User centric mindset and reimagined business models: two prevailing needs in automotive industry

As a mobility technologies’ enthusiast, it was undeniably amazing to be back in a face-to-face conference with automakers and vehicle technology partners at Novi (Detroit’s suburban area) for the Auto Tech Week 2021.

Being able to hear about novelties from manufacturers and having the opportunity to sit inside a Bentley Bentayga and explore its features and treats are already priceless experiences.

Truth being told, vehicles inherently offer experiences that go way beyond functional values: the sexy shapes delight the eyes; the tactile experience with the fabric and soft finishing massage our fingertips; the carefully created fragrances pleasing our noses; the carefully engineered sound from the mufflers bring more enthusiasm than a rock concert.

Not to mention the exclusivity status and membership experiences that please us beyond our 5 senses: more than a functional commuting good, a vehicle is, after all, an emotional and aspirational choice that dialogues with the entire housing context (phase in life, family, lifestyle).

Having that said, automakers surely have a long-time experience in carefully crafting products capable of delivering embracing synesthetic experiences deeply touching many of users' functional, emotional and aspirational desires.

Nevertheless, products evolve and in the digital era customers have become “spoiled”, being more demanding regarding features not before present in cars: infotainment screens loaded with content, seamless online-offline experiences, connected socialization demands, services subscription and a reimagined relation with ownership, purchasing with goods in general.

New vehicles, new technologies… for whom?

At the many panels, it could not go unnoticed how proud industry executives were enthusiastically presenting new vehicle lineups and technologies. Yet, it suddenly became clear that something was missing in the presentations of new solutions and development roadmaps: the link with the users!

New vehicles in all families of portfolios, batteries, platforms and electronics were presented without clearly referencing why they were needed or required (which problems they were addressing in user’s journey that were not being substantially being fulfilled by better alternative solutions).

It became evident that, to a great extent, other than trying to focus on a more pleasant user experience, solutions were being conceived following technology hypes in a late attempt to replicate technologies and business models that are already established in other industries and contexts: voice assistants, subscription content, more infotainment for the head unit, etc.

What the industry seems to have “forgotten” is that a few years ago the entry of a “Trojan horse” from tech industry was allowed in the mobility ecosystem with the introduction of Android Auto and Apple Car Play that solved most of users' needs when it comes to infotainment.

These platforms bring to the vehicle space, in a user-friendly way, most of the features we are already used to handle in our daily basis with our smartphones.

And using the personal phone as a hub has many benefits with a more seamless integration with other activities of our lives, given the lock-in effect achieved by big tech players (that keeps us loyal to one particular ecosystem provided the high effort of migrating all the settings and customizations to a whole new environment).

You enter your car and suddenly all your contacts, preferred music and subscription services become available in the vehicle’s cockpit with no need for further account setup or charges. You use your mobile phone personal assistant to schedule a new appointment while driving and it will be available in your personal computer, phone and smart watch after leaving the vehicle.

Attempts to recreate these features in a closed ecosystem from manufacturers (requiring more complexity for setting up this connection, fragmenting user journey and damaging the experience) are doomed to be expensive ways of failing.

Data driven business models: racing against smartphones?

With manufacturers trying to distinguish themselves from competitors in new areas (beyond traditional horsepower, acceleration numbers and comfort features that were once most prominent unique selling propositions in the sector), in-cabin user experience became one of the hot topics.

Several different solutions are being considered to delight both drivers and passengers: new interior architecture (with more freedom with the removal of central transmission tunnels in EVs), previously mentioned sound and noise cancelling systems, new infotainment head units, entertainment content options and lots of services to support maintenance and even the experience of purchasing or subscribing for features.

Car manufacturers and partners are now discussing business models to create streaming platforms and new content apps for their vehicles’ closed ecosystem.

But while these endless discussions are taking place, you enter a Tesla, quickly settle your existing Netflix or Spotify accounts and, voilà, all the content you are already familiar with is available for you (allowing resuming songs/movies from where you stopped at home or in your smartphone).

And, as expected and desired by customers, this brings no extra charges to simply add a new access point (your car) to the platform-agnostic form of these services.

Similar approaches have already been applied to other vehicles (Porsche Taycan where Apple Music is available) where setting your services onboard is not more complicated than doing it on your SmarTV (why should it be, after all?).

In an attempt to create a controlled proprietary ecosystem for entertainment, automakers seem to become a bit greedy, once again loosing focus on the usability perspective.

Not rarely you find executives “inventing” problems to justify solutions they want to offer, for example: offering new paid entertainment streaming services for vehicle-charging hours. Don’t users have their smartphone with them while charging? Why would one pay for a different service to use to occasionally (considering 80% of vehicle charges currently are made at home).

Data security and privacy is another factor that commonly appear among answer to justify a closed ecosystem by OEMs (Original Equipment Manufacturers, or automakers), which also seems not to be supported by any user research (at least when considering just streaming services that do not threat vehicle safety).

By doing that, OEMs seem to be insistently trying to reinvent the wheel in infotainment and charge to offer a “vehicle-embedded calculator” while this is already available for free at user’s smartphone.

Once again, trying to follow the trend established by tech companies (and praised by Wall Street), OEM’s are targeting recurring revenues through services. For example, VW is aiming 20% of its revenues to be coming from subscriptions and mobile offerings by 2030.

There is nothing wrong in the attempt to switch from traditional car sales business to mobility providers. The problem seems to be that these financial targets are being placed like a blindfold, ahead of usability and user desirability pillars.

In addition to that, there is always an attempt to suggest that cars are much more complex machines than smartphones (with many more sensors and processors) and should therefore have a more central participation “than a simple screen in user’s hands”.

While this affirmative might be correct from the technological point of view, manufacturer executives seem to forget that smartphones are much more engaging and immersed in our lives (in our hands all day, fulfilling different roles in our daily journeys).

The battle to establish (and charge for) new content streaming solutions seems to be lost for different reasons:

1. Business model and scalability problem: especially for smaller premium OEMs with annual production around a couple million units, attracting developers to create exclusive content to automotive infotainment is challenging (when considering that only Apple sells over 200 million mobile devices/year, which represents more than twice total annual vehicle production).

2. User experience: users simply don’t want to pay for another subscription just to use services while in the car. Besides the money factor, there would bring an interoperability problem (what if I want to finish watching at home something I started viewing in my car)?

3. Apple CarPlay and Android Auto are already widely available, as well as multiple streaming platforms (Disney, HBO+, Hulu, Netflix, Apple TV, Apple Music, Spotify, Amazon Music). Fragmenting even more this ecosystem only for a small onboard experience simply does not seem to be scalable.

In my opinion, one acceptable business model goes in a different direction than the subscription hype: integrating existing streaming platforms with no added cost and increasing revenues by increasing the demand for higher-end trims (so that users can make the most of existing entertainment offerings):

- Better sound

- Bigger screens / more screens

- Onboard connectivity

- Internet access

On the other hand, there is still room for servitization: OEM’s should focus on offering powertrain related subscription services (feature as a service) with over the air features and incremental capabilities. E.g.: the ability to have heated seats, autopilot or 4x4 only for a certain time by paying for service activation.

This is closely related to their core competence, not being even accessible by 3rd parties (Apple and Google), being also connected to the main reliability and safety drivers they are so funded on.

A UX panel about… technologies!?

The lack of user focus in many new technologies being launched was evidenced in the UX panel “Developing innovative User Experiences with electric vehicles” that, except for the title, has no other clear touchpoint or commitment in enhancing user perspective.

Presenters converted what should have been an UX talk into a tech presentation merely focused on the undoubtedly beautiful new Cadillac 3D graphics infotainment, without referencing how the new interior would improve usability.

On the other hand, a surprisingly good exception to the lack of user centricity could be found with Bose, that interestingly presented itself as an experience provider (other than a tier 1 parts supplier).

Even being focused exclusively on sound ecosystem (that goes way beyond the speakers, including AI, processing, architecture disposition), the company displayed enhancements directly connected with diversified user experiences in vehicle interior.

Bose showed, for example, how noise cancelling solutions inside the vehicle can reduce fatigue and distraction (mainly in EVs where road noises might become hypnotic).

Another use case was how seat centric technologies (individual sound settling for each position in the vehicle interior, alike dual zone climate control) may enhance different activities to be performed altogether inside the vehicle cockpit.

Besides, user research feedbacks were also presented for exhibited technologies, evidencing company’s commitment to a true user centric design process to create offerings for the next generation of car buyers.

Dealers pannel

At last, when it comes to the extended automotive value chain it is impossible to forget to mention the dealership role. A few panels with representatives from large dealer groups portrayed many of the well-known challenges currently faced: supply shortage and competition from online sales channels.

While most of dealers agree that they can’t hide behind franchise law (after all, it’s known that laws follow consumer as we have seen with the taxi industry war against Uber and Lyft), how to increase perceived value in this old-fashioned business style is still to be answered.

The change to a more customer friendly approach indeed urges: even before covid and current inventory shortage, users were already running away from the old-school model with pushy, annoying and not always knowledgeable salespeople. Should customers perceive so much value added, retention for vehicle maintenance wouldn’t be shameful 30% after warranty expiration.

In the meantime, new EV players offer stylish showrooms and popup stores where there is no salesperson, but a consultant (like an Apple Store representative) to guide you through their products and answer questions.

There is no harassment or haggling since prices are transparent (following MSRP) and the purchase is made online (no commission is given to the consultant that, therefore, has no reason to annoy the customer with multiple calls).

One interesting analogy with Best Buy was established to suggest that dealerships can be more than delivery centers and show rooms/test drive location (agency model) by offering a more guided consulting approach (as products experts) for the purchase of such an expensive consumer good.

Without changing anything in the OEM-dealership model, though, it is hard to expect big changes in current pushy perspective (especially in days of labor shortage when hiring and keeping knowledgeable and well-trained people became a challenge).

Besides, while Best Buy has a multi-brand approach, it is hard to build trust when the product expert from the dealership is hosting the flag of one specific manufacturer (neutrality issue).

In other words, information about vehicles is widespread online in a more neutral and informative way. It gets difficult to understand therefore what dealer’s main value proposition for vehicle sales is to justify their fees and share in the pie (charging dealership fees on top of car price).

While there is a highly appreciated awareness about the need to improve customer service (what to do), the means to do it (the “how”) still seem blurry, with no significant novelty seems to have been brought to the table over past 50 years to make user purchasing journey more pleasant.

Industry paradigm shift: embracing technology when/if it matters… in a user-centered way

As mentioned in the beginning of this article, considering the legacy of automakers in shaping multisensorial experiences to delight customers, and given the growing number of positions in UX and design departments (besides traditional market research) inside these organizations, it’s highly likely that extensive user research is indeed conducted.

What seems to still be missing in these organizations is having a dominant mindset towards user-centricity. Automakers in general seem to still be engineer based companies in which product and technology precedes usability and purpose (engineering driven organizations).

That is substantially different from tech companies and newcomers to the automotive world that were born with a user centric design philosophy.

Conversations about connectivity, voice assistants and subscription services are now widespread in the industry. But the acknowledgement of these needs seems to have arrived with undeniable delay, when the big tech already dominated many of the offerings converting the mobile phone in an almost “omnipresent” personal hub that assists one’s life not only while driving, but also in all other spheres of life.

On top of that, internet 2.0 topics (attempts to created new closed ecosystems — e.g.: manufacturers own app stores) arrived when world starts discussing decentralized blockchain and seamless solutions for the upcoming meta universe.

A lot of catching up has to be done and opportunities still exist to be fulfilled especially in the core domain of automotive companies: powertrain, pleasure, comfort and safety to drive (perhaps the nicest example being the feature subscription most known as feature as a service).

This shall be done starting from the user perspective (what unmet needs are still around while commuting or towards extended vehicle journey and ecosystem), not just trying to mimic tech and business models that worked in other industries and contexts (and that already filled user’s needs).

If since early days automotive designers from the Bauhaus school defined that form follows function, now it’s fundamental to complete the statement suggesting that functions shall follow real unmet needs. After all, “there is nothing more elusive than an obvious fact”.

Some of the old school guys of both industry and customer side (myself included) are still proud of muffler sounds of big V8 engines undeniably putting a smile in our faces when we get “kicked back to against the seats” when pushing the right pedal.

But in an electrified world where almost all vehicles achieve remarkable acceleration (0–60 around or below 5 seconds) and given new customers (millennials), regulations, mobility and lifestyle needs, just the pleasure to drive seems to not suffice (and is perhaps doomed to be restrictive to a diminishing melancholic group).

There might be always a market pursuing fun behind the wheel, but this can increasingly become a niche segment and, with that, there is a risk for companies that stay locked in old mobility attributes like power, mechanic refinement and finishing quality.

Against all odds, new manufacturers with lousy finishing failures (but outstanding user centered technologies) are luring a growing number of clients that grew up being more used to be staring at screens than focused on finding quality mismatches.

While newcomers will have to fast learn the complexities behind car making business (regulations, safety standards, branding, services and distribution, etc), traditional OEMs still have to speed up the pace to find out how to understand and integrate technology in their vehicles in a more user-centered perspective.