The automotive industry is facing radical changes. Traditional functions will take a back seat, progress will manifest itself in new functionalities. Besides autonomous driving, connectivity is at the focus of the automotive industry. In an interview with Hilmar Dunker, editor-in-chief of automotive IT, Pietro Hagemann, Chief Sales Oﬃcer at Concardis, Timm Kellermann, Managing Director of Consulting4Drive – IAV’s consultancy business - and Christian MüllerBagehl, Executive Vice President for Vehicle Cockpit at IAV, speak about the new “AutoMotive MarketPlace” which has been developed in cooperation between the IAV Group and Concardis.
Gentlemen, what do you think: how well prepared is the automotive industry as opposed to the global big-data players for data-based services? Do the OEMs have a chance of getting a slice of this lucrative cake?
Müller-Bagehl: I believe the automotive industry can oﬀer a number of interesting assets. But it still needs to develop a digital relationship that oﬀers the customers genuine value. Google, Apple and Amazon have understood this: direct consumer relations are at the core of their business model. The automotive industry must meet them on a level playing ﬁeld. Then it will have a chance in the face of the major bigdata players.
Hagemann: The automotive industry has the possibility of bringing together central basic needs: mobility and communication. For many, daily journey times of one to two hours are nowadays run of the mill. Usually, this is time spent unused. Increasing digitization in communication must be reconciled with advancing mobility, and this is something the automotive industry can do today.
Kellermann: I share this view. This question, though, is: which aspect is lacking among the automobile manufacturers when we speak of digitization? The answer to this in my opinion is relatively simple: direct access to the customers. Over the past 100 years, local dealerships have been responsible for customer relations. But in the digital age, businesses will only be successful if they are in immediate contact with consumers. So: there must be a direct dialog on the part of manufacturers. Realizing this is nothing new, but for the ﬁrst time with the marketplace, we see a solution which, in return for direct contact, will let a manufacturer oﬀer convincing added value in respect of everyday mobility for the consumer.
Is there not a danger of the automobile merely ending up as part of a comprehensive smartphone economy?
Hagemann: I think it will be a complementary situation. A vehicle will neither replace a cell phone nor vice versa – instead, they will complement each other. A vehicle can provide information a smartphone per se doesn’t even possess, for example, vehicle or journey-related data. And this is the basis for new technologies, solutions and added values.
Speaking of new technologies: IAV, payment service provider Concardis and IAV’s Consulting4Drive subsidiary have teamed up and developed the “AutoMotive MarketPlace”. This is also about added values. Can you please explain what’s behind this concept?
Hagemann: Looking at the existing marketplaces, there are two categories: the physical marketplace, the brick-and-mortar store, on the one hand and then there’s the electronic marketplace on the other. The automotive marketplace, in the way we deﬁne it, is a virtualization layer in between them and intelligently combines both worlds. And there’s high added value for motorists: they can actively use the time while they are sitting behind the wheel.
Kellermann: It’s a clever combination of driver assist system and online shopping. Here’s what’s behind it all: every day I travel familiar journeys, to work, say. At the same time I have all sorts of things going on in my mind that I need to get done: ﬁnd a dry cleaner, ﬁll up on low-price fuel, organize fresh bread for supper. In the car, things like this can be planned effectively and done very easily. And the “AutoMotive MarketPlace” helps. The system, for example, gives the driver speciﬁc suggestions on where to shop on everyday journeys. Where can I still get fresh bread in the evening? Which ﬂorist is still open? The principle is simple: I transfer the convenient shopping experience from the online world into the real world – into the car. Along the route I travel every day.
How does the system work from a technical point of view?
Müller-Bagehl: The secret is simple: know your customer. This is the principle behind all common websites: customers’ speciﬁc interests are proﬁled exactly. But we want to go a step further with our concept. One of the things we use for this is prediction logic that helps us to respond more quickly to the customer’s spontaneous requests. This means we want to identify the customer’s needs and respond in a focused manner. To do this, we draw on existing proﬁles from the past and combine these with the personal wish lists customers have made themselves. This combination delivers tailor-made results and also gives the customer intelligent options to choose from. The system never stops learning, making sure that the customer’s proﬁle gradually grows in accuracy.
Hagemann: Namely, the customer’s proﬁle in the car. To make sure that he or she can make an immediate decision, we integrate brick-and-mortar retailers into the concept. In other words, the system works in the motorist’s immediate action radius. This lets us simplify their everyday routine.
To do this, you need to access relevant customer data. A sensitive issue, particularly in Germany. How do you go about this?
Müller-Bagehl: Let’s be quite clear on this: the data belong to the customer and only the customer grants the rights to them. And we are under the obligation to treat them conﬁdentially. Naturally, there’s speciﬁc information we need to work with so we can generate values and beneﬁts. But not without the customer knowing. Many Internet platforms use customer data to generate values for themselves. We only use data to generate added value for the customer – that’s a key diﬀerence.
So, how is the system’s revenue model made up then?
Kellermann: The “AutoMotive MarketPlace” is subject to the familiar rules of trade and commerce. The clever part: it’s a dynamic trading system, not a simple marketplace as in the case of the online platforms or the pure brick-and mortar providers. We actually move along with the customer, so to speak.
What makes you so sure that precisely your concept will work on the market?
Müller-Bagehl: Because we bring together mobility, retailers and consumers. It’s a complex exercise IAV and Concardis are providing the relevant expertise for. Concardis, our partner, has over 600,000 payment terminals across the country. So, the company has huge amounts of experience in this sort of thing and that all-important access to retailers. We have the right ingredients for successfully launching the system. We will get retailers interested in getting on board and installing the technical platform. And we’re certain we’ll manage to because we oﬀer real beneﬁts for OEMs, retailers and consumers.
Where will the system be hosted and how will you make sure data are protected?
Hagemann: Technically speaking, the marketplace will be operated from several computing centers to ensure fail-safe performance and provide redundancies. For reasons of data privacy law, we will leave the infrastructure in Germany because we have well-functioning data protection legislation which also provides relatively strict provisions on data accessed by third parties from outside. For the platform itself, there will be an operating entity we still need to deﬁne.
Germany is a country of cash payers. How are you addressing this problem?
Hagemann: Historically speaking, Germans like to pay cash, that’s right. But that’s changing and is something that will alter more and more quickly. Why? Because other ways of paying give the customer an added value. In the meantime, you can even pay by credit card at discount stores in this country so your account is not immediately charged. As soon as familiar mobile payment services, like Apple Pay, are available in Germany, things will start moving faster here too. Because then people won’t need their cards any more but leave home with their smartphone in their pockets. That’s easy and convenient. So, for an added-value service, like the “AutoMotive MarketPlace”, this problem doesn’t exist: consumers can use a service while driving and pay for whatever they buy and it’s easy, quick and secure.
Müller-Bagehl: Absolutely right. MyTaxi or Uber are already pointing the way and work with an electronic payment system. This means I register once and then I don’t have to worry about anything anymore. That’s the added value and also what the customer expects. On top of this: I automatically get all transactions sent to me by e-mail or I can look at all of my payments directly on the Internet portal – there’s no reason why I’d ever want to pay cash.
Kellermann: In this country, the matter is viewed too pessimistically. The internationally growing e-commerce segment has long since geared itself towards cashless payment. Everything that’s consumed digitally is also usually charged for digitally. We will very soon come to appreciate this in Germany too.
Hagemann: This is why it’s necessary to get consumers on board. For instance, every car could be provided with a digital key that gives access to the marketplace and is linked with a payment function. This would also provide additional identiﬁcation and authentication, and could, at the same time, oﬀer the retailer more security because the vehicle owner is properly registered. This would provide a basis for intelligent and convenient in-car payment.
Let us move on to another important point in development: If a system like this is integrated into the vehicle, under no circumstances must it be allowed to distract the driver and it must also be easy to use. What thoughts do you have on this?
Müller-Bagehl: There’s a lot we will do through voice and navigation as well as graduated forms of information. In a nutshell: we will use less demanding interaction modalities and make the HMI appropriately intuitive and straightforward …
Kellermann: … and provide assistance systems that relieve the driver to an extent that will make using the system safe and legal. There must be no compromising in this respect. Why? For the ﬁrst time in years, we are again seeing a growing number of traﬃc accidents and road fatalities. Not because cars have gotten worse but because many drivers are increasingly tempted to do things that drastically push up the hazard potential. People want to use the time behind the wheel in more diverse ways and, together with the manufacturers, we are making this legal and safe for all road users.
Müller-Bagehl: The more we actually relieve and assist drivers in future, the safer it will be for them to spend their time doing other things.
Finally, this brings us to a central question: why should an OEM order the system from IAV and its partners?
Müller-Bagehl: Because I, as a manufacturer, can generate an incredible number of customer contacts with this marketplace. The system provides the basis for digital communication – the gateway to a completely new relationship with customers. It is comparable with Google: you enter something into the search mask and in return get valuable answers or a wealth of products – that don’t belong to Google. This service deepens the relationship between the consumer and Google. This lets me top up my digital customer relationship with an incredible added value. All digital players are generating added value through their customer relations, directly or indirectly. This is why an OEM should embark on this step with us.
Hagemann: Having good products is simply not enough any more. So, what is turnover generated from? From services that are oﬀered through systems like these. The marketplace gives the OEM the opportunity to build up a customer relationship it doesn’t have from today’s perspective – and this is where their business lies.
Kellermann: I see another element. As a manufacturer, I get to know my customer and I can use the knowledge resulting from this for new products and, in particular, for one question: do I really still need to sell cars or should I not be offering their use instead? What we are developing here is completely detached from whether the customer owns the vehicle or only uses it. With this system, manufacturers gather information that gives them greater confidence in what they do. It would let them shelve the principle of trial and error in relation to modern mobility. One thing is certain: companies failing to build up direct value-driven interaction with their customers in the medium term will be relegated to the back seat. This is a fact that is unbelievably painful for most OEMs, but for some manufacturers it will become reality. The “AutoMotive MarketPlace” opens up a positive perspective.
When will the official “AutoMotive MarketPlace” rollout begin?
Müller-Bagehl: As an established company, we are in a kind of start-up phase, so to speak – with all its facets. We have not yet decided how we will go about the actual rollout. At CES in January, we presented the showcase to the public. Now it’s a matter of planning the ﬁnancing. In this phase, for example, we will also be talking about venture capital. We are on the way.