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    Auto Industry Disruption: Who and What is Being Disrupted and What to Do About It!
    Auto Industry Disruption: Who and What is Being Disrupted and What to Do About It!
    Auto Industry Disruption: Who and What is Being Disrupted and What to Do About It!
    Ebook167 pages1 hour

    Auto Industry Disruption: Who and What is Being Disrupted and What to Do About It!

    By Frank Terlep

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    About this ebook

    The disruption of the automotive industry will be one of the biggest that has ever happened in any industry. The automotive and transportation industries touch almost everything in our everyday lives! Automated Driving Technologies will completely transform transportation. It will change tens of millions of people's lives, and bankrupt hundreds, if not thousands, of companies, and create thousands of millionaires and tens of thousands of jobs, while destroying just as many.
    Hundreds of billions of dollars will be invested. There will be winners and losers along with VERY BIG winners and VERY BIG losers. New businesses, industries, and business models will be created while old ones disappear.

    So, if you are interested in how one of our country's most important industries is being disrupted, you need to read this book! If you are one of the almost 10 million people who work for a company or are supporting the automotive industry, want to work for a company in the automotive industry, or are simply interested in the trends and technologies that are disrupting the automotive industry, you need to read this book!

    One thing is for sure, it won't be boring…….buckle up!
    LanguageEnglish
    PublisherBookBaby
    Release dateNov 4, 2019
    ISBN9781543987973
    Auto Industry Disruption: Who and What is Being Disrupted and What to Do About It!

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      Book preview

      Auto Industry Disruption - Frank Terlep

      What Does Disruption

      Look Like?

      So what is the definition of DISRUPTION?

      The actual dictionary definition of disruption is…dis·rup·tion…/disˈrəpSH (ə)n/ noun: disruption; plural noun: disruptions: disturbance or problems that interrupt an event, activity or process.

      The term disruption is synonymous to the word interruption, which has a largely negative connotation. When it comes to business, the first real use of the term disruption came in the 1997 book Innovator’s Dilemma by Clayton Christensen.

      In the book, Christensen introduced the idea of disruptive innovation as a way successful companies were not just meeting customers’ current needs but were trying to create products and services that fulfilled their unstated or future needs. Mr. Christensen’s book also focused on how small companies with minimal resources were able to enter a market and displace the established system of much bigger companies. The book theorized that a disruptive business is likely to start by either satisfying the less-demanding customers or creating a market where none existed before. Disruption occurs when mainstream customers start adopting the new company’s offerings in volume

      WHAT DOES BUSINESS DISRUPTION LOOK LIKE?

      Below is a graphical representation of the classic disruption cycle (Fig. 1.1) where the incumbent company becomes overconfident or is not paying attention, a new player enters the market with a new solution that is a minimal viable product (MVP), and over time the incumbent’s business experiences a serious decline in their business.

      (Fig. 1.1)

      One company outside of the automotive industry most of us know that disrupted the media industry is Netflix. When Netflix started, Blockbuster thought the service seemed insignificant. Why would anyone wait for DVDs to arrive in the mail when they could pick them up at the store? Blockbuster didn’t anticipate where the future of watching movies was going, that streaming would become the next phase of home entertainment, which ultimately led to its downfall. Instead of marketing to the next generation and their preferences, Blockbuster continued to rely on their DVD-renting customers.

      When Netflix came to the rental giant to sell their business, Blockbuster declined. If Netflix had started out targeting Blockbuster’s core market, it’s likely Blockbuster would have launched a vigorous and perhaps successful counterattack, explains Christensen. But because of the time that disruption requires, Blockbuster didn’t realize it was threatened until Netflix tapped into streaming services, unlocking the brand’s immense profitability. By then it was too late. Today, Netflix is worth billions of dollars and Blockbuster is bankrupt (Fig. 1.2).

      (Fig. 1.2)

      Let’s look at the transportation industry, particularly ride sharing, taxis, and rental car companies where a major disruption is already underway!

      (Fig. 1.3 Courtesy of wolfstreet.com)

      The graphic above (Fig. 1.3) presents a simple yet powerful image of how fast a rapid technological disruption can occur within an industry. As early 2015, taxi and rental car receipts represented approximately 75% of all corporate ground transportation travel reimbursements in the U.S.

      By late 2016, Uber and Lyft reimbursements had grown to more than 50% of the total. By 2018, Uber and Lyft’s combined share had exploded to 71%, while the market share of taxi and rental car receipts have collapsed to less than 30%!

      Disruption in the automotive industry is occurring at a much faster rate than at any time in the past, so we should not be surprised if more incumbent business models are disrupted by technological advances in the future. Some true disruptors will be BIG winners, while some disruptees will be BIG losers!

      On a side note, because of this UBER/LYFT disruption of ground transportation reimbursement, prices of New York City taxi medallions plummeted to less than $200,000 each in 2018, less than five years after peaking at roughly $1 million.

      Getting disrupted HURTS!

      Finally, let’s look at some of the industry disruptions we will cover in this book.

      Autonomous Vehicles: The rapid progress made in the areas of artificial intelligence, machine learning, and deep neural networks will make it possible to develop vehicles that drive themselves. This will completely redefine car ownership and everything that goes with it!

      IOT (Internet of Things): The IoT revolution is impacting the automotive space like never before in leasing, car rental, public transportation, and auto manufacturing. IoT and telematics are opening up new opportunities for innovation for many automotive industries through add-on hardware, software solutions, and mobile apps. By 2020, it is expected that there will be more than 30 BILLION connected and communicating IoT devices (Fig. 1.4). These connected IoT devices will deliver more than 4.4 zettabytes of data by 2020! What is a zettabyte, you ask? A zettabyte (ZB) is a unit of digital information storage used to denote the size of data. It is equivalent to 1,024 exabytes or 1,000,000,000,000,000,000,000 bytes.

      (Fig. 1.4 Courtesy of IOT Analytics)

      Electrification: Today, the shift toward electric vehicles and away from internal combustion engines is being driven by concerns about climate change where 29% of greenhouse gas emissions are generated from the transportation sector, the ongoing dependence on fossil fuels, and finally economics where the shift to more sustainable transportation solutions could save governments, consumers, and companies as much as $70 TRILLION by 2050. At least that is what the U.S. Department of Energy says.

      Direct to Consumer: The dealership-based new and used car sales business is one of the most competitive consumer markets. There will be more than 55 MILLION new and used cars sold in 2019. For new and used car dealers to succeed over the long term, they need to reconsider how they do business, or risk becoming obsolete to forward-thinking competitors.

      The Sharing Economy: The sharing economy has already had an enormous impact on the automotive industry, but the disruption is still on the horizon (Fig. 1.5). The most evident impact on the auto industry is the move away from the traditional model of car ownership. Consumer mobility behavior is changing, leading to up to one out of ten cars sold in 2030 potentially being a shared vehicle and the subsequent rise of a market for fit-for-purpose mobility solutions.

      (Fig. 1.5)

      Transportation as a Service: The intersection of the technology and transportation industries is drastically altering the mobility landscape. This union has created entire new value streams and business models, attracting the attention of consumers and OE manufacturers alike. Numerous new passenger transportation options (Fig. 1.6) such as carsharing, ride-hailing, bike-sharing, ridesharing, micro-transit, and scooter sharing programs are opening or expanding in cities across the globe every month.

      (Fig. 1.6)

      The Digitalization of the Automobile: Digitalization of the automobile has already begun to turn the automotive industry upside down (Fig. 1.7)! The automobile is being transformed to a computer on wheels that is connected 24/7! This transformation is disrupting old business models and creating hundreds of new ones! There are many experts that feel that the existing auto industry is simply not agile enough to compete with new players such as Uber, Lyft, Google, and Amazon. Let’s see what happens…

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