How Offering Management Affects the Car Industry?

Case in point: Automotive industry

“In order to achieve transformation and growth for the automotive industry to enhance fair competitiveness and sustainable growth, an ambitious industrial policy strategy for the automotive sector will be needed in the coming years” – Mass Customization at BM

How is Offering Management changing car companies now and in the future?

Essentially, the most visible change and root cause is in how people are buying cars.

Think about how cars were bought 20 years ago? You did some background research about the models on the market and reflected them onto the features you needed. Then you visited the dealership, did a test drive and ended up buying the particular car they happened to have at the dealership. Regardless of the fact that the color of that individual car wasn’t exactly the one you were looking for, and you originally didn’t plan your budget with that performance chip in mind. Anyway, the sales guy did a good job pitching.

After purchasing a car and paying good money for it, either the car ate the miles and kilometers as long as it could until no maintenance repairs or services could save it anymore. Another choice was paying good money for annual or seasonal maintenance services and hoping to get a good deal for trade-in. One thing has been always sure – the car will lose it’s value after you start to use it.

The present moment

How people buy cars today hasn’t actually changed that much. Yet. Instead of going to the dealership, you enter the website, choose the car model and configure to your preferences. Now, instead of placing the order and waiting for the delivery, you still - in most cases - have to visit the dealership to place the order.

Aside from car and product configurations and how they could be done remarkably smoother.

Buying mobility

Even though people tend to have strong values and feelings attached to car brands, the consumer mindset is inevitably shifting from ‘buying a car’ to ‘buying mobility’, or sometimes ‘buying lifestyle’. Driven by this shift (pun intended), car manufacturers are aggressively sculpting their offerings to meet the changing market demand

Offering Management as the key driver to new business models

Car manufacturers have adapted Offering Management in their strategy and have started to aggressively implement that strategy. Yet, most of the companies are in the early stages of Offering Management evolution. Here’s in what kind of steps we believe the automotive industry will take shape in the future.

1. Physical product

The typical car company. Offering consists of car models which the customer can configure to according to preferences at the moment of purchase.


2. Product with value added services

Car companies that have expanded to other business models, like car maintenance services or retrofittable features such as performance or economy improving firmware updates.


3. Car as a service

Companies provide an end-to-end service where the car acts as the key asset. An example offering can be a car subscription service for 30 000 kilometers of driving for a dynamic pricing based on the data extracted from your driving style and conditions.

4. Open interfaces and mobility as a service

The ecosystem model where the car as a service model can be seamlessly integrated as a part of a third party platform. This platform can be for example a MaaS platform, an external maintenance bidding platform, or a combination of many different platforms. These new business models create new income and data streams for the car manufacturer and thus generate an unmatched capability to respond to changing demand.

Summary

In the core of this transformation is automation enabled by data and intelligent product configurability. This enables streamlined adaption to changes in market requirements and customer demand.


Read more about intelligent product configurability solutions at Variantum.com.