of Automotive Aftermarket and Supply Chain Presentation by: Sarwant - PowerPoint PPT Presentation

Transformative Trends Reshaping the Future of Automotive Aftermarket and Supply Chain Presentation by: Sarwant Singh Senior Partner 1

Transformational Shifts Reshaping the Future of Mobility Cognitive Era Connectivity and Autonomous Digitization of Retail Future of Aftermarket Mobility New Logistics/Supply Health Wellness and New Business Models Rise of electrification Chain Models Wellbeing in Cars 2

Transformational Trend 1: 5G Rollout in Europe: Road Map and Vision 5G technology will enable zero latency applications in Vehicles such as V2V or V2I communications Specifications Speed: 50 KBPS Speed: 250 KBPS Bandwidth: 20 Bandwidth: Bandwidth: 200 MBPS MBPS 1 GBPS Analog Voice Calls Digital Voice Calls Video Streaming Data M2M Device Generation 1G 2G 3G 4G 5G 0 perceived down Less than 1 7 trillion M2M 5G Targets 90% Energy savings time for service millisecond Latency wireless connections provision 3

Future Space Jam There will be 1,213 Satellites Launched, Cumulatively, Globally between 2011 - 2021. 1,213 220 965 354 102 327 107 218 225 71 164 161 73 136 129 89 59 559 31 365 Heavy Large Medium Small Micro Mini Nano Pico 5,400kg+ 4,200- 2,500-4,200 500- 100- 10-100 kg 1-10 kg 0.1-1 kg 2011* 2021* 5,400 kg kg 2,500 kg 500 kg R&D Reconnaissance Navigation Earth Observaion Communication 4

Implication: 5G and Satellites boom will make our cars cognitive and intelligent Satellite High to Fully Augmented and Connectivity Automated Driving Virtual Reality Satellite data at 50 megabits Over 2 Gb data needs to be Continuous processing of per second with a harnessed at a given point. real-time information to transmission speed beyond a Needs 5G speed windshield gigabit-per-second Source: Frost & Sullivan 5

Implication: Re-thinking Automotive with Big Data Meaningful data sets is expected to grow from 10MB to 5GB in an average connected car by 2017/2018 Internet Aggregators Price transparency, unbundling of activities Real-Time Prognostics Proactive maintenance, warranty management Personalization & Customization ‘Me - commerce’, Social media analytics and reporting for targeted ads New Products User-based insurance, Telematics Dynamic Pricing Real-time billboard pricing, Price different vouchers, Surge pricing (Uber) 6

Case Study: Big Data and Connectivity Will Transform the Car Insurance Industry in Future http://www.drivelikeagirl.com/ 10

Sub Trend: Boom in the Automotive Startup Ecosystem There has been a shift in the automotive value chain; over 1700 new startups are unbundling the car HMI Cybersecurity OTA (Over The Air Update) AI Software Sensors Hardware P2P Used Car Market Place Autonomous Algorithm HD Mapping UBI (Usage based Insurance) Autonomous Solution Aftermarket Telematics Blockchain VINILI Autonomous Sensors Driver Safety Autonomous Processing Mobility Integration V2V/V2X Electric Vehicles 11

Transformation Shift No. 2: Cognitive Era Cars Will Need These 6 Cognitive Technologies For AI Natural language Computer Vision Machine learning processing Rules based Planning & Optimization systems scheduling 12

Implication: Voice Recognition – Women’s call outs to take over your car: Key technology players will bring voice functionality into cars Amazon’s Nuance’s Microsoft’s Alexa DragonDrive Cortana (Ford & VW) Renault + Nissan) Google’s Apple’s Now Siri Source: Frost & Sullivan 13

Sub Trend: Autonomous Cars - $60bn per annum market opportunity in 2030, 50% of which will be in Software Human Machine Change in Responsibility Current Level 2011 2016 2018 2025 2030 Awareness for General Awareness Early Warning Traffic Control Takeover No Full Autonomous Systems Assist Driving Level 0 Level 1 Level 2 Level 3 Level 4 Level 5 New 40 million 15 million 5 million 2 million 1 million Vehicles 14

Sub Trend: Autonomous Cars - $60bn per annum market opportunity in 2030, 50% of which will be in Software Human Machine Change in Responsibility Brain Off Mind Off Eyes Off Hand Off Feet Off Current Level 2011 2016 2018 2025 2030 Awareness for General Awareness Early Warning Traffic Control Takeover No Full Autonomous Systems Assist Driving Level 0 Level 1 Level 2 Level 3 Level 4 Level 5 New 40 million 15 million 5 million 2 million 1 million Vehicles 15

Autonomous vehicles: Disruptive to industries beyond automotive Public transport Fast food Parking garages Real estate Trucking Insurance Energy/fuel Hotels Car repair and parts Media and Ride-hailing companies entertainment 17

Future of Freight Delivery ; Amazon Prime - Airspace Amazon proposes a 200-foot designated airspace – between 200 and 400 feet from the ground – to be reserved for drone flights, Amazon Airspace Design for Small Drone Operations Integrated Airspace 500 ft / 152 m 500 ft / 152 m No Fly Zone 400 ft / 122 m 400 ft / 122 m Predefined Low Risk Location High-Speed Transit 200 ft / 61 m 200 ft / 61 m Low-Speed Localized Traffic 18

Traditional Supply Chain Compared To Drone Enabled Supply Chain Drone enabled deliveries could cost as less as $0.07 per package in comparison to $1.20 cost incurred through traditional channels Diagrammatic Representation Of The Supply Chain Process Options Drone System Last Mile Delivery Drone High Capacity UAV Store Conventional Sub Sorting Last Mile Supplier Main Hub/Collec- Ground Customer Sorting tion Point Vehicle Hub Shipments Integrated From Semi- Drone Integrated Supplier Truck Last Mile Delivery Drone Drone enabled Traditional 19

The Five Pillars of Digitalisation For The Automotive Industry to Reach Nirvana Digital Connected Mobility as a Connected retailing and Industry 4.0 and service supply chain VRM automated car 20

Implication: Future of Formula 1 Racing - Autonomous Source: Frost & Sullivan 21

Implication: Future of (flying) cars Future of F1 Racing is Autonomous Source: Airbus 22

Video : There will always be a market for traditional products 23

Transformation Shift No. 3: Digitization of the Retail Network Unbundling of the Automotive Business - The Multi Channel strategy for the future Bundled (Single Location, One-stop-Shop) Finance & Service Parts New Cars Used Cars Insurance Unbundled (Multiple services, channels, aggregated online) Online On-the-air Online Stores Warehouses E-marketplace Insurance diagnostics Lifestyle Rental & Service & Mobility Pop Up Stores Stores Leasing Maintenance Solutions Flagship Store in a Pay-as-you Finance Heavy Repairs Stores Store drive Options 24

Digitalization of the Aftermarket Parts Market € 5bn worth of parts sold on-line and expected to grow four folds by 2020 in EU Automotive Parts and Service eRetailing Market: Online Parts vs. Total Aftermarket, Europe, 2013 and 2020 Total Online ~$166 B Aftermarket ~ € 141 B UK 2013 Parts eRetail Share: 4.9% Germany France 2013 Parts 2013 Parts eRetailShare: 5.7% eRetailShare: 5.8% Italy 4X ~3 % of total 2013 Parts eRetailShare: aftermarket ~ € 18 B ~2% ~ € 5 B 2013 2020 Note:. All figures are rounded. The base year is 2013. Source: Frost & Sullivan 25

Case Study: BMW’s eCommerce Strategy Over the years, BMW has explored different market outreach strategies in eCommerce channel globally 2011 2015 2016 BMW Store on eBay Motors (UK) BMW Online Store (Europe) BMW Direct eStore (Germany) 27

eCommerce in Automotive Aftermarket — BMW Web Store BMW could expand own web store channel strategy outside of Germany depending on the outcome of current pilot project Products Coverage: BMW Direct eStore (Germany) Driveline, Suspension, Electricals, Systems, Exterior Body Parts, HVAC and Lighting Payment Options: Online banking, PayPal Fulfillment Options: • Delivery at Choice of Location (shipped from dealer location • Pickup from BMW dealership Shipping Cost: • Varies according to order weight (minimum shipping is EUR 5.99 across Germany) BMW Direct eStore Delivery at Customer e-Catalogue Order Placement Order Fulfillment Location 11,000 + parts Online payment Via local Dealer Pickup from BMW Dealership 28

Bricks n clicks in Future eService Aggregation Service Delivery Model 1 2 3 4 5 Customer Customer Customer Customer pays for takes product to shop; visits service provider searches for parts Part delivered to parts, related service repair completed Web site or app required for customer or store online service Service Aggregator Model 1 2 3 4 5 Customer visits third- Customer Customer Customer pays Part delivered to party searches for best takes vehicle to shop; on Web site or customer or customer Web site or app deal for parts, repair completed app (optional collects at store service Source: Frost & Sullivan analysis. 29

FUTURE OF AFTERMARKET MB84-18 30