Auto brands will matter less to consumers in 2030

Both consumers and executives put less emphasis on car brands in an autonomous, mobility-as-a-service future, according to a recent study from the IBM Institute for Business Value (IBV). Auto brands will have to focus on in-vehicle digital experiences to effectively differentiate themselves.

Up to 15% of new cars sold in 2030 are projected to be fully autonomous, with car-sharing potentially accounting for 26% of global miles traveled. Software, meanwhile, will account for 90% of innovation in the vehicle – fostering seamless touchpoints with consumers and personalized services. A consumer’s autonomous ride-share vehicle will be able to remind them to pick up their laundry and pester them to make good on their exercise goals in the brave new world of 2030. 

In an autonomous, mobility-as-a-service paradigm, 48% of consumers said that vehicle brand wouldn’t matter to them, but cost and convenience would, according to the study from IBV. The Automotive 2030 study polled 11,500 consumers and 1,500 auto executives globally.

"Around the world, automakers are preparing for an industry in which less than 50% consider their brand to be a competitive differentiator,” said Ben Stanley, global automotive research lead at the Institute for Business Value, IBM. “In the next decade, as cars evolve into networked machines dominated by software, the concept of an auto brand may be facing a digital revolution that will require prioritizing in-vehicle digital experiences over driving features to separate from the pack.”

Indeed, 50% of surveyed executives said that succeed or even survive they would need to reinvent their organizations with digital technology.

In an environment where people no longer drive their cars, the value emphasis turns to attributes like “connected,” “personalized,” and “seamless,” rather than traditional ones like handling, horsepower, and styling.

With an average of 51 minutes per day freed up from the rigors of “driving” and converted to online shopping or watching personalized news report in driverless vehicles, companies can look to attract consumers to their brands with elevated in-vehicle digital experiences.

Though almost half of consumers would favor cost and convenience over brand, companies can use better digital experiences to attract them. Fifty-seven percent of urban respondents said they would request a specific brand if they felt it had better data security and privacy; 50% would request a specific brand if they could have a natural conversation with the vehicle (versus dials and screens); and 49% would do so if they could get a better in-vehicle digital experience and if their information could be transferred from different vehicles of the same brand.

Purpose-specific vehicles, such as those with medical devices for the elderly, were desirable to 54% of urban respondents, while 53% would pick a specific brand if they would receive loyalty points.

Auto executives figure that innovation will help differentiate their brands, with 72% responding that innovation is one of the most significant attributes for defining their competitive advantage. Eighty-three percent, meanwhile, responded that strategy innovation was critical to addressing the rapidly approaching change in the industry. Strategy innovation becomes increasingly important as companies pilot new business models for ownership, mobility services, and data.

Polled executives said that new business models (81%) like digital platforms, as well as entering new geographic markets (81%), were the most viable routes for future growth. Executives, meanwhile, projected that revenues from mobility services would grow from the current 5% to 10% of revenues in 2030.

Though 69% of execs said brand was a competitive advantage today, only 46% expect that to be the case in 2030. In the new environment, 68% tag safety as a brand differentiator for autonomous vehicles – a very reasonable conjecture. The next seven of eight brand differentiators identified by execs are related to digital in-vehicle experiences. 

Eighty percent of executives said they expect customer experiences to be greatly enhanced by digital services. “The vehicle’s abilities to learn about its occupants, integrate with other devices, protect and share personalized information within the brand, and have a natural conversation can all lead to greater brand eminence and loyalty,” the IBV report notes.

Executives placed less importance on purpose-specific vehicles (21% of execs vs 54% of urban consumers) and loyalty points (37% of execs vs 53% of urban consumers). The report recommends auto executives place more emphasis on the above areas to further strengthen their brand proposition.