Posted on November 30, 2016 by staff

Connectivity set to change very concept of car ownership


The speed with which technology is disrupting traditional industries is awesome. Just look at Uber in transportation, Spotify in music and Funding Circle in banking.

We get very excited when large industries come under attack from this new breed of unicorns.

One such sector is automotive where the development of technology delivering the Internet of Things is coming together with consumer demand to create massive change and thereby opportunity in what’s termed as the ‘connected car’.

This is an area where GP Bullhound has published research in the past. Today even the cheapest new cars come with some degree of connectivity and an increasing proportion of the cost of your car is electronics.

This was 20 per cent in 2000 but by 2020 this will be 35 per cent. The estimated market size for the connected car is currently €40billion; by 2021 this is forecast to be over €120bn.

There are obvious areas where your car becomes more connected: entertainment and safety for example. The largest area for growth is around the driverless car.

This is the next step in which both the large OEMs and the global digital giants – principally Apple and Google – are investing serious sums of money.

The complexity of this market, both technologically and regulatory, means it will inevitably draw a global supply chain of expertise.

This will create new market winners. Identifying these is keeping investors busy, many of whom are looking to deploy significant capital to finance that success.

Whilst the driverless car may be some way off, technology has always been a vital component in the automotive industry.

For decades, it has been a key part of the manufacturing processes where robots and sophisticated JIT systems have transformed the industry’s efficiency and scalability.

Technology is now restructuring the way consumers buy and finance a car.

Companies such as Zuto, which offers a platform for consumers to arrange car finance in advance of choosing their vehicle; Carwow, a reverse market place which removes the need for buyers to negotiate with dealers; Zerolight, who have reinvented the car configurator which may fundamentally change the process by which we purchase our cars and challenges the very concept of a car dealership; and Autotrader, the UK’s biggest website for buyers and sellers of new and used vehicles.

Similarly, changes are happening in the car management market. Companies like Tyres On The Drive, which has developed an entirely new platform to bring the driver replacement tyres to their home; Servicing Stop, a platform which collects and returns your car when it needs a service; and, Gocompare, amongst others, which has transformed the way we buy car insurance

Many of these companies are based in the north. All are changing the markets in which they operate and altering the way in which we, as both drivers and consumers, interact with our cars.

The very concept of a car and car ownership is set to change.

Keep an eye on Apple and Google. I don’t think they will be able to resist the temptation to buy Tesla for long.