Why Automotive Companies Need To Capitalize On IoT In Manufacturing

The automotive manufacturing world is experiencing a rapid business transformation. While some say this is due to the change in manufacturing of vehicles themselves, it really has to do with the way people use and want to use their vehicles. Consumers want more than to just head to a dealership and purchase a car. As consumers have seen many other aspects in life becoming connected, they want their automotive experience to be connected as well. This means manufacturers are becoming involved at a customer level to ensure everything is working seamlessly, from reminding customers to come in for an oil change, to notifying them when a connected part reports it needs a service upgrade.

Any organization that isn’t building Internet of Things (IoT) technology into its manufacturing is missing a huge opportunity to increase profit from services. Take a moment to step back and consider the importance of IoT within the automotive industry and how it can contribute not only to sales but also to ongoing profits for any automotive manufacturer.

Why does IoT matter to automotive manufacturers?

The IoT is one of the most important components of the digital world. A rough definition shows that there are many “things” that will be connected over the Internet, often through the cloud. Gartner predicted that IoT use would increase 31% from 2016 to 2017, reaching 8.4 billion connected things in use, with total spending on these services reaching $2 trillion, by the end of the year. The connectivity trend will only continue to grow in the coming years.

Within the automotive sector, BI Intelligence expects there to be 94 million connected cars for consumers by 2021. At that time, 82% of all vehicles shipped will be connected. To show how rapidly this is growing, consider that in 2016 there were only 21 million connected vehicles in total.

It is important to point out that smart technology, including IoT, is rather new, although rapidly developing. Features that consumers are initially interested in include lane-keeping assistance, adaptive cruise control, parking assist, and emergency braking, but they also want to know about the “health” of their vehicle and how safe they are while behind the wheel, according to a J.D. Power study of Generation Z.

People want information. They want to always be connected to those they love, but they also want to be connected to the brands they trust. With so much competition between auto manufacturers and the constant, ongoing innovation in this sector, it is clear there is a growing need for manufacturers to implement IoT into their vehicle manufacturing. The value is there for connecting vehicles. This does not come only from establishing IoT from the aspect of design and ideation – it also focuses on service enablement opportunities.

Intel’s A Guide to the Internet of Things infographic illustrates the projected growth of connected devices from 2006 to 2020. Most IoT smart devices (40.2%) are currently in businesses and manufacturing creating real-time analytics of supply chains and equipment, robotic machinery.

How can auto manufacturers use IoT for service enablement?

Service enablement may be one of the most lucrative and effective methods for auto manufacturers to tap into the IoT world. In this area of digital transformation, there is a significant opportunity not to build only on customer satisfaction but also on the profit margins of the manufacturer and brand. Quality assurance, upgrades, and aftermarket services may enhance the company’s end-to-end profitability.

1. Quality assurance and upgrades

The customer purchases a vehicle, falls in love with its features, gets home, and forgets how to use them. They never utilize these features because it is human nature not to read the manual. This dampens the feature’s value to the consumer. However, with IoT in place, it is easy for the consumer to connect back to the manufacturer for information and service. In the “instant gratification” world of Gen Y & Z, this is key.

Or, perhaps even more importantly, the manufacturer can monitor for quality assurance and provide upgrades as necessary. Upgrades in areas of key interest, such as security or amplified features of the vehicle, can improve the consumer’s view of the company.

2. Aftermarket services

A key opportunity to drive profit margins is by offering aftermarket services. Automated maintenance, communications about new promotions and offers, added features, upgrades, and newly available tech will bring consumers back for more.

Service enablement captures opportunities for auto manufacturers. It is easy to track product defects and ensure that maintenance matters are handled properly. Recalls, technical upgrades, and service announcements are seamless across the company’s makes and models. Notifications are sent proactively rather than reactively – potentially impacting overall liability. From software updates to software upgrade offers, companies finally have an efficient way to manage their communication with their vehicles long after that initial point-of-sale occurs.

Pulling out data to make it truly usable

All this IoT connectivity prepares automotive manufacturers to take that streaming data, coming from some 10 million (or more) lines of mission-critical software code, and translate it into specific, actionable steps. To achieve this, companies must work with an innovative leader in capturing and making data like this usable.

Manufacturers must first create a vision for their company and begin investing in IoT now, while it is still at its breaking point. This ensures that, within a matter of months, they can be ready to provide their customers with the next generation of vehicles that are more digitally connected than ever before.

Learn more about how IoT measures up to other pressing issues and opportunities for the automotive industry. Download the Best Practices for Automotive Research Report by filling out the form below and get access to a comprehensive view of the state of the industry.

Written by Moncombu Raju, this article originally appears on the Digitalist Magazine.



Detroit Marriott at the Renaissance Center
Renaissance Center, 400 Renaissance Drive Detroit, MI 48243
Phone: +1-313-568-8000


Detroit Marriott at the Renaissance Center
Renaissance Center, 400 Renaissance Drive Detroit, MI 48243
Phone: +1-313-568-8000