Automotive Insights 01.2013 - Roland Berger

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technoglogy . Advanced driver assistance systems interested in selling ADAS have few opportunities to demonstrate the technology. This is unfortunate, as surveys consistently show a correlation between experiencing a safety feature and buying it. Dealers play a decisive role in bringing ADAS to both interested customers and to those unfamiliar with the technologies. To promote ADAS successfully, dealers need to be well informed about the different functions, costs and benefits of the systems. In short, training and support are essential. While most car buyers are willing to pay more for increased horsepower, acceleration time or rim size, they are generally not willing to spend more on features that make driving safer and more comfortable. This is why it is essential that dealers are well prepared with feasible cost calculations and sound arguments. For instance, a potential buyer who is skeptical of parking assist and other self-parking features could be convinced with a simple calculation of average damage versus system costs. OEMs should consider integrating ADAS sales into their dealer margin schemes. Especially when linked to insurance companies, an incentive system could be established that would benefit everyone. In an ideal incentive system, car dealerships that manage to sell a car with optional ADAS features could provide car insurance at a discount. With the insurance contract, the dealer would give the customer an incentive to spend money on ADAS and get a better insurance deal. In this scenario, everyone would win: the customer, the vehicle manufacturer, the supplier, the dealer and the insurance provider. The challenge lies in getting the calculations right. Not only does the carmaker have to calculate a profitable incentive model, it also has to consider the statistical accident reduction potential of new systems. In addition, it must consider that it would be difficult to subsidize lower insurance premiums from the ADAS margin. Vehicle manufacturers act as integrators and have the most to win Many stakeholders in the global automotive sector are interested in ADAS becoming standard. To make this goal a reality, a strategy needs to be devised. Customers want improved driving safety, and governments are safety systems can help to generate considerable revenue streams: the demand for adas components is expected to more than double from Usd 2.3 bn to over 5.4 bn by 2017 Global market forecast for top 5 ADAS components, 2012 to 2017 [estimations in USD m] 1) 5,446 CAGR: 14% CAGR: 17% CAGR: 32% 2,797 1,654 CAGR: 16% CAGR: 13% CAGR: 5% 2,088 755 299 638 344 638 334 427 520 2012 2017 2012 2017 2012 2017 2012 2017 2012 2017 2012 2017 Lane departure warning blind spot detection night vision system driver drowsiness detection adaptive cruise control 2) total 1) Based on OEMs' average purchase prices for entire systems 2) Also basis for collision avoidance systems Source: Strategy Analytics; Roland Berger 38 Automotive Insights | 01.2013
considering making safety systems mandatory. Insurers, in turn, see major savings potential. The independent after-market is keen to take advantage of new business opportunities, and fleet managers want to lower costs. Each of these stakeholders would benefit from a higher prevalence of intelligent driver assist systems. Suppliers and OEMs would benefit as well. Suppliers can expect demand for ADAS components to more than double by 2017, from USD 2.3 billion today to over USD 5.4 billion. These figures are based on OEMs' average purchase prices for entire systems, not on customer purchase prices. If margins are added to this, the financial value for vehicle manufacturers increases significantly. Adaptive cruise control and lane departure warning systems show the most promise. ADAS are attractive for OEMs, as they bring additional revenue with high profit margins. Manufacturers are rolling out ADAS features on medium to low-end cars for a number of reasons. Doing so allows them to bolster their safety image and helps set their products apart in addition to generating an additional source of revenue. OEMs act as integrators: they bring supplier innovations to the car, have marketing and sales power, control options and packages, and are the link to insurance companies. As a result, they are in the best position to promote ADAS. Carmakers would also benefit most from a business perspective. Several regions like the EU have ambitious goals to reduce the number of accidents strongly – it will need the widespread use of ADAS to achieve them safety features and persuade the big share of indecisive customers. Moreover, manufacturers should include insurers in the ADAS sales and marketing process. Safety is no accident, and the success of advanced safety features won't be either. Unless OEMs play an active role in promoting them, ADAS are unlikely to gain broad acceptance To take full advantage of their prime position, vehicle manufacturers should consider following a multifaceted strategy: they must see to it that customers experience ADAS firsthand and are given greater freedom to select the safety features they want. They should also give customers the option of choosing between packages and individual features, and offer both standard and optional technologies. Car manufacturers also need to follow through on their strategy of bringing ADAS to cars in the lower vehicle segments. To ensure that deals are made in showrooms, they should support and train dealers, providing them with the skills they need to sell advanced Authors Ralf Landmann Partner Roland Berger Strategy Consultants, Frankfurt ralf.landmann@rolandberger.com Manuel Yoon Consultant Roland Berger Strategy Consultants, Frankfurt manuel.yoon@rolandberger.com Automotive Insights | 01.2013 39
Page 1 and 2: Automotive Insights Automotive Comp
Page 3 and 4: Table of contents 4 19 12 40 4 12 1
Page 5 and 6: Innovation . intelligent MOBILITY i
Page 7 and 8: Innovation . intelligent MOBILIty c
Page 9 and 10: The automotive industry is sufferin
Page 11 and 12: Not only for private cars: public t
Page 13 and 14: 3 Assist OEMs in their efforts to s
Page 15 and 16: The change of relationships is a cl
Page 17 and 18: from unavoidability to Dependency:
Page 19 and 20: Cover story Supplier business outlo
Page 21 and 22: Revenues are growing, but EBIT marg
Page 23 and 24: Cover Story . Supplier Business out
Page 25 and 26: The mid-term challenge: rising capi
Page 27 and 28: Cover Story . Supplier Business out
Page 29 and 30: Jean-Marc Gales, CEO of the Europea
Page 31 and 32: Finally, Mr. Gales, let's talk abou
Page 33 and 34: safety does not happen by accident
Page 35 and 36: A typical situation which illustrat
Page 37: despite the high interest in safety
Page 41 and 42: aftersales . online business Around
Page 43 and 44: Which player offers the most solid
Page 45 and 46: Books & studies Connected Mobility
Page 47 and 48: Automotive Competence Centers World

Automotive Insights 01.2013 - Roland Berger

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