Automotive: The Big Change. Ready for acceleration?

The impact of the pandemic on the automotive market has been crippling. Yet it has accelerated a changing process leading to a more digital future and business opportunities related to exponential technologies. Insurance carriers must now get ready to face brand-new challenges

Published on 09 Jun 2020

Photo by Alessio Lin on Unsplash

The industry that better describes the contradictions and opportunities we are facing in this tough post-pandemic relaunch is certainly the automotive one, a crucial competitive market for the automotive industry. 

A two-month lockdown could only knock out those working for our mobility: figures are ravaging and, even if forecasts suggest a return to the private vehicle and therefore a recovery in sales, it will take time to recover the lost value, not just in terms of revenues. Millions of vehicles are currently immobilised on the European forecourts, the average daily depreciation is around 7 euros, and the impairment is unlikely to be recovered. 

Automotive industry is by far an important part of the European economic system, 7% of GDP. And it’s no coincidence that while in Italy the political controversy over a state-guaranteed loan for the only brand with an Italian root was roaring, in France President Macron announced an 8 billion-dollar plan to support the automotive supply chain, with a focus on electric vehicles. 

Rear-end investments to shore up a heavy manufacturing with no future but to lick the wounds? Definitely not, since the future looks bright for the automotive industry, yet very different from its past. “The pandemic has caused the biggest change since Henry Ford came up with the T model” said Marco Marlia, founder and CEO of MotorK, during a recent meeting. MotorK is an Italian leading tech company in Europe, working with 90% of car manufacturers to digitalize the supply chain, mainly in the sales phase. 

Just one piece of information to understand what’s happening: before the Internet era, people used to go to a car dealership about 8.5 times to get a car. In pre-Covid era 2.5. MotorK estimates that this number will drop to just over 1. A revolution that will change everything: the use of technology, organizational models, space management, how to get customers.  An ever more digital revolution. 

Perhaps puzzling that an industry as bloody physical as the automotive one needs to rely on digital technology to catch its breath. However, it’s not so much if looking forward, following the evolutions that are already in sight for the coming decades. Today digital marketing and reputation are key to get back to selling, in the future Big Data, Internet of Things, Artificial Intelligence will be the essential software to make this industry work, like the two wheels setor and any other vehicle will be devised. 

Only two tips to understand where the value is heading: Intel in early May has acquired Moovit for a figure approaching one billion dollars. The German startup Lilium at the beginning of this spring received funding for 240 million dollars in a round led by the Chinese Tencent. Moovit is the world’s largest aggregator of mobility data, now serving the queen of microchips for its driverless car projects. In Munich, the city of BMW, Lilium is building a flying urban mobility vehicle that will be used for taxi services in 2025. 

The car is in crisis, God save the car! even though very different. 

The impact on insurance will be important as it no longer means selling an online policy but rather thinking of new ones for vehicles and situations never seen before. The risk profiles will also change, although the information available to manage such risks will dramatically increase, as long as it can be leveraged to seize the business and streamline costs.  Unless insurance companies start preparing now to understand the change and be ready to deal with it, the risk is that other players will be on board the car of the 21st century, already aiming at the big business of mobility. 

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Giovanni Iozzia

Direttore di EconomyUp, InsuranceUp e Proptech360, ha studiato sociologia ma da sempre segue la tecnologia. È stato direttore di Capital, vicedirettore di Chi e condirettore di PanoramaEconomy.

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