(1) Business Drivers for Global Automotive Evolution
The demand for automobiles in the global market is uneven, with the strongest growth in North America, the weakest in Europe, and the most inconsistent in growing markets like China and India. Against the current macroeconomic scenario, the following factors drive the future of the automobile industry:
- Shifts in consumer demand: consumers are demanding more sophisticated and affordable infotainment systems, and are expecting high-end features to be standard.
- Expanded regulatory requirements: tighter corporate average fuel economy (CAFE) in the USA is driving for more safety, fuel efficiency, and emissions control.
- Increased availability of data and information: information about vehicle usage and driver behavior is growing as sensors and telemetric systems become more accessible. This leads to innovations in car infotainment that are powered by car telematics. These leaps in technology in turn drive greater differentiation and attract customers from competing brands.
The increasing use of infotainment and telematics systems disrupts OEMs and traditional suppliers, changing the ways in which industry players design and develop new products and services.
(2) Key Highlights from the Growing Chinese Automotive Market
The following data points highlight the importance of the Chinese automotive industry within the global landscape.
- 40% of BMW sales worldwide come from Chinese markets, further emphasizing the importance of the growing Chinese luxury car industry.
- 30%+ sales of Daimler worldwide come from the Chinese market.
- Local Chinese brands are catching up with global brands, both in quality and brand share.
- Global brands are eating into the local market, competing with Chinese brands in tier-2 and tier-3 cities in both cost and value for money.
- An upcoming wave of growth is expected from the electric vehicle sector due to increased government subsidies
- The local Chinese electric car market is experiencing growth in the double digits and foreign brands have yet to infiltrate this trend.
- The Chinese government is making massive infrastructure investments so that automakers can penetrate tier 3, 4, and 5 markets by 2030.
(3) Influence of Global Automotive Trends on the Chinese Market
Global automotive trends significantly impact Original Equipment Manufacturers (OEMs), as outlined below:
OEM strategy: given the increase in electronic content, OEMs need to collaborate with suppliers and experts outside the traditional auto industry including hardware and software companies. The importance of infotainment will drive OEMs to improve their skills to gather and analyze consumer data in order to better serve their customers and cultivate brand loyalty.
Supplier strategy: suppliers should partner with innovative non-traditional automotive electronics and infotainment suppliers in order to utilize both their speed-to-market and scale.
Dealer strategy: as more buyers use online research, rating, price comparison, and offers, the dealers in turn need to invest in data management and customer care technologies. This will help facilitate the buying transaction, rendering it more efficient, less pressured, and more pleasing to buyers. Customer care technologies should extend to post-sales cycles, including servicing, vehicle health, pro-active monitoring, and vehicle repurchasing to build loyalty and brand image.
The automotive manufacturing sector in China forms an important link within the overall automobile sector from OEM components to parts supply perspectives. Most of the global OEM players from Europe and the US have bases in China for manufacturing auto parts in order to fulfill the demand for domestic and international consumption. For example, Chrysler has approximately 140 parts suppliers in China from whom they purchase nearly $640M worth of goods, representing 3% of its global purchases. The domestic consumption involves parts repurchase, replacement, and export driven by global new car sales. The automotive suppliers in China need to increase the production of high-end infotainment products and scale up to the demands of both global OEMs and domestic consumption. This would involve not only partnering with downstream electronics and infotainment suppliers, but also working with global OEM product rollouts, whose product release cycle is tightly integrated with the supplier parts rollout cycle.
(4) How are Trends in Automotive Segments Shaping Software Testing?
The QA and Testing spend is predicted to increase to 40% of the overall IT budget by 2019. While this predicted upward trajectory must eventually halt, it is perhaps indicative of the industry’s enthusiasm for emerging technologies and automation techniques. For example, 48% of survey respondents in this sector foresee using cognitive automation, and 40% foresee the use of predictive analysis (automated identification of the risk areas). Elements of these developments are already evident, with 47% of automotive sector respondents saying that they use predictive analytics to determine or optimize test coverage in a DevOps environment. This corresponds with findings from across all sectors of an increasingly intelligence-led approach to test data and test environment management. Source- WQR2016
OEM suppliers need to increase their capabilities in digital testing on the application side, with a focus on IoT, analytics, artificial intelligence, Platform-as-a-Service (PaaS) testing, and cloud platforms. On the technology side, key capabilities in automation, agile development, DevOps, and cloud testing become a crucial differentiator for growth and sustainability. New capabilities in embedded testing, IoT testing, machine learning, and connected devices validations are required to holistically address the needs of infotainment and telematics systems.
Dealers also need to upgrade their systems in order to engage the customer effectively during pre- and post-sales stages to digitize all the customer touch points. This will enhance the customer experience and drive the top-line.
The table below illustrates how various vehicle finance providers are addressing the vehicle financing market in China with their digital strategy.
System integrators need to acquire skills to test applications built on social, mobile, analytics, and cloud (SMAC) platforms. This testing capability must to cover agile, DevOps, cognitive automation, predictive QA, cloud testing, IoT testing, and big data. Embedded system testing should cover infotainment and telematics systems.
The global automotive market will see tighter integration and collaboration among OEM suppliers, system integrators, and niche technology companies to deliver on value.
Digital disruption and innovation in global automotives are driving the demand for the niche testing services of OEM’s, OEM suppliers, system integrators, and ecosystem partners.
The emergence of connected cars is driving the convergence of application testing and embedded testing services to create seamless, end-to-end, digital testing.
Cognitive automation, DevOps, artificial intelligence, IoT testing, automated test environments, test data automation, and predictive QA will dominate the testing for the automotive segment. Traditional testing providers need to transform themselves to fit into the new age of digital by focusing on both speed and the digital experience.
Main Author: Renu Rajani, Vice President, Capgemini India, firstname.lastname@example.org
Contributing Author: Manojkumar Nagaraj, Director, Capgemini India, email@example.com