The auto industry has always been one of the more important industries in the U.S. economy. Whether you believe they were right or wrong, the government bailouts during the recent recession are living proof of this fact.
When tech trends emerge in the auto industry, people take notice.
Three Tech Trends Worth Watching
From the way vehicles are manufactured to the way they are sold, the auto industry is currently undergoing some pretty exciting changes.Technology is making vehicles safer, processes easier, and outcomes more efficient. But which trends are most significant in the long run?
Let’s take a look:
1. Digitization of Car Buying Process
Gone are the days where people spend an afternoon driving around from car lot to car lot, looking for the best price on a vehicle. Today, most of the research is done online.
"The RoPo phenomenon (research online, purchase offline) is growing continuously. Some 70 percent of auto customers start their journey digitally," McKinsey&Company Reports. "While in-person dealer visits are still a top information source for customers, car manufacturer web sites now play an equally critical role. Both were named by 52 percent of respondents as important influences on purchase decisions. These were followed by dealers’ online offerings.”
To account for the RoPo trend, many dealers are changing their approach. Take Napoli Nissan in Milford, Connecticut as an example. When shopping for a vehicle with Napoli, you’ll find they let customers sort through vehicles, estimate trade-in values, choose financing options, and schedule delivery — all before ever stepping foot in a dealership. Customers can then bring this information when they visit the showroom to make the process more efficient. "Car dealers report that only 5 percent of their customers are not highly informed upon their first visit," McKinsey and Company explains. "Customers come armed with product feature details, model history, and price comparisons."
This digitization is arguably a good thing for both dealers and consumers. It gives dealers the opportunity to reach more people online, while offering consumers better education and the chance to compare prices.
2. Advances in Car Technology
Over the past three years, auto companies and tech companies have been joining forces to advance innovation in car manufacturing and design. Here are a few examples:
- General Motors invests in Lyft.
- General Motors acquires Cruise, a self-driving car startup.
- Toyota invests in Uber to form a strategic partnership.
- Fiat Chrysler works with Google to develop a self-driving car.
- Apple invests in Didi Chuxing, a Chinese ride-hailing service.
- BMW works with Intel to develop self-driving technology.
As auto companies work with leaders in the technology space, the line between vehicles and consumer electronic products will become blurred. While cars will always be viewed as transportation, they’ll also gain a reputation as tools of convenience.
3. The Rise of Driverless Vehicles
One of the bigger trends in auto technology is the rise of driverless vehicles. And while it may seem like a long way off, don’t be surprised if roadways are filled with driverless vehicles in a matter of years.
Oliver Garret, founding partner and CEO of Mauldin Economics and Garret/Galland Research, predicts there will be 10 million self-driving cars by 2020, with one in four cars having self-driving technology by 2030. But he also admits that the steady compression of the technology adoption cycle over the years makes this a very conservative estimate.
Garret explains, "While it took approximately 50 years for electricity to be adopted by 60 percent of US households, it took cell phones only about 10 years and, though it’s not shown on the chart, smartphones only about five years to reach the same penetration."
The technology for driverless vehicles exists and is being refined and improved by several auto manufacturers and tech companies. It’s the matter of addressing regulatory and logistical challenges that currently stands in the way. As soon as these are dealt with, driverless vehicles will become the norm.
Because of mass adoption of driverless vehicles, society will be totally changed. Everything from auto insurance and auto repair shops to shipping services and mass transit will undergo significant makeovers. This will make driverless technology the most innovative technology of the 21st century.
Don’t Sleep on the Auto Industry
While the auto industry may not get the same attention as consumer electronics, healthcare, and traditional technology niches do, it’s one of the most innovated industries in the entire American economy.
Over the next 6 to 18 months, the expectation is that the auto industry will continue to innovate and evolve at a rather significant pace. By keeping an eye on the digitization of the car buying process, advances in car technology, and the rise of driverless vehicles, you’ll be up to date on the latest trends and capable of making smart buying decisions and well-informed investments.
Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. To read more of his reports — Click Here Now.
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