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Automotive industry: technology vs. customer value

Achal RaghavanStrategy & Business Excellence Consultant

Bangalore, India

achalraghavan@yahoo.co.inwww.achalraghavan.com

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Achal Raghavan: introduction

IIT Madras (1973); IIM Ahmedabad (1977)

30+ years of work experience 10+ years at Board level Companies: L & T, Anand Group,

Sundram Fasteners, Delphi Automotive, Ingersoll-Rand

Now: Teach, consult, write

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Contents

Automotive technology: current status & trends

Aerospace to automotive: technology osmosis

The tipping point Customer needs in developing markets The way forward

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Automotive technology: current status & trends

25% of cost of modern car (Europe/US) is electronics and software; projected to grow to 40% by 2020

Electronics expected to drive 90% of future innovations

Industry focus shifting to need for “dependable electronics”

Software defects costs rising at 17% CAGR

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Automotive technology: current status & trends (contd.)

Car prices constant between 1990 and 2004 (adjusted for inflation)

Customers increasingly rate “safety” as most desirable feature of vehicles (JD Powers)

Models proliferating: 20 models/brand in 1994; grown to 34 in 2004

Beginnings of backlash against complex technology –”computer rage”

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Aerospace to automotive: technology “osmosis”

Technology “osmosis”

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ABS – from aerospace to auto

Originally developed to assist in landing heavy aircraft

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Heads-up display

F/A-18C jet fighter

Wikipedia

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Chevrolet Corvette

Heads-up display

Wikipedia

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GPS / HUD – aerospace

Runway Awareness and Advisory System

Honeywell

Integrated Primary Flight Display

Honeywell

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GPS: automotive navigation

Stand-aloneNavigationSystems(for cars)

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US DoT

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US DoT

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24X7 connectivity

GM OnStar• Safety, security, convenience• Vehicle diagnostics• 24X7 connection to Advisor

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Airbags – from auto to aero!

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Aerospace vs. auto: comparison

Highly trained and expert pilot

State of the art service backup

Techno-savvy buyers

Limited competition

Less sensitive to price

User is an average citizen

Service backup still “iffy”

Highly competitive Communicating

“value” difficult Highly price-

sensitive

Aerospace Automotive

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The tipping point ?

Technology

Customerenthusiasm

Fascination

Frustration

“Tipping point” ?

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Class discussions What are the pros and cons of this

technology trend? What does the “emerging market”

customer really need? What is “value”?

What is the way forward?

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Customer needs in emerging markets – finding the balance

CONVENIENCE

LIFESTYLE SAFETY

COST

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The way forward: some ideas Offer basic platform which is a

cost-effective amalgam of technology and value

Empower the customer with “build your own car” menu: Customer chooses add-ons Incremental costs for technology

clearly known Replace “tech transfer /

localization” with “design for local”

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Thank you!