has an edge? We offer a great end-to-end experience for our customers. That starts when they leave the house and goes all the way to the final destination. Customers take the bits they want. Of course other companies also have similar features, but we have a joined-together experience. Our use of a touch screen makes the experience of in-

Mike Bell · Jaguar Land Rover

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The Jaguar XE, which was unveiled in September 2014, features a new mid-range infotainment system

tegrating smartphone Apps more natural for customers and much easier for developers. How is the infotainment in the new JLR vehicles received by the market? The reaction of journalists driving the new generation of cars has been very positive. We received an award from Germany’s Autobild magazine for our smartphone integration, InControl Apps. You told us at the automotiveIT Congress in London that you hope to get valuable new customer data from connected cars. Are you already getting this and, if so, what are you doing with it? Our main desire is to improve the cus-

26 Jaguar Land Rover · Mike Bell

tomer experience. For example, a customer may find it useful to send vehicle diagnostic information to their preferred dealer. The customer can “opt-in” to these features. Every carmaker says the data belongs to the customers, but there’s still a lot of concern over privacy. Is that not justified? It is about our customers. So we adopted the most stringent data protection principles, which means that we comply with German laws - on a global scale We also do not monitor individual customers’ use of the car. The data is provided to the customer via the smartphone App, InControl Remote.

Can you name some IT and telecommunications companies you work closely with? And what exactly do you do with them? We partner with multiple mobile operators, including Vodafone, AT&T and China Unicom. We also work with service providers like WirelessCar, AppCarousel and we work with silicon suppliers such as Intel. We have a joint research program with the latter. We also work with Bosch on multiple levels for the infotainment hardware and software (Bosch Softech), with Symphony Teleca and TCS for infotainment systems integration and with Panasonic for consumer technologies. There are several more partners we work with. There’s a lot of talk about driverless driving. Will we at some point see autonomous Jaguars and Land Rovers on the road? When we’re talking about autonomous cars there will be an evolution of technologies rather than a revolution. We will have more and more sensors and functions to automate and assist with driving. We are not setting a time, but, of course, JLR will at some point provide autonomous vehicles. But we’ll also provide a choice. Our customers - whether they are luxury or sports car buyers - like to drive, and it will be the customer’s choice. A sports car is built specifically for the enjoyment of driving. But even in a luxury vehicle you probably won't enjoy being stuck in a traffic jam. So you will be able to engage autonomous functions where you choose.

A final question about the future: What will the car look like in 2040? In 2040, connectivity will be pervasive. High-speed connectivity will be standard. The coverage problems we face today will be a thing of the past. In 2040, the view to the outside will be via a screen. This makes different seating layouts possible. Your vehicle will be used like a mobile office or a living room, depending on the driver’s and the passenger's needs.

Interview by Thomas Koehler Photos provided by Jaguar Land Rover

Mike Bell is global connected car director at Jaguar Land Rover (JLR). This relatively new position was created in 2012 to address customer demand for connected car technologies. Bell’s role combines technical expertise with a focus on delivering a premium customer experience to drive commercial value. Earlier, Bell was chief technology officer at JLR. He has spent more than 19 years working as a senior strategic technology professional at several companies. His experience spans multiple industries including utilities, manufacturing, telecoms, oil exploration, and the public sector.

Mike Bell · Jaguar Land Rover

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5 connected car trends for 2015 By Kevin Link, Chief Technology Officer (CTO), Verizon Telematics

Kevin Link, chief technology officer (CTO), is responsible for the OEM vehicle technology and network architecture of Verizon Telematics. He is also in charge of the overall technology strategy. Link is one of the co-founders of Hughes Telematics, which later became Verizon Telematics. Prior to his involvement in the telematics industry, he spent 19 years in various engineering roles developing products and services for the US wireless industry.

28 Verizon · Kevin Link

The car is quickly becoming the coolest mobile device we own — just ask the 16,000 decision makers and influencers who attended the Los Angeles auto show in November to discuss the latest technological advancements in connected cars. In 2015 more mainstream automakers will adopt connected car and other advanced technologies. Here are five auto technology trends to watch for in the new year: 1. The number of vehicles that include a telematics option will increase: There are 14 automakers that control 80 percent of the car market globally and each one of them has a connected-car strategy. In 2015, we’ll start to see these strategies apply to more car models as connected features such as high-end navigation, telematics and infotainment are included as standard options. 2. Advanced technologies will become a precursor for autonomous vehicles: Future-forward car manufacturers will start to push the envelope on enhancing advanced technologies such as adaptive cruise control and lane departure warning – further setting the stage for autonomous vehicles. 3. Competition for off-the-shelf aftermarket solutions will intensify: Overall, adoption rates for connected cars remain relatively low. For example, 200 million cars in the US are not connected. The coming year will usher in more competition for solutions to benefit the aftermarket. 4. 4G LTE will become the de facto standard and Wi-Fi in the car will become a reality: Often lauded as the early adopters, high-end auto makers will set the course when it comes to 4G LTE and Wi-Fi hotspots in their car deployments as a future-proofing mechanism. While the amount of bandwidth that comes with 4G LTE may not be needed by all drivers, automakers do not want to be faced with a situation down the line where they are required to migrate from 3G to 4G because their models have suddenly become antiquated. Meanwhile, demand for mobile Wi-Fi hotspots is increasing as rear-seat entertainment — in the form of tablets and mobile computers — becomes a “must-have” for parents of small children, limo drivers, field service workers, etc. 5. Wider integration between connected cars and the internet of things: As the internet of things becomes more prolific, location and intent will be central to identifying drivers’ algorithms, thereby making the car the proxy for delivering on the promise of the “connected lifestyle.” In other words, intelligent technology will continue to embed itself into peoples’ day-to-day lives, changing how they engage with the world including the driving experience. (Photo provided by Verizon)

Kevin Link · Verizon

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" New technologies let car drivers make better use of their time"

As vice president, electrical & electronic systems at Volvo Cars, Thomas Mueller is in charge of a significant chunk of innovation in the new models the Swedish carmaker is rolling out. In an interview with automotiveIT, Mueller explains how Volvo is addressing the new technology challenges and he talks about the opportunities the auto industry has as it integrates more sophisticated connected systems.

30 Volvo · Thomas Mueller

I’d like to start by asking you about the big trends you see in the automotive industry today. What are the transformative forces at work? The three trends I see at the moment I would describe as “safe, green and connected.” On the safe side, I would list everything safety-related that’s finding its way into the car. A lot consists of IT and software supported systems. On the green side I would put everything that aims to reduce CO2 emissions. That includes hybrids and electric vehicles. And on the connected side you see everything that is connecting cars to the outside world. In other words, we’re talking about bringing the car into the internet, but also bringing the internet into the car.

to bring two worlds together. The traditional automotive industry comes from a very mechanical world. In the past 15 to 20 years it has moved more and more into the direction of electrical and electronic systems and software. That was the first challenge we had. And we could still manage this well because it was all in the car in what was pretty much a closed environment. Now the car is getting connected and we have to deal with data exchanges with the outside world. We’re talking about different technologies, different lifecycles, a different way of thinking and different possibilities for new features.

There’s a huge technology leap going on in the auto industry. How difficult is it for owners of cars or drivers to come to terms with all the new stuff? Drivers are picking up the new technology fairly easy. That’s because the consumer electronics industry has been moving into this space for several years. And in the premium segment of the car market, where we operate, people are very comfortable using all the features of their smartphones. We haven’t met that many customers who are not familiar with smartphones and connected technologies.

Can you explain that a bit more? Take software. In most of our cars, we’re looking at highly embedded systems. They were developed according to certain specifications, were automotive-grade and built in line with the automotive development cycle and the lifecycle of the car. With IT, it’s a completely different story. Hardware and software are pretty much separate from each other. You can exchange hardware without the customer noticing it. You can swap applications from one day to the next. You can very quickly apply patches, bug fixes or new applications. These are two worlds coming together and they need to learn from each other.

Where do the difficulties then start for the automaker? The challenge for the automaker is how

You mentioned the issue of different development cycles for the automotive and the IT industries. How do you bring

Thomas Mueller · Volvo

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these two in sync with one another? You need to put a lot of thought into this. You need to get the interfaces right. We’re not talking about one side adopting the lifecycle of the other. It’s all about co-existence. We’re doing a lot of work on developing an architecture that starts in the car but also goes outside of the vehicle. The question is how we can make interfaces that are robust enough to deal with a car, which has a lifecycle of 10 to 15 years, and, at the same time, make the newest applications available to customers during this lifecycle. Tell us a little bit, please, about the sales and marketing approach and how it has to change to sell what is essentially a totally new kind of vehicle. When it comes to marketing, the key is to explain the new features to customers. The industry is challenged by this, because the environment is so complex and there’s so much detail behind all the innovations. Look at all the differtent features you can get in a new Volvo. While you operate a smartphone, you can call a call center, bring your applications into the car and so on. We need to explain all these features to customers in a crisp, transparent and logical manner. We’re doing many things in this area. We’re running trailers on the internet, we’re investing in our sales force, we’re installing demonstrators at our dealerships, just to name a few. The internet plays an important role, too. Just google “Volvo On Call,” our connect-

32 Volvo · Thomas Mueller

ed smartphone app, and you see lots of trailers explaining everything. Or log in to our web site. With lots of smart customers browsing the internet before they make a purchase, you need to explain things in a much different fashion. How is IT and communications technology enabling your organization to operate smarter and more efficiently? These new technologies help broaden the customer’s experience beyond owning the car, sitting in it and driving it. We’re talking about preparation for the journey, but also what you do after the journey and what services you need around your car. We can, for example, help plan your trip in advance, send navigation information to your system. When you enter the car, it already knows where you’re going. You can switch on the heating or air conditioning in advance and after the trip you can download your driving journal, which makes sense for a business travel expenses report. And does this new connectivity provide an opportunity to improve car maintenance and service as well? In the context of service, we introduced in May our connected service booking feature, which lets the car tell the dealership that it needs maintenance. The dealer then proposes a time, which you see on your in-car monitor. You can respond by either calling him up or just agreeing through the push of a button in your

car. It’s very important in the premium segment that you offer a wider range of convenience features for the customer. Modern people don’t have time and this kind of feature lets them make better use of their time. There are great opportunities for the auto industry here. Volvos used to have a little red light that would come on when you needed service. Are those days finished? That red light will still come on, but a lot of things happen at the same time. The information goes to the dealer and the scheduling can then take place automatically. Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com

Thomas Mueller is vice president electrical & electronic systems at Volvo Cars. He joined the Swedish automaker in April 2012 and has responsibilities that include E/E architecture, HMI, infotainment and connectivity, the electrical distribution system, body electronics and electric propulsion. Before joining Volvo, Mueller worked in different management positions at the BMW Group. He holds a PhD in nuclear physics with a strong background in electronics and IT, complemented with studies in economics. Early in his career, Mueller worked at several international research centers both in Europe and the US.

Photos by Silvia Steinbach

“These new technologies help broaden the customer experience beyond owning the car”

Thomas Mueller · Volvo

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Industry 4.0 – (R)EVOLUTION By Oliver Kelkar, Business Innovation Manager, MHP

Oliver Kelkar is responsible for business innovation management. In this function he is driving themes of the future for the automotive and manufacturing industries.

34 MHP · Oliver Kelkar

In recent years, business organizations have faced a number of new challenges. The most important one is:

FLEXIBILITY The customers’ growing demand for individuality, ever more volatile markets, global competition, shortage of resources, ecological aspects and cost pressures force business organizations to become more flexible: Flexibility with regard to their own production and product development, but also flexibility with regard to the stronger internationalization of the lines of industry. For instance, just look at the fact that consumer electronics has found its way into automotive vehicles. Volatile markets with heavy fluctuations in sales have an increasingly drastic and permanent impact on manufacturing companies. After all, fluctuations of this kind prevent a reliable forecast of the required product volumes. As a consequence, the ability to ensure high flexibility regarding delivery periods and quantities has become very important for business organizations, if they wish to still be able to meet customer expectations in future. This means that, in future, manufacturing companies will find themselves in an environment in which both the correct and rapid response to changes on short notice and absolute customer orientation – while taking the best interests of the staff into account – will be of vital importance. The shortage of natural resources and space consumption in urban areas will have an impact on the decisions and actions of business organizations. This fourth industrial revolution is inspired, made possible and driven by the Internet of Things and Services. The focus is on the Smart Factory. It is powered by cyber-physical systems (CPS). It is served by smart logistics, by intelligent mobility, by smart buildings, resource-saving power generation and supply. It produces smart products that continue to evolve and change, even after leaving the smart factory.

With our MES projects (Machinery Execution Systems) which are frequently based on SAP technology, we integrate the centralized business management with production equipment. The resulting transparency yields flexibility - flexibility for job order planning, for logistics and production. This integration constitutes a significant component in the implementation of Industry 4.0 with its cyber-physical systems.

Oliver Kelkar · MHP

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How would you rate the importance of a close strategic cooperation with your IT? 100% 90%

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Figure 1: The role of IT from the perspective of the business departments (MHP-Study Industry 4.0, Nov. 2014)

Industry 4.0 is an interdisciplinary challenge that needs to be dealt with as a top management issue. The business departments expect a tight integration with IT. IT plays a central role within the company. It orchestrates the backbone of the business. The Internet of Things and Services is the “technical vision of integrating objects of any kind into a universal digital network.” Sensor and identification technologies give various objects a unique identity and enable their localization. Thanks to digital product memories and embedded systems things (such as cars, consumer goods or clothes) communicate – both among themselves and with their environment. They can make decisions on their own and trigger actions. As a result, the physical world of things is linked with the virtual world of data. Cyber-physical systems constitute the core, the infrastructure, of Industry 4.0. These are devices, buildings, transport vehicles or production plants and logistics components that contain embedded systems and are capable of communicating via the Internet. These objects are intelligent and capable of assigning and executing tasks on their own. Thanks to its know-how on contact-free identification technologies, MHP helped to create an RFID-based solution for test vehicles in the “Transparent Prototype“ project. The assembly status is automatically documented prior to each test run and the test run data

36 MHP · Oliver Kelkar

is then compared with this data. As a consequence, we obtained faster and more reliable results which motivated us to develop a significantly enhanced, GPS-based integration for the entire test vehicle fleet on behalf of our customer. The necessary platform for company-wide or cross-company data storage is provided by cloud computing solutions. The smart objects, products, machines, and internal ICT systems are linked with the cloud via communication networks. This way, data is also available to mobile applications. Using the MHP BIG DATA scenarios, we enable our customers to create value from data, to make (partly) automated decisions and analyses in real time. In the course of the fourth industrial revolution, our industrial production, the working methods and probably even our entire social life will fundamentally change. Still, how well is Germany, how well are the leading markets of the automotive and manufacturing industry prepared for the pending changes? We took a closer look at this question and carried out the study “Industry 4.0 – a positioning of the German automotive and manufacturing industry” (November 2014).

Industry 4.0 Perspective Langfristig ist die Umsetzung von Industrie InInthe thelong long run, run,the the implementation implementation ofof Industry Industry 4.0 4.0is4.0 is für Ihr Unternehmen Unternehmen erstrebenswert. desireable business. desireablefor foryour your business. erstrebenswert.

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Figure 2: Industry 4.0 as an opportunity for business organizations and Germany as a business and investment location (MHP-Study Industry 4.0, Nov. 2014)

The findings of the study show that business organizations still need to cope with many challenges. Certainly, this equally applies to all organizations in society, such as associations, research institutes and politics. It would be easier to get a grasp on this topic, if

Oliver Kelkar · MHP

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Starting point

Environment analysis

Corporate analysis

Assessment of Industry 4.0

Roadmap

© 2012 Mieschke Hofmann und Partner Gesellschaft für Management- und IT-Beratung mbH

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Figure 3: MHP Assessment - Industry 4.0 can be implemented and planned

specific, industry-related case studies were used. This is, in particular, true for mid-sized companies. There is a large demand for concepts, paradigm shifts, technologies and solutions in connection with Industry 4.0, although the Industry 4.0 is not an established concept yet and the underlying understanding will have to grow. At present, there is still a certain degree of skepticism and uncertainty. Generally, business organizations attach a high importance to Industry 4.0, which will significantly rise in future, although only 50 % believe that Germany will be able to play the leading role. This complex topic is definitely a task for the top management. 80 % expect that Industry 4.0 will hold a high benefit for their business. In particular, the ability of responding to changing conditions in a highly flexible manner stands in the foreground. Cost and resource efficiency are also driving factors. Industry 4.0 technologies such as BIG DATA, public clouds and the Internet of Things are gaining in importance. Naturally, the machinery and plant engineering industry is more intensively involved in Industry 4.0 than the automotive industry, since the efficient and flexible production of smart products and vehicles requires cross-linked, smart und versatile machines.

38 MHP · Oliver Kelkar

If a business organization wishes to be among the leading suppliers, there is no other way than dealing with this range of topics already now and creating added value by implementing Industry 4.0. It should be kept in mind that large investments may be required that will pay off in the long run. A strategic approach with a flexible roadmap will have to be developed in order to avoid that the need for investments jeopardizes Industry 4.0. The MHP consulting product is tailored to this flexible roadmap. Based on the corporate strategy, the impacts from the environment and the market situation, a roadmap with specific recommendations for the implementation and actions will be developed. A catalog of 200+ actions with related criteria and weighting will help business organizations to benefit from previous experience. In order to make Industry 4.0 a success, all players will have to engage in a joint and constructive discussion. Prof. Dieter Kempf, BITKOM chairman, correctly summarized the core of the challenge presented in this paper when he made the following statement: “If we do not implement Industry 4.0, others certainly will. And if we wish to realize it, we will have to do so quickly, since our global competitors have been dealing with this topic (Photos provided by MHP) for a while. So let us get going!“

Oliver Kelkar · MHP

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Photo: Silvia Steinbach

" Car connectivity is the new battleground for product differentiation in the automotive sector"

Qoros Auto was founded in 2007 as a Chinese-Israeli automotive manufacturing company headquartered in Shanghai. The first Qoros production model, the Qoros 3, made its public appearance at the Geneva Motor Show in March 2013 and went on sale in China in December 2013. From the start, the car has come with the QorosQloud infotainment system as standard. Maurits Aalberse, director of Connected Services at Qoros, spoke to automotiveIT about the brand’s infotainment strategy and its plans going forward.

40 Qoros · Maurits Aalberse

Please update us on how Qoros as a new carmaker is doing. After our initial success with our first production car – the Qoros 3 Sedan – we received the second 5 star EuroNCAP crash test rating for our second model, which debuted at the 2014 Geneva Motor Show, the Qoros 3 Hatch. We also just recently presented our third model at the Guangzhou auto show in November2014. It’s called the Qoros 3 City SUV. We also debuted the second version of our QorosQloud infotainment service there. Can you please summarize the strategy behind your infotainment package? We strongly believe customers today and tomorrow expect high-quality connectivity options in every car. People don’t line up at car dealers any longer just to look at new models. Car connectivity is the new battleground for product differentiation in the automotive sector. We offer an 8-inch capacitive touchscreen standard on all Qoros cars, which is unique to the segment we operate in. Also, 95 percent of our cars have access to our QorosQloud connected services. This cloud-based system offers a wide range of services including navigation, driving control and social sharing. And it’s very intuitive and easy to use. How much of the brand’s initial success in China comes from the standard infotainment package? The infotainment package is a strong factor in the success of the Qoros brand. We

discovered that 75 percent of Qoros buyers actively use the majority of the core services in their car and more than 90 percent would recommend QorosQloud to friends and family. That’s a great start and our challenge now is how we can make this number 100 percent. So far you’re only in China. What kind of data security concerns are you dealing with in the market and how do you address them? Hackers of any kind target connected objects everywhere in the world. We are working with world-class global partners in the end-to-end QorosQloud architecture. That includes the car and the backend. Our partners are strongly involved with us in this area. Partners include Microsoft, China Unicom, Harman, Wireless Car, and Neusoft/Alpine. Given the dominance of the mobile phone in China, do you need an embedded system there as well? Our onboard unit is easy to operate. It offers local functions as well as functions relying on cloud connectivity and hybrid as a continuum. We see the car monitor as one of the screens for the user’s mobile journey. The idea behind this is simple. For example, you plan your route on any device; it does not matter if this is your PC, your tablet or your smartphone. Your smartphone tells you about the whole journey including walking information. You then use the screen in the car while

Maurits Aalberse · Qoros

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Photo provided by Qoros

Qoros unveiled a hatchback version of the Qoros 3 at the Geneva auto show in March 2014

driving. When you enter the car, one touch of the monitor is all you need for the car to take over from your phone. When you park the car at or near your destination with the help of our cloud-based dynamic parking information, the smartphone takes over again. The screens augment each other and each has the information that you need at a particular time. At the automotiveIT Congress in London this summer you said that the car must be – or must become – a fully connected part of the digital lifestyle. How far are we removed from that today or is Qoros already there? We are already fully connected at Qoros.

42 Qoros · Maurits Aalberse

The ‘customer-centric digital ecosystem’ was pioneered in Qoros’ first production car and launched in late 2013. Today, 95 percent of our cars are sold with the connected services system fitted as standard. But we are never satisfied and keep on innovating. We focus on ease of use and gamification. Our customers have fun using our systems. With the use of the social media and community elements we’ve exceeded our own expectations. Please tell us some more about QorosQloud. We feel we offer a complete portfolio and for a car priced at about 16,000 euros in China we offer unique cloud-connectivity

standard. We’re very happy that other carmakers also see connectivity as more and more important. With our QorosQloud we created a head start and we are building a digital value chain from the ground up. It will be relevant not only for our customers but also for business partners. Think insurance or car dealers. Which IT and telecommunications companies do you work with most closely? We are a true first mover in China and work with several top suppliers. Microsoft provides telematics service, we use the dispatcher from Wireless Car on China Unicom as telecommunications provider. On the backend side, traffic information is supplied by AutoNavi and enhanced by TomTom. We get map services by AutoNavi and we also integrate server content providers like EasyPark for Dynamic Parking services, Dianping local services that work like Yelp in the US, and many more. Working with partners help us to innovate at high speed. Our cloud-based approach allows regular incremental updates, which makes us flexible. But you don’t outsource everything. We rely on key functions to be provided in-house: We have a team for the product vision, product management and concept as well as a design team that focuses on user experience, interaction and graphic design and a technical team to get it done, with, indeed, a strong link to our partners.

We also have a business development team that supports CRM and after-sales as well as our dealers and works with partners such as insurance companies. Together we form a multi-disciplinary, multi-cultural team, which translates in a very short time to market of an integrated digital ecosystem and value chain. Of course, we started with a clean sheet of paper, but this is just a part of our success story in the connected vehicle segment.

Interview by Thomas Koehler

Maurits Aalberse is director of Connected Services at Qoros Auto. He joined the China-based international car company in 2012, having gained 16 years of experience in multiple disciplines across the automotive and technology sectors., At Qoros, Aalberse is responsible for telematics and QorosQloud, a consumer-centric digital ecosystem that offers more than 30 functions, including enhanced navigation, driving control and social sharing accessible via connected in-car infotainment, a consumer web portal and mobile device app. Earlier in his career, he worked at IBM and TomTom, where he was director of product management & marketing.

Maurits Aalberse · Qoros

43

Answering key infotainment questions By Philippe Gicquel, President, GENIVI

Philippe Gicquel is general manager for cockpit, safety and infotainment EE modules at PSA/Peugeot-Citroen. He currently holds the presidency of the open-source association GENIVI.

44 GENIVI · Philippe Gicquel

In-vehicle infotainment (IVI) has been in the spotlight for several years and with recent announcements from Apple and Google, the focus is even more on this important area. With the smartphone, the consumer electronics industry has created a revolution that has totally changed consumers and their habits. Smartphones are now both communication devices and digital extensions of their individual owners. Benefiting from this digital extension anytime and everywhere is a requirement for more and more people, which puts the automotive industry under significant pressure to answer a growing number of questions. How to deliver to customers in the car their normal smartphone experience as well as an undistracted and safe drive? How to manage the rapid evolution of consumer electronic devices? How to manage the diversity of customer expectations resulting from the diversity of the smartphone industry? How to balance the pros and cons of smartphone integration with the pros and cons of a pure, embedded solution? Is there a risk to lose brand recognition in a car to the profit of the consumer electronics industry? Should cars be connected by themselves or through smartphones? What is the value of car data and should smartphone apps get full access? How is cyber-security managed? What level of integration or segregation is needed between pure infotainment and car functions tied to driving assistance? An exhaustive list of questions would fill pages. Multiple options Most of the open-ended questions listed have multiple possible answers. And for those that are not open-ended, the answer may depend on a variety of factors. These include car segment, market zone, brand strategy, who you put the question to in a company, when you ask it, etc... For this reason one should be wary of people who pretend they can describe the future in definite terms. Multiple options are possible and will eventually coexist in coming years. Uncertainty is the only certain assessment one should make when talking about the future. What is clear and undisputed today is that automakers do not wait for the answers to all questions before moving forward. They have already joined organizations that define smartphone integration standards. After the generation of systems allowing Bluetooth phone, including Bluetooth audio streaming, the new trend is to allow drivers on the road to use smartphone applications through the car’s HMI equipment: large touchscreen, loudspeakers, microphone, steering wheel switches and commands.

Philippe Gicquel · GENIVI

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This strong trend does not mean that automakers have a “smartphone integration” only policy. They still have several good reasons to keep some of the features native to the

OAA (Android Auto) BMW

APPLE (Carplay)

CCC (Mirrorlink)

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FIAT - CHRYSLER

X

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FORD

X

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GM

X

X

X

HONDA

X

X

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HYUNDAI - KIA

X

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JAGUAR LAND ROVER MAZDA

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MERCEDES MITSUBISHI

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PSA PEUGEOT CITROEN

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RENAULT - NISSAN

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SUBARU

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SUZUKI

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TOYOTA

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VW GROUP

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VOLVO

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X Info Web September 2014

embedded head-unit. First, this head-unit does not provide only CE type infotainment but also supports specific car features such as front and rear parking cameras, on-board computer, vehicle function configuration, climate control and other features. Second, the smartphone market is diverse and fast moving. Covering a broad market-share of smartphones will be challenging and no automaker can afford to leave customers without a preferred solution. Third, some car companies are unwilling to lose control of the most important customer-facing branding opportunity, the user interface delivered by the HMI. Fourth, data is seen by some people as the black gold of 21st century. Modern

46 GENIVI · Philippe Gicquel

cars generate a huge amount of data that may be of interest to a very diverse and growing number of companies. The ability to collect and process data and then resell the information is something that many automakers may like to keep under control. Competitive solutions Eventually, some other considerations may favor embedded solutions. Such may be the case for navigation for autonomous vehicles, as it is not likely that an automaker will trust a smartphone’s navigation for autonomous driving use-cases. For all these reasons, a large majority of car companies still believes they need a competitive solution to develop embedded infotainment. That means a solution under their control, with smartphone integration being one feature among many others. GENIVI is working to develop one such competitive solution. Since it was launched in 2009 by BMW and Intel together with PSA, General Motors, Wind River, Delphi, Magneti-Marelli, and Visteon, the GENIVI Alliance has grown to maturity. Products using GENIVI deliverables have been launched; membership is stable at more than 160 companies; and movement from a closed industry organization to an opensource development approach has been accomplished. GENIVI is now launching a more aggressive technical and marketing strategy in order to better leverage the great assets realized during the last five years. Consultants estimate that GENIVI-based systems’ market-share will reach more than 20 percent by 2018. And with member activitiy on the rise and new automakers joining the alliance, the trend suggests growth will continue. GENIVI well-positioned If we look at the big picture of connected cars and the move to the Internet of Things, GENIVI appears to be well positioned for the future. GENIVI software embedded in the head unit is in a critical path of the growing number of services provided by the connected car. The head unit deals with infotainment and navigation, both of which use data from the cloud. The head unit connects through Bluetooth or Wifi to customer devices enabling communication between vehicle and cloud. On-board HMI enables interaction with connected services provided by the head unit. Through its partnership with Autosar, which defines car ECU standards, and with W3C, which defines web standards, GENIVI helps define software standards for sensor-to-cloud communication.

Philippe Gicquel · GENIVI

47

Through its Linux-based, open source model, the alliance is facilitating a dramatic reduction in development cost and time to market. GENIVI offers the automotive industry the agility that Android brought to smartphones, plus the fact that the development is facilitated by a non-profit organization with broad community involvement. This last aspect is a guarantee for the members that they will keep control and can steer developments without the liabilities incurred by unbearable commercial contracts. HTML5 brings convergence Three other important technology moves need to be mentioned to draw the full picture in the area. First, HTML5 deployment brings some convergence in apps development. Apps using this technology can be deployed on any device, including GENIVI head units. Second, personal data storage in the cloud allows people to get their personalized environment everywhere on any device without the need to “carry” it with them. Finally, telecommunications technology on the SIM card is moving quickly, especially in the European market. European carriers may allow the use of reprogrammable SIM cards, thus allowing new business models for communication contracts. For example, a car could become just one of the devices included in a multi-device, family contract. Bring all these technologies together, and you can imagine a future where people do not need to carry their digital extension with them but can access it anywhere, including in their cars. Such a trend has been described as the “pervasive step.” It appears it happens in every technology field after a while. The future Through wearable devices available today, the movement of diversification of formats for a person’s digital extension has started. The car as an electronic device may become one object among others that implements and provides access to the customer’s digital world, without the need of any intermediate device. Once again, the uncertain nature of the future is the only certain assessment we can make, so the description above is not THE future but only one hypothetical view. But one thing is clear: GENIVI as the major organization in the in-vehicle infotainment ecosystem will play an important role in the delivery of these future trends for the automotive industry. (Photos provided by GENIVI)

48 GENIVI · Philippe Gicquel

49

Be First to the Future By Hugh Dickerson, Industry Head, Automotive, Google

Hugh Dickerson is a senior industry head at Google. He leads the team that works in partnership with the automotive industry’s largest players in developing and delivering successful digital marketing strategies.

50 Google · Hugh Dickerson

The world is changing fast, being fueled by the rapid acceleration of technological advances. As I sit writing this piece my youngest son is reading the news on his tablet and recounting how Alan Eustace, one of my Google colleagues, has just skydived from a height of more than 40 kilometers at speeds of over 1,300 km/h. Alan’s feat is mind-blowing but so also are the technological advances that allow the spread of this news, in both words and video, so wide and so quickly. He broke the record previously held by the Austrian Felix Baumgartner. Felix’s jump has been watched over 40 million times on YouTube and was watched by so many globally at the time that it used 8 percent of the world’s internet bandwidth.

Alan Eustace skydived from a height of more than 40 km at speeds of over 1,300 Km/h

This pace of change in media is incredible. The telephone took 75 years to scale to 50 million users, the radio took 38 years, the television 13 years and the internet just four years to reach that same figure. Perhaps making the point of this acceleration most poignantly is that the Angry Birds app took just 35 days to reach 50 million users. This rapid acceleration is only set to continue. As you read this you are experiencing the slowest day of technological change for the rest of your life. This pace of change can be bewildering for many of us as our linearly wired human brains struggle to come to terms with the exponential rates of advancements.

Hugh Dickerson · Google

51

It is against this backdrop that I joined Google just over three years ago to lead a team that works in partnership with automotive manufacturers in developing and delivering successful digital sales and marketing strategies. This move followed twenty years of working across the globe in various parts of the automotive industry. During this last decade, advancements in vehicle design and performance have both benefitted from and fueled this technological revolution. There have been major advancements in cleaner more efficient propulsion systems and there is also much development time spent on connected vehicles and driverless cars. I would contend, however, that vehicle brands are not generally at the cutting edge, compared to leading retail businesses, in keeping pace with their consumer and grasping the opportunity that digital offers them in forming more profitable and longer lasting relationships with their drivers. The capacity to change and grasp the digital opportunity is critical for manufacturers as the consumer shifts behaviors and small agile disruptors flood into the auto space snapping at the heels of the car giants. These disruptors are sometimes well known and publicized such as Tesla, which is perhaps as well reknowned in the industry for challenging the distribution model as it is for its sporty electric vehicles. But more often the disruptors take the form of smaller startups or disintermediators sensing opportunity as auto manufacturers struggle to change gear and accelerate the adoption of digital into their sales and marketing. But it is still not too late to be early in the digitization of automotive commerce if they act now. The key to success, in my belief, is switching the focus of sales and marketing departments away from what is emerging from the factory gates to the behaviors of existing and future customers. The car product cycle is understandably long due to the huge amount of investment and research that goes into designing and building a new model, but it is not this rhythm that should be dictating the pace of change in communication and retail strategies. The role of my team is to help sales and marketing teams across the industry cast off the shackles of the status quo to ensure automakers’ commercial businesses are fit for purpose for Generation Y, who have grown up in the digital age and are forecast to make up 75 percent of vehicle customers by 2025. We believe there are a number of key behaviors that will characterize success in automotive sales and marketing going forward and I would like to share these thoughts.

52 Google · Hugh Dickerson

The first of these behaviors is being prepared to take risks or, perhaps more importantly in the motor industry, remove the fear of failure. At Google we think that if you are not failing it means you are not setting ambitious enough goals. Our major projects are born out of “moonshot thinking,” whereby we have identified a huge challenge and then tackled it with a radical solution together with breakthrough technology.

Take Risks Notable examples of late include Project Loon. We have a vision that the whole world should benefit from internet connectivity, but currently two-thirds of the world’s population does not yet have internet access. Project Loon is a network of balloons traveling on the edge of space, designed to connect people in rural and remote areas, help fill coverage gaps, and bring people back online after disasters. More relevant to this publication is our work in the field of driverless cars. Our goal is to help prevent traffic accidents, free up people’s time and reduce carbon emissions by fundamentally changing car use.

Project Loon is a network of balloons designed to connect people in rural and remote areas

Today automotive marketers often find themselves constrained by the existing distribution model. The current unwillingness to risk destabilizing the fine balance between all stakeholders leads to inaction that allows other new players to disintermediate prof-

Hugh Dickerson · Google

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itable areas of the business. Similarly, conservatively persisting with a media mix that does not match the pattern of consumption of your audience seems more risky than actually breaking the status quo and fully embracing digital media. Empowering teams to be creative and take risks can be mitigated by ensuring you constantly listen closely to the customer. They will always keep you on the right track pointing out if your program requires iteration.

Wise up There is lots of talk of Big Data and there is certainly no paucity of data available to auto brands. The critical skill going forward is not only collecting all the signals your audience is providing you but, perhaps more crucially, interpreting this data into actionable insights. As Niall FitzGerald, former Unilever CEO put it: “Data makes your briefcase heavy – insight makes you rich.” Listening and reacting to audience signals enables brands to have conversations with prospects as they go through their complex multi-device, multi-platform research journeys with a view to vehicle purchase. Brands’ success at winning new customers and increasing loyalty will depend very much on such conversations, as customers increasingly expect a more personalized digital relationship. To do this most effectively we work with car brands to work across the historically siloed after-sales, sales, finance, dealer and CRM departments. This ensures there is one voice of the brand listening and responding with the most relevant response at the moments that matter. Another benefit of all the data provided by digital marketing is the ability to measure the effectiveness of your media spending. This is clearly dependent on measuring all the KPIs that truly measure actions that propel the customer down their route to purchase, rather than only valuing KPIs such as brochure orders or test drive requests. Research suggests these are no longer the core currency in lead generation. As automakers increasingly move to programmatic digital media buying they have the opportunity to manage real time personalized digital customer journeys. However, the holy grail of truly understanding the conversion rates of both on and offline prospects into actual customers by media source remains the key to ultimate success.

54 Google · Hugh Dickerson

My last point brings me back to the rapid acceleration of technological change and how this has transformed drivers into constantly connected consumers, time-poor but with high expectations.

Move Fast To be ultimately successful we will strive to help car brands to become quicker on their feet and with this increased agility be able to keep one step ahead of their challengers. Our research shows that over half of car buyers globally would contemplate buying online. With car sharing schemes and other innovative mobility solutions gathering pace, automakers are going to have to be ahead of the pack, driving and benefitting from these changes rather than suffering from the potentially more negative consequences for existing business models.

“We will strive to help car brands become quicker on their feet”

The world is moving fast and automotive sales and marketing needs to catch up quick. I am personally excited about the future for automotive and I am committed to ensuring that OEMs grasp the opportunity that digital offers and use it to drive successfully to 2020 and beyond. (Photos provided by Google)

Hugh Dickerson · Google

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Guard the control points – Rethinking OEM business models to beat the risks of disruption

Photo: Gui Yongnian (123rf.com)

Juergen Laartz, Director, Business Technology Office, McKinsey & Company Dominik Wee, Principal, Business Technology Office, McKinsey & Company Matthias Kaesser, Engagement Manager, McKinsey & Company

56 McKinsey · J. Laartz, D. Wee, M. Kaesser

Even with the rise of Toyota’s lean production system, the automotive industry and its business models have remained largely stable for decades. Most of today’s OEMs and tier-1 suppliers were already household names a generation ago, and economic downturns and attempts at consolidation have had little or no effect on the industry’s basic line-up. Now, however, the automotive industry faces the prospect of gale-force disruption. A combination of new developments has the potential to change or even replace current OEM business models in the decade ahead. To adapt successfully, OEMs will need to come up with strategies to guard the most important control points – the human-machine interface, car condition data, and dynamic real-time information – as they are the gateways to the redistribution of profits over the car ownership lifecycle. Of the new developments in the automotive industry, the connected car and, to a lesser extent, e-mobility have clear potential to severely alter today’s automotive value chain. While revenues from connectivity in all its facets might only account for a small share of the total customer lifecycle spend, the connected car opens the door to today’s digital titans, who may be able to move in front of the OEM, directly facing the customer. Incumbent OEMs and suppliers could find themselves fighting a losing battle if they underestimate the risk and lack strategies to define, defend, or expand their competitive positions. Assuming e-mobility continues to grow, OEMs face losing one of the most important differentiating components – the internal combustion engine (ICE) developed and produced in-house or with a tier-1 supplier. Furthermore, as a powertrain with an electric motor and no gearbox is much less complex than an ICE, the spread of e-mobility will lower technological barriers to entry. New players – as epitomized by Tesla – may intensify competition in an already fiercely contested market. What is more, they will almost certainly accelerate the pace of change in the automotive industry. One early sign of the speed of change potentially ahead is the large number of Tesla customers who switched from Model S to the new and improved Model D within 24 hours of its market launch in October 2014, only two years after the debut of Model S – a pace of change so far only seen in consumer electronics.

Disruption all along the customer spend lifecycle While the changes occurring may seem incremental so far, looking at the car lifecycle in terms of total customer spending suggests that the base price is likely to be the biggest

J. Laartz, D. Wee, M. Kaesser · McKinsey

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driver of impact. To get a better idea of how disruptions and more evolutionary changes could play out, we find it useful to consider their impact on customer spending pools along the entire car ownership lifecycle (Exhibit 1). Exhibit 1

New car (base) price. Car connectivity has the potential to shift significant market shares between OEMs. In McKinsey’s 2014 Connected Car Consumer Survey, one new car buyer in five would switch brands to get better connectivity features. The emergence of third-party connectivity solutions, such as the Open Automotive Alliance and AppleCarPlay, has the potential to level the playing field among automotive OEMs for infotainment and other software features. Operations. Powertrain innovations will be pivotal. Not only because customers increasingly seek low-consumption vehicles, but also because it will be crucial for OEMs to master new powertrain technologies in order to meet upcoming CO2 regulations. E-mobility/electric powertrains currently seem to be the most viable option.

58 McKinsey · J. Laartz, D. Wee, M. Kaesser

Insurance. Insurance is a potential source of additional revenues for OEMs given their privileged access to connected driving data that supports pay-as-you-drive and pay-howyou-drive models. Maintenance. Vehicle upkeep and repairs will remain steady as a customer spend pool, but connected services will likely open up new or better ways for non-OEM parties to grab a bigger piece of the revenue stream. For example, suppliers have launched apps that not only detect maintenance needs but also suggest a maintenance service center to the driver, which clearly opens the path to directing customers away from a given OEM’s authorized service centers. Dealer margin. Digitization revolutionizes sales and service processes, and other industries are leading the way in innovating their retail formats to integrate online and offline shopping. Most new car buyers still rely on traditional dealers and will continue to do so, especially in the decision phase and for the all-important test drive. As digital and cyber-physical systems become more widespread, however, OEMs will need to transform today’s dealer network into a profitable multi-format sales channel that combines offline and online strengths. Connectivity hardware. There is also the increase from the underlying connectivity hardware, a spend pool that is expected to grow from EUR 29 billion today to about EUR 155 billion in 2020. However, this pool will stay part of the new car price. As we expect customers will not increase their spending over a five-year car lifecycle, overall revenue from connectivity hardware for the OEM is not expected to increase either: higher rates of adoption will just be offset by eroding feature prices. Furthermore, such revenue is at risk of being reduced or taken over by consumer electronics players. Driver’s time and attention. This spend pool is enabled by the growing connectivity in the car. We expect a fifteen-fold increase until 2020 in app- and content-related revenues over the lifecycle, mainly through usage-based subscription payment models. However, customers will likely be loyal to their existing app/content providers, thus limiting OEMs’ ability to capture part of this revenue stream to around 50%, even in an optimistic scenario. Infrastructure. The cost of road repairs will remain in the taxpayer domain in the medium term. However, for the connected car and autonomous driving, which we expect to see from 2017 onwards, OEMs might need to support investments in digitized infrastructure, such as the algorithmic optimization of driving patterns. This task is too big and too critical for city or state-level governments to orchestrate alone.

J. Laartz, D. Wee, M. Kaesser · McKinsey

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As these points suggest, we see clear risks that new attackers will force OEMs to accept thinner margins along the value chain.

Asserting control over control points We believe that ownership of a number of control points – the pieces of hardware and software that give drivers, passengers, or other parties access to a car’s features or to the data gathered about its operation – will determine the future distribution of revenues and profits. Industry players may regard control points as enablers, and they need to define their ultimate distinctive sets of connectivity offerings, which can be features or services or both. It may also be crucial to probe and experiment with innovative ideas, possibly by cooperating with external providers as well as by setting up preferred partnerships or multi-partner “ecosystems.” Connectivity has the potential to fundamentally change the way profits are distributed in the automotive value chain. In understanding upcoming dynamics, we can derive lessons from industries that have gone through similar disruptions already. In the mobile phone industry, for example, the shift from feature phones to smart phones triggered a redistribution of profits from hardware to software, with the key determining success factors being the control of app stores and advertising platforms. We call these success factors control points. Applying this “lens” to the automotive value chain, three major control points emerge: Human-machine interface (HMI). While lagging OEMs can make a step-change in improving their competitiveness by incorporating a third-party connectivity offering, leading OEMs will need alternative sources of differentiation in HMI, for example, even larger screens, multiple screens, innovative interface concepts, and large-scale augmented reality experiences. Car condition data. Controlling this data will be a key requirement for offering maintenance and insurance services. Although OEMs currently have privileged access to this data, third-party providers could convince consumers to install OBD-II dongles to create a superior user experience. Dynamic real-time geo-information. Due to the effort required to maintain granular map data, only three major players have a significant role in the market on a global scale.

60 McKinsey · J. Laartz, D. Wee, M. Kaesser

Access to granular map data will also become one of the critical enablers of (semi)autonomous driving. Other lessons that have proved valuable are to anticipate customers’ priorities instead of relying on a current value proposition (i.e., Apple’s iPhone strategy); to manage IT as if it were a profit center instead of a mere support function; and to foster industry-wide and cross-industry alliances/partnerships instead of playing “lone ranger.”

Operating at the “speed of thought” Both connectivity and e-mobility have in common that they demand a dramatic compression or “flexibilization” of product lifecycles, a challenge for an industry used to lifecycles of five to seven years. And the next disruption is already knocking: beyond the industry dynamics that connectivity has already unleashed, it is also already or will soon be unlocking the “right” technologies to make the fully autonomous car the signature modern convenience of the 2020s. Autonomous driving will be the true revolution in the way we conceive personal mobility and will have immediate and far-reaching effects in multiple dimensions – not least in increasing personal productivity by eliminating active driving as a daily chore. Looking ahead, twenty years out, the new arena for automotive OEMs and tier-1 suppliers will include names familiar today but in configurations so different as to be nearly unrecognizable. Some OEMs may succeed in fast-forwarding to a permanently higher metabolic rate. Others, particularly competitors that opt to “wait and see,” however, risk being completely swept aside. It will be forward-thinking, active, adaptive, and collaborative approaches that help automotive OEMs avoid the pitfalls and learn to thrive and drive their success in the digitized world.

J. Laartz, D. Wee, M. Kaesser · McKinsey

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"Big data plays a huge part in delivering a better customer journey"

Stephen Kneebone is vice president and chief information officer at Nissan Europe. He is also in charge of business transformation at the European division of the Japanese automaker. Kneebone spoke to automotiveIT on the sidelines of the automotiveIT International Congress in London this year.

62 Nissan · Stephen Kneebone

Let’s start with a general question: What are the major trends in the auto industry today? I think, first and foremost the major driver of change we’re seeing is the changing customer. We are now competing in a general retail environment. So we are not just competing with other automakers, we are competing with general retailers. And if we look at today’s customers, we see that they are extremely technology-hungry and extremly well informed. They do a lot of their research online. And they are quite willing to share that information, the good as well as the bad. For us that means we need to deliver a customer experience from the first touch on the internet all the way to the dealer and the after-sales environment. That’s the key challenge for us. Is that particularly difficult? Does it require a different mindset and does the organization have to change? All of those things. First and foremost it meant we had to take an end-to-end view of the customer experience and be really clear about what that means. We also have to be clear about the touchpoints and the experience we want the customer to have and what we want them to come away with. Technology plays a huge part in that. There are some organizations that have looked at online as just another channel to market. Some of them have failed and paid the ultimate price for that. So for us, it’s absolutely key that we take the customer experience on board, en-

sure technologies to deliver to their digital customer journey and that we look at it in a slightly more comprehensive way than just another channel to market. Let’s talk about big data, which is one of the big new trends across all industries. What role does big data play in providing Nissan’s customer journey? It’s important from a number of different perspectives. The more insight we have into the customer, the better we will be able to offer them the right type of services and support. So for us big data plays a huge part in enabling a more consistent and coherent customer journey. So how exactly will Nissan use big data to meet the demands of tomorrow’s driver? The signature for Nissan is “Innovation that excites.” And that isn’t just a strapline. It is something that we really strive to deliver. A good case in point is the Leaf, our all-electric vehicle. This is a product that has been on the market for some years and we’ve so far sold 110,000 of them worldwide. From the big data perspective, the Leaf’s onboard systems allow us to really understand how the consumer is using the vehicle. We get insight into their driving patterns, their charging behavior, how they drive in terms of performance. And we can really make sense of all that information. We can actually feed it back to the product development process and make a number of improvements, such as the ones that are in the new Leaf.

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How important is information and communications technology in enabling Nissan to operate smarter and more efficiently? It´s an essential component. I have a slight advantage because I have responsibility for IT as well as the business transformation office. Operationally, our information systems underpin most if not everything we do these days. That’s not just in terms of delivering capabilities, but also with regard to delivering them more efficiently. Over the past six years we have been on a huge push to really drive down the costs of running the business infrastructure and applications. In this area we have reduced costs by 35 percent. That’s money we can invest in business transformation so we can move forward. IT underpins most of that transformation. Final question: With connected cars becoming a new standard and quick upgrades a must, how do you speed up the development cycle of today’s car, which is essential in a world where most other industries move a lot faster? I think first and foremost we need to integrate the telematics and the onboard systems components into the product-development lifecycle. We must recognize that it´s a formal part of that process and not an add-on; it’s a core part of the product in the service proposition. The software world and the product engineering world are coming together and that does present us with some significant challenges.

64 Nissan · Stephen Kneebone

We’re not just talking about the engineering perspective but also about the support and service we provide to the customer. We’ll want to make changes to onboard services much more frequently and take advantage of how quickly technology advances. That remains a challenge in terms of culture and discipline. The service we provide needs to be more in line, perhaps, with what’s customary in consumer electronics than in the traditional automotive realm.

Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com Photo provided by Nissan

Stephen Kneebone is CIO of Nissan Europe and also is in charge of the Business Transformation Office and External and Government Affairs. Kneebone joined the IT operations of the Japanese carmaker in 2006. His department supports Nissan’s design, manufacture, distribution, retail and after-sales operations in Europe, Russia, the Middle East and Africa. Kneebone’s background is in engineering and business transformation. He has a PhD from Coventry University in the UK.

Stephen Kneebone · Nissan

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" You also have to enable connectivity on existing cars"

As president of the non-profit US Connected Vehicle Trade Association (CVTA), Scott McCormick is at the center of one of the biggest transformations taking place in the automotive industry. McCormick’s organization wants to make travel safer and more efficient through the use of new connected technologies. He spoke with automotiveIT about the concrete benefits of connecting cars, the time it takes to achieve tangible results and the different priorities of Europe, Asia and the US.

66 CVTA · Scott McCormick

Mr McCormick, please describe briefly the benefits you see in connecting cars. There are a myriad of benefits. The primary one is safety. Think about cars that receive and send information on road and traffic conditions from and to other cars on the road. The second comes into play when public authorities are involved. For example, the Department of Transportation will have the ability to manage traffic flows better and avoid congestion and traffic jams. They can also push out better warnings if they have more data and help avoid accidents by getting salt on the road early where it is necessary. For now, we already know about congestion through traffic message services but future connected services will tell you what the situation will look like when you get there – in real time via the connected infrastructure. The third benefit will be commercial services, which provide information that is useful in the right context. Please provide some examples. If I am interested in buying a camera and there is a sale in a shop somewhere on my route, I would appreciate knowing this. But of course contextual services are not limited to retail. Think about parking at a sports event or conference venue. Connected cars can also be an enabler for new safety, mobility and commercial services. Patient telemetry from the ambulance is an example. Such services and other similar ones can be provided through a connected car infrastructure.

And are you happy with the progress made to date? Things, to us, still seem to be moving quite slowly. We’ve now been working in this space for 15 years and it’s a long path. We started in 2000 with all the automakers with a central question: How to connect? In 2004, we started development of DSRC (Dedicated Short Range Communications). It is a long process to harmonize and socialize standards globally. We need proper testing of the kind of communications hundreds of different cars are engaged in. It is also a long path for automated driving, which has to rely on connected-car services. Cars can have this technology on board by 2017 or 2018. What are the biggest barriers that still need to be overcome before cars can talk to each other and can talk to the environment? You have to take care of the security of the system, as you will open the gateway into the vehicle. You can compare it with a computer operating system. If you open it for external connections you have to secure it. Very good firewalls inside the cars are needed, as there is a risk of people trying to do malicious things with connected cars. Another major challenge is data ownership and privacy. There is no comprehensive privacy law in the US. But one has also to ask what knowledge can be derived from connected car data such as origin and destination of travel. We already give up that information via our cellphone

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and other communication devices we carry with us all the time. Another obstacle on the road to car connectivity is the pace of deployment. It will take eight years to replace just half of the cars on US roads today, so if you supply every new car with connectivity this won´t be enough. You have to enable the functionality also on existing cars by adding a device or offer smartphone-based services. Is connectivity an area where carmakers are more inclined to work together than on other issues? The car manufacturers have to work together. There is no space for three competitive consortiums. Also no automaker has the resources to do everything by itself. Of course they can and will differentiate their services. The look and feel will be different from maker to maker. We currently have the Connected Car Symposium and AUTOSAR and the VII (Vehicle Infrastructure Integration) Consortium. The VII Consortium should be in the lead. Who is driving the connected-car revolution: automakers, IT companies, consumers? The IT companies are late to the party. Data analytics companies are participating in the development of the connected car rather than driving it. The car is not a cell phone accessory. The user interface is different and the focus has to be on easy-to-use controls. In the two seconds you spend looking at something on your

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smartphone the car travels a distance of 170 feet. Connected car is not an app on your smartphone; it is about automating functions in the vehicle. Is the situation in the US different from Europe and Asia? Yes, the US is focusing on vehicle-to-vehicle (V2V) because there is a recognizable benefit. Vehicle-to-infrastructure (V2I) is much more expensive. Europe is more focused on V2I. Think about densely populated areas in Europe and parts of Asia versus the vastness of the US Midwest. Geography changes the equation. Of course we also have other differences, for example with local warnings of extreme weather conditions. Think about tornadoes versus snow or even sand storms in other parts of the world.

Interview by Thomas Koehler Photo provided by CVTA

Scott McCormick is president of the US Connected Vehicle Trade Association (CVTA), a non-profit business league established to facilitate the interaction and advance the interests of the entities involved in the vehicle communication environment. He has degrees in mechanical and aerospace engineering, an MBA and he did doctoral research in artificial intelligence.

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"Our cars have been sending streams of telemetry data for many, many years"

In Formula 1 racing, having large amounts of data on a race car’s performance is key. But what’s even more important is to have the data available immediately. Michael Taylor, IT/IS director of the Lotus F1 Team, explains how he manages this side of the business.

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Let’s start with a general question: What are the big trends that you see in the automotive industry and on the racing side in particular? In Formula 1 racing the biggest trend we’re focusing on this year is the major engine-related regulation we faced. Pre 2014, a Formula 1 race car was deemed to be a very large beast with a non-turbo-charged large V8, 2.4 liter normally aspirated engine. These engines would have a small element of energy recovery built in, but overall, they weren’t relevant to the consumer car industry. For the 2014 season we had to make some significant changes. We now run a hybrid power unit with a very small 1,600 cc V6 internal combustion engine, complemented by a a large turbocharger and equipped with energy recovery systems – both from a heat and a kinetic perspective. Formula 1 cars are hybrids, which are much more relevant to the mainstream industry. We obviously work very closely with the consumer side of the industry. Is it correct to say that some of the science and technology applied in Formula 1 crosses over into mainstream cars? Yes absolutely. We talk about Formula 1 being a hotbed of innovation and over many, many years there have been innovations that began life in Formula 1 and now feed down into the consumer space. For example: traction control, anti-lock braking systems, semi-automatic gear boxes, launch control. All of those very, very clever things

are innovations that had been around for a long, long time. When you talk about connectivity, Formula 1 is very much a data-centric sport. Our cars have been sending streams of telemetry data for many, many years. Our car now has more than 150 sensors on board. When it’s on the track, we generate in excess of 25mb of data per lap of acute information. Our engineering groups use that data in real time to make business-critical decisions about the running and optimization of the car. So the connected car really is not a new thing for us and there’s probably a lot of telematics experience that we can feed into the consumer space. The same is true for our experience with the power units, which we are optimizing. We’re making sure that all this is relevant for the entire industry. You are the IT and IS director of the Lotus F1 Team. What do you actually do on daily basis? My role is very simple. I lead the group that looks after the technology and hopefully some of the technology innovation we develop for the team. It goes across the entire business. We focus on two key areas: One is the factory systems we use for the design, simulation and manufacturing of the car. The other is the trackside, where we actually run the car. Here we provide traditional service support: capacity, availability, traditional networking, data centers, storage, those types of things. The other half of my group focus-

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es on being creative and innovative. This is where we create applications and these are key. This is where the value is. We want to provide applications to our engineering group, so that it can make those sub-second decisions that are key in giving us the competitive advantage we’re looking for. Our remit extends across the factory and track-side environments. Can you explain a bit more where your IT operation fits into the company as a whole? I´d really like to say that IT is on the forefront of the technological innovation that we see in the car, but we are very much seen as a support or enabling service. We’re definitely moving away from a pure support organization and are becoming more of a business-enabler. Technology plays a key part in everything we do. My group’s responsibilty is to ensure that our engineers and designers and back-office

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support staff have the right tools at the right time to make the right business decisions. And of course the whole focus is to make the car go faster. We talked about the connected car, we talked about sensors and we talked about telemetry, but what kind of a role do new big-data analysis technologies play in making a Formula 1 team successful? Big data must be a big deal for you. Absolutely. Data is king for us. We are collecting data now on all aspects of our business and not just on the car while it’s on the track. Take simulation, for example. It’s very important that we can simulate the performance of the car. Another area is the manufacturing space, where you have rapid prototyping, 3D printing and improvements in material science. All these provide the ability to very quickly and easily build solutions and parts.

How do IT and communications technologies help shape the Formula 1 car of tomorrow? This, again, is all about the data. The role of IT and communications is really to enable and make it much easier to make informed business decisions. That requires richer information that you have available as quickly as possible. One of the things that’s important is to be able to correlate the different data sets. That’s very challenging. It’s similar to what you see in the consumer space, where people really want to understand their customer. Our customer, for all intents and purposes, is the race team. So we’re talking about understanding how the team wants to use the product, and how to maximize and optimize the use of the product. We support the team by refining designs, improving the car and improving connectivity so the team can make those well-informed sub-second decisions that are crucial in Formula 1 racing. During the season, there is a Grand Prix every second week in a different part of the world. You obviously need the same technology available everywhere, but doesn’t the quality of networks and availability of bandwidth vary from one place to the next? It absolutely depends on where we are. There are challenges in particular in some of the newer Grand Prix venues and tracks that are far away from a city, for example. Even with the cost of bandwidth dropping

significantly, there can still be an issue of how much bandwidth we have available to us. We look at the risk-reward scenarios and always have to strike a balance between what we spend on bandwidth and how much we use it.

Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com Photos provided by Lotus F1 Team

Michael Taylor is the IT/IS director of the Lotus F1 Team. He has been part of the team for the past 11 years and, during that time, has developed a detailed business-based understanding of all the F1 Team’s IT needs. Taylor oversees all information systems that help make the Lotus F1 race car successful. His responsibilities range from determining strategic direction within the team’s technology infrastructure, to managing existing IT-related partnerships and, when appropriate, developing new ones.

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The Experiential Path to Automotive Innovation By Olivier Sappin, VP Transportation & Mobility, Dassault Systèmes

Olivier Sappin, VP Transportation & Mobility Industry, has been working at Dassault Systèmes since 1995. He started as an application engineer for design and styling solutions, taking responsibility of the automotive unit in 2003. Since 2011, his organization delivers Industry Solution Experiences for vehicle manufacturers (Cars, Trucks, Buses, Trains, Motorcycles, Racing Cars) and suppliers.

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“The best way to predict the future is to create it,” US President Abraham Lincoln once said. So, as we enter Industry 4.0, a new era of cyber-physical systems, the internet of things and connected processes, what is the future that we will create in the automotive space over the next 10 to 15 years? Given the evolution of mobility, history teaches us to think boldly about its future. Just three generations ago, who would have predicted that we would be able to travel anywhere, anytime and with minimal effort? Rail travel opened up a whole new world of connectedness in the mid-1800s, only to be superseded little less than half a century later by the automobile for the masses. Societies accustomed to traveling by buggy, bicycle or foot had to reimagine their worlds. As we envision the mobility of the future, will we be able to both create and produce our own custom car? Can we go beyond a zero-emission vehicle to a mode of transport that actively supports environmental health and balance? What about vehicles that are so smart they literally cannot be crashed and that can even contribute to personal and urban safety? What if the main producers of mobility end up as governing bodies that abolish sound, smells or other factors deemed detrimental to their community, similar to non-smoking laws? Or, as one futurist predicts, will we nearly do away with the need to travel as nano-bots implanted in our brain deliver full-immersion virtual reality environments? One thing is for certain, with the immense societal and emotional impact of mobility and with the increasing rate of technological change, the automotive industry will evolve at a pace like never before. At Dassault Systèmes we are conscious of our role in this change and we have architected our offering with the purpose of building a future open to choice and backed by security. And, we make it available in a way that opens the path to the future now, regardless of where the customer currently stands. Our contribution to the industry is based on three fundamental assumptions for achieving the possibilities we can imagine in Automotive 4.0 Place the customer experience in the center of innovation As we enter the “age of experience” across the economy, the automotive industry, or more aptly the mobility providers, will also broaden their scope. It will no longer be about producing and marketing a product or a brand. It will be about creating mobility experiences around how consumers use and interact with the vehicle.

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With autonomous vehicles anticipated to be available to the public as soon as 2020, the opportunity to create unprecedented driving experiences grows tremendously. Passengers can watch movies, eat dinner or work with other people among multiple other choices. This requires a comprehensive understanding of consumer capabilities and needs beyond driving, making mobility providers forge new business and technology partnerships while developing new industry and technology standards.

AKKA Link&Go Ergonomics Simulation

To lower the risk of innovation in this new world of mobility experience, customers will be strongly involved in the creation process up front via lifelike 3D virtual experiences. The ability to run dynamic and immersive “clinics” in a virtual environment at the design stage will offer new ways for understanding and validating consumer desires around mobility. Furthermore, leveraging massive amounts of unstructured information (Big Data) will catalyze the creation of customized mobility experiences. In-vehicle sensors alone, expected to reach 200 per vehicle by 2020, provide new levels of real-time feedback so that technical and business people will be able to interpret customer behavior. All of this information, meshed with external data from online social networks, will be used to continually improve driving performance and provide the desired experience. Visteon has already leveraged a 3D-enabled social innovation platform to eliminate formal organizational barriers and gather insight in the creation of its e-Bee concept vehicle. This reduces development time while leveraging both internal and external communities to drive a company culture of innovation and knowledge-sharing.

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To understand the full impact of innovation, manufacturers will extend beyond the physical and technological aspects of the vehicle to simulating functional and behavioral aspects. Furthermore - the vehicle, which is now a smart system, will be simulated within the scope of larger systems such as traffic, energy and even community- and homegrids. All of our automotive customers have started to build their innovation on systems engineering. AKKA Technologies´ concept car “Link&Go” is proof of how innovators in the automotive supply chain can marry advanced systems engineering know-how with social innovation to deliver impressive new perspectives for self-driving mobility on urban roads. Become agile by managing the increasing complexity This may sound contradictory. But in the era of Automotive 4.0, automakers will be able to master the immense backend complexity of the development and manufacturing processes while simplifying the user experience across the enterprise. The first method to achieve this is integration and in today´s IT environments, where many isolated applications have grown over decades, the opportunities are numerous. Integrating design and engineering to preserve design intent. Integrating engineering and simulation for cost-performance tradeoffs and for product compliance. Integrating mechanical, software and E/E development for an optimized development architecture. Integrating test and validation with marketing and sales to meet requirements. Every part of the organization will benefit from intense integration, connecting people, information and processes in a single, intuitive and collaborative environment. AKKA Link&Go simulation of its u-turn function The next key to managing complexity is modularization, ideally by implementing a modularization strategy – again requiring integration of various disciplines – from requirements over systems design, detailed engineering, and testing to manufacturing. The integration will comprise the virtual and physical world: Integrated hardware and software testing, integrated manufacturing planning and operation, etc. whereby smart, modular objects will implement the behavior of complex systems. The base technology and concepts are available today, and what will follow is solutions in support of concepts like the “Resilient Factory” or “Adaptive Logistics.” Dassault Systèmes’ recent acquisitions of

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APRISO and QUINTIQ are providing the capability to build flexible shop floor and logistics processes, leveraging the complex information systems with which they integrate. The next step – implementing intelligent, self-adaptive systems in manufacturing and logistics – will only be limited by how far the integration and modularization strategies will reach. If 3D printers are able to handle a portion of the spare parts production, what will be the impact on product design, packaging and commercial aspects?

AKKA´s Technology´s cloud-based 3DEXPERIENCE user interface

Lastly, the management of complexity has another dimension. Just as mobility users will gain the ability to personalize their experience, the mobility creators will also (need to) benefit from a workbench that is more flexible, attractive, intuitive and customizable to the individual needs. High levels of data security, technical precision and performance of the product development tools and applications will be the foundation of a more inspiring work environment that attracts any generation of innovators. Cloud solutions lead the way, as they enable the organization of agile, scalable IT environments that bring the world-best capabilities to anyone, whether a single expert or globally operating corporations with tens of thousands of users. Assume greater responsibility Companies are accustomed to acting as responsible corporate citizens, but these responsibilities will grow with the capabilities of tomorrow’s technologies. Environmental

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aspects have long been part of the automotive industry concerns and today’s drivers expect delivery of fuel-efficient, eco-friendly vehicles without sacrifice to performance. With varying compliance mandates across the globe, mobility providers will use a platform that manages compliance complexity and enables modeling and behavior simulation that shows the energy balance and potential impact of the vehicle design on the environment. Increasing passenger and pedestrian security will continue to be a driving element for future innovation and we see how this focus is growing rapidly. This is why Target-Zero-Defect approaches are (and will continue to be) so high on the industry agenda today. They address faultless and incident-free operation around corporate processes and data. And what about the leveraging of customer and customer-use data? With the array of in-vehicle and exterior sensorics available, the industry may be expected to actually contribute to a person’s social well-being and health. These requirements could begin by recording a passenger´s state of health and - according to the situation - emit calming scents into the vehicle, start a massage that prevents backache or blood clots, or immediately connect to a medical specialist in case of emergency. Generating and processing the respective personal data will – at least in data-sensitive countries – require passengers to feel a great amount of confidence. Mobility providers´ brand promise and associated dimension of trust will have to reflect business models that will take “the pleasure of driving” and “advantage through technology” to a new level. Looking forward We are not clairvoyants who can predict the future of mobility. However, we are certain that integration and the impact of social innovation will be fundamental enablers for further time-to-market and productivity gains by mastering the exponentially increasing complexity of mobility innovation. More connectedness within vehicles and between vehicles and their environments, as well as continuing demand for individualized mobility will provide new opportunities for automotive innovators to create differentiated customer experiences. Virtual work environments that are realistic, collaborative, “intelligent” and intuitive will be the innovation labs for creating these experiences. Today’s technologies – although constantly evolving – already build a bridge to provide the level of collaboration required for operating tomorrow’s Automotive 4.0. We have architected our inclusive and open 3DEXPERIENCE platform and our Industry Solution Experiences to connect imagination with action, enabling innovation both today and tomorrow. We look forward to creating the future of the automotive industry with you. (Photos provided by Dassault Systèmes)

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" Collaboration with other industries is a big trend; we cannot invent everything ourselves"

Continental’s Otmar Schreiner discussed the changing face of the car industry with automotiveIT on the sidelines of the automotiveIT International Congress in London. In the interview, Schreiner, director R&D Interior Electronics Solutions at the German supplier group, also talks about the new technologies the company is developing. And he makes some predictions about tomorrow’s cars.

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Mr. Schreiner, briefly describe the big trends in the auto industry from your perspective. Tomorrow’s cars will be more comfortable, safer and, of course, more efficient. Those are the three main trends and at Continental our target is to develop new technologies to improve in all these areas. Can you explain what the focus of activity is in your Interior Electronics Solutions division? Within Continental, we have of course the rubber group, which makes tires. And we have the automotive group, which includes chassis and safety systems, powertrain, ContiTech and Interior. Within the interiors unit, IES takes care of electronics in the car. That includes head units, navigation systems, radios, instrument clusters, head-up displays and the like. I’m responsible for the pre-development systems, so the new products that will come out. Electronics and software are redefining the car. Where is this big trend going? Just about all of the automotive innovations of recent years have been electronic. Now, they’re increasingly software-based. Electronics in the car are getting more and more intelligent. So we keep getting smarter cars. With external sensors built into cars – such as radar and cameras - you can look outside and create a model of the car’s surroundings. The next step is to use cameras and sensors to build a model of the driver, so we can really build a smart-

er car. And after that, the next step is to add information from back-end servers to complete the picture. So connectivity has many facets? Exactly. At the moment, a luxury car has up to 90 electronic control units and the first order of business is to network all the electronics in the car. The next step is to connect to the environment of the car and to the backend and to establish car-to-car and car-to-infrastructure communication. There’s a lot of talk about connected cars, autonomous vehicles, machine to machine communication and, above all, big data. How does all this play out at Continental and what’s your role and the role of IES in the development of these new technologies? Our goal is to develop new, smarter functions in the car to make it more comfortable and safe. We also want to make use of the data available. We believe that with this data, we can enrich the functionality of in-car systems. For example, today’s navigation systems are not always up to date because many of them are running on a dvd inside the car. Once you have permanent connectivity, you can easily update the systems and get real-time traffic information. In the future, we will also have more accurate data to improve safety systems. Today’s radar looks maybe 200 meters in front of the car, but it cannot look around the corner. With fresh data from other cars and from the infrastruc-

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ture coming through a backend server, we can really improve these systems. How is Continental itself adapting to the transformation of the auto industry? As a tier 1 automotive supplier we traditionally listen to our customers, the car-

makers. Of course, given the big trends today, we are also more and more looking at consumer electronics and the end-consumers. We’ve established so-called “trend antennas” in Germany, Europe, Asia and the US. These units look at upcoming trends in local markets. Open innovation

Schreiner: “With more data, we can enrich the functionality of in-car systems”

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or collaboration with other industries such as the IT industry is a big trend. We cannot invent everything ourselves and need to work with other technology suppliers, which includes startups. How to integrate the right stuff from various industries is a big opportunity and a big challenge. Can you tell us something about the role of IT in making Continental smarter and more efficient? That’s a big topic. We have more than 180.000 employees in more than 40 countries, so a good IT infrastructure is crucial. For logistics and production we obviously require a strong IT infrastructure. But a big new development is also that we have started an internal social network that allows all employees to contribute. That’s a cultural change within the company. We’re moving from a top-down to a bottom-up approach to internal information. Such a network approach, I think, is the only way you can manage such a huge and complex organization in the future. Finally, please look ahead 20 or 30 years and tell us what kind of cars we will be driving then. Connectivity will play a big role. The car will be part of a global network. We may be calling it a digital companion and the car will be just one part of your digital lifestyle. Cars will be safer and automated driving will play a big role in this respect. I believe you will be able to select your drive mode. When you’re stuck in traffic on a highway,

you can decide it’s time for the car to take over the controls. But if you want to drive yourself, you can take over and set the vehicle to, for example, a sporty profile. Adaptive technologies, which let you adopt different driving modes, are one big trend for the coming years.

Interview by Martyn Warwick, TelecomTV, for automotiveIT www.telecomtv.com Photos by Silvia Steinbach

Otmar Schreiner, director R&D Interior Electronics Solutions at Continental, is responsible for new system solutions and programs within the interior division of the German automotive supplier group. Since 2012, he has also headed the Interior Electronics Solutions division in France, with a focus on “hightech low-cost” components and systems. Schreiner has a degree in mechanical engineering and business administration. He studied at Darmstadt Technology University in Germany and UC Berkeley, California. He joined Continental in 2005.

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Customer privacy and the connected car

Photo: Natallia Khlapushyna (123rf.com)

By Thomas R. Koehler

In May 2011 a newspaper in the Netherlands revealed that TomTom, the manufacturer of aftermarket navigation devices and traffic services, had sold data to public authorities in the Netherlands. The police subsequently optimized the locations of their speed traps based on this information. There was a major uproar in public opinion and TomTom’s PR department had to work hard on its damage control. This incident was the first to put the spotlight on a topic heavily discussed today: the use of consumer data generated by connected cars. Especially in Europe people are more and more concerned about giving away their personal data to corporations. The Germans lead the way here, but there is much more to it than typical “German Angst”. Most Silicon Valley companies have focused on analyzing customer data as a business model, but mostly they don’t bother to tell the users. Instead, they kept playing down the issue for years and in consequence have already suffered a major backlash in customer confidence – even in the United States.

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In November, 2014, the world’s major automakers decided to address the privacy issue proactively. Nineteen automotive companies from the US, UK, Japan, Germany and Sweden agreed on common principles for collecting, analyzing and sharing of consumer and driving data. These principles were agreed upon by the members of the Alliance of Automobile Manufacturers and the Association of Global Automakers. They are listed on the www.autoalliance.org web site as follows: • Transparency: Participating members commit to providing owners and registered users with ready access to clear, meaningful notices about the participating member’s collection, use, and sharing of covered information. • Choice: Participating members commit to offering owners and registered users with certain choices regarding the collection, use, and sharing of covered information. • Respect for Context: Participating members commit to using and sharing covered information in ways that are consistent with the context in which the covered information was collected, taking account of the likely impact on owners and registered users. • Data Minimization, De-Identification & Retention: Participating members commit to collecting covered information only as needed for legitimate business purposes. Participating members commit to retaining covered information no longer than they determine necessary for legitimate business purposes. • Data Security: Participating members commit to implementing reasonable measures to protect covered information against loss and unauthorized access or use. • Integrity & Access: Participating members commit to implementing reasonable measures to maintain the accuracy of covered information and commit to giving owners and registered users reasonable means to review and correct personal subscription information. • Accountability: Participating members commit to taking reasonable steps to ensure that they and other entities that receive covered information adhere to the principles. These principles are an important first step for the protection of consumer privacy rights. They also give automakers sufficient flexibility to address their needs and wishes in the ever growing field of consumer data collection and usage. From an outside perspective

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the principles outlined here cover much more than one would expect from a tech company. The European influence can be seen throughout the whole agreement. However, from a customer’s point of view, the agreed-upon rules leave a lot to be desired. For example, just think about “data minimization” and “data retention” for “legitimate business purposes.” Most likely, this will open the door for companies to store data on driving habits even when the customer may not want this information captured at all. Of course, all carmakers have to abide by the law and have to hand over data if forced to do so by a public warrant. Customers and automakers both would, in such an event, be better off having stored no data at all in the first place. After all, the driver could get a speeding ticket on the basis of connected-car data. And the automaker may incur sizable administrative expenses as government agencies request more and more access to connected-car data. Consumer fears of total surveillance are growing and automakers need to be sensitive to this. That means adopting a proactive approach to privacy that goes beyond the common principles outlined here. When consumers have to deal with questions of sharing data with governmental agencies, insurance providers or other companies, automakers need to be their allies. With cars only now getting connected, this is the proper time to lay the proper groundwork. The acceptance of all connected car services is at stake. It will be crucial for long-term success to get the approach right from the start.

Thomas R. Koehler is the author of numerous books on internet and technology topics. In his 2014 book “The digital transformation of the automobile,” (http://www.automotiveit.eu/digital-transformation) he identifies and covers the megatrends that will be game changers for the automobile industry: connected car, internet of things, big data, cloud computing and autonomous driving. Koehler also is the founder of CE21 (http://www.ce21.de), a Munich-based strategy consultancy that advises companies building data-driven business models.

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Imprint/ Contact

Book title

Contributions from

©Automotive 4.0 – The Digital Revolution

automotiveIT international, Arjen Bongard

Views from the Top

Continental Automotive GmbH, Otmar Schreiner

Volume 1/ 2014

CVTA, Scott J. McCormick CE 21, Thomas R. Koehler

Publishing house

Dassault Systèmes, Olivier Sappin

Media-Manufaktur International GmbH

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GENIVI, Philippe Gicquel

82335 Berg

Google, Hugh Dickerson

Germany

H.R. Owen, Chris Harris

www.automotiveIT.com

Jaguar Land Rover, Mike Bell

[email protected]

Lotus F1 Team, Michael Taylor McKinsey & Company, J. Laartz, D. Wee, M. Kaesser

Publisher

MHP, Oliver Kelkar

Christiane Nina Sauer

Nissan Group of Europe, Stephen Kneebone

[email protected]

Qoros, Maurits Aalberse salesforce.com, Patrick Pélata

Editor-in-chief

Verizon Telematics, Kevin Link

Arjen Bongard

Volkswagen UK, Ian Plummer

[email protected]

Volvo Cars, Thomas Mueller

Art Direction

Interviews

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automotiveIT international, Arjen Bongard

www.enjoy-design.de

TelecomTV, Martyn Warwick CE 21, Thomas R. Koehler

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ISBN: 978-3-9817013-0-2

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Personal mobility is changing and the auto industry is adapting to a new era of connected consumers living in an increasingly urban environment. The subject of this book is how the industry is in the midst of developing a totally new business model to build on its successful 125-year history. In a series of exclusive interviews, automotive executives explain how they are drafting and executing this blueprint for a new era of personal mobility. Their insights are complemented by the views of the automotive IT partners that are instrumental in making the changes happen. The transformation has many sides and all of them get ample attention in these pages. The focus, however, is on the big issues: Connected vehicles, big data, car sharing, electric propulsion, digital retail, Industry 4.0, autonomous driving and data security.

Single copy price: € 22,90 ISBN: 978-3-9817013-0-2

www.automotiveIT.com