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Frost & Sullivan: Big Data's Predictive Functions to Help Identify and Deliver Opportunities in the Automotive Industry

Big data can impact the bottom line for stakeholders by being more predictive than reactive as well as enhancing customer satisfaction

MOUNTAIN VIEW, Calif., March 25, 2014 /PRNewswire/ -- Both the North American and European automotive industries are on the cusp of change, with big data and connected services combining to foster the development of diverse mobility integration business models. Frost & Sullivan expects 60 percent of original equipment manufacturers (OEMs) to devise big data strategies and offerings in the next two years, prompted by the proliferation of high-bandwidth, embedded connectivity technologies, such as long term evolution (LTE).

OEMs' strategies could involve strengthening in-house capabilities or outsourcing the job to big data experts. The focus is on standing out from the competition based on brand awareness, digital engagement of customers, and response time.

New analysis from Frost & Sullivan, Strategic Analysis of the Impact of Big Data on the European and North American Automotive Industry, finds that by 2020 approximately 35 million vehicles in North America and Europe will make relevant data sets available for OEMs to assimilate and convert into actionable insights. Around post-2015 or 2016, the industry is expected to witness the emergence of integrated service providers with expertise in end-to-end services across the automotive value chain, from consulting to implementation.

For complimentary access to more information on this research, please visit: http://bit.ly/1lhfmwz.

The concept of connectivity is gaining currency in the European and North American automotive markets, as there is a rising need to create a three-way data sharing network among dealers, customers and the OEMs. This collaboration is crucial for providing a seamless after-sales experience through convenient service scheduling or proactive diagnostics. Furthermore, having access to data regarding the vehicle's performance and issues before it reaches the service center, will also help dealers better manage their inventory.

"Supporting customers with proactive monitoring of vehicles and services will strengthen the OE dealership and customer relationship post warranty periods," said Frost & Sullivan Automotive & Transportation Program Manager Niranjan Manohar. "Proactive monitoring will not only enable the OEM to collect information regarding the user's needs, but also create an opportunity to analyze and collate data on vehicle performance."

However, the influx of Internet aggregators could cause OEMs/dealers to lose control over the potential flow of information, which is a crucial purchase factor for customers. On the other hand, it will make transaction pricing transparent and eventually, disrupt the dynamics of the industry by choking the business for mystery shopping.

OEMs can also leverage big data to offer value-added services with facilities to integrate navigation and parking slots/reservations, electric vehicle (EV) charging spots and car sharing.

"The real differentiating factor for OEMs is to have a big data framework, a clear connectivity strategy with the ability to pull large volumes of data, and most importantly, partners to help them harness the true power of this data," noted Manohar. "The most successful OEMs will be those that can use predictive data analytics to affect a one to three percent reduction in warranty costs and enable other important software and firmware over-the-air-updates."

Strategic Analysis of the Impact of Big Data on the European and North American Automotive Industry is part of the Automotive & Transportation (http://www.automotive.frost.com) Growth Partnership Service program. Frost & Sullivan's related studies include: Prognostics for the European and North American Trucking Industry – Big Data is Creating all the Difference, The Advent of Digital Retailing and its Impact on Car Dealership Structures, Strategic Update of the North American UBI Market for Passenger and Commercial Vehicles. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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Strategic Analysis of the Impact of Big Data on the European and North American Automotive Industry
ND31-18

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Corporate Communications – North America
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