The stricter safety and environmental regulations have notably led to bottlenecks for car manufacturers. In addition, the changes in customer behaviors and technology developments are pushing the automotive players to redesign the automotive industry landscape.
At Tesla's 2016 Shareholders Meeting, CEO Elon Musk famously talked about the importance of building the production system to accelerate the world's transition to sustainable energy, faster vehicle production, and lower costs.
"We realized that the true problem, the true difficulty, and where the greatest potential is building the machine that makes the machine. In other words, it's building the factory. I'm really thinking of the factory like a product."
– Elon Musk, CEO of Tesla Motors –
Disruptive Transformation
Digital transformation in automotive manufacturing is not new. In fact, the automotive industry has been one of the most aggressive in replacing manual labor with automation. There are four key trends disrupting the automotive industry: connectivity, automation, shared rides, and electrification. These trends will directly impact automotive manufacturers' operation and survival in a highly competitive market, making digital transformation required.
With digitalization altered the connections across the entire retail landscape. OEMs, dealers, and customers are dynamically redefining how they interact with each other. Consumers' growing demands for a seamless experience across digital and physical touchpoints are pushing OEMs and dealers to reconsider how they engage with customers before, during, and after the sale. That also means, to digitized the paper-intensive purchase transaction and works.
Data on the move, from the factory to store
Continuous data collection and analysis on the factory floor creates a new opportunity for predictive maintenance in-vehicle diagnostic systems. In addition, intelligent components and prevalent connectivity allow the vehicle and some components to proactively signal when they need maintenance or replacement, thus dramatically reducing recalls' frequency and severity.
The burst of low-cost sensors has reduced the cost of predictive maintenance, thus enabling next-generation servicing. Gradually, service is no longer just a mechanical adjustment or part replacement but also a software upgrade to improve performance in the overall engine and individual mechanical systems, contributing to parts and optimal performance maintenance.
With all these moving parts working in harmony, it is not hard to leverage Industry 4.0-collected data beyond the factory floor into e-commerce. Data collected from digital market platforms can tell manufacturers what products are preferred and what locations receive the most demand—allowing manufacturing to adjust their operations to meet the needs and create personalized services.
Digitalizing for Manufacturing Benefits More than Just Manufacturers
Although the Industry 4.0 leading technologies like industrial robotics, Industrial Internet of Things (IIoT), cloud computing, and machine-to-machine (M2M) communications technologies have only matured recently, the competition and broader adoption have driven the cost of digitalization down. That means the Industry 4.0 digitalization will be more accessible for a wider group of adopters, unlocking more benefits for more people and businesses.
Studies by Capgemini Research Institute predict that by the end of 2022, 24% of automotive manufacturers' plants will be smart factories, and 49% of automakers have already invested more than $250 million in smart factories. With a digital technology component to everything an auto manufacturer does, the challenge they need to overcome is how to move at speed, make changes now, and own the customer experience before technology disruptors take it from their grasp.
