Connected car report 2016: Opportunities, risk, and turmoil on the road to autonomous vehicles
The race to build the fully connected car, and ultimately the completely autonomous vehicle, is already under way. Who will cross the finish line successfully, and where exactly that finish line is, remains to be seen. In this report — based on extensive market research, interviews with auto industry experts, and engagement with auto manufacturers, suppliers, and technology companies across the globe — the automotive practice of Strategy&, PwC’s strategy consulting group, addresses these questions.
Today, 70 percent of global connected service sales come from premium brands. By 2022, that number will fall to 50 percent, at the expense of falling margins. Although connected services will generate sales of US$155 billion, most of this value will be offset by falling sales from legacy features such as navigation, entertainment, and safety systems. These trends will contribute to a squeeze in profits for OEMs and suppliers. Higher R&D expenses will not convert into higher overall sales. On the supply side, by 2030, profits available to traditional automakers and suppliers may drop from 70 percent to less than 50 percent of the industry total. The balance of $120 billion may be captured by new entrants, including suppliers of new technology, mobility services, or digital services. Many of today’s manufacturers and suppliers lack the skill, agility, and boldness to turn their companies digital quickly enough to take advantage of this change.