Dramatic change is underway in the auto industry in recent years. There have been significant changes to the auto industry in the last 7 years, ranging from environmental factors to innovative design and the introduction of 'over the air' software updates and online ordering for cars by Tesla. The demand for digitization fueled by changes in other areas of a consumer's day-to-day life, has now found its way to the car.
Japanese Earthquakes Affect Supply Chain
From April 14-16 of 2016, Japan was rocked by two massive earthquakes along the Kumamoto Prefecture on the island of Kyushu. This event not only ripped apart the island, destroying properties and causing utter devastation in its wake, but also ground automotive production in Japan to a startling halt. As a primary producer of complete vehicles and parts supplier for Toyota, Lexus, Prius, GM and many other automotive brands, Japan’s automotive industry drives the delivery and supply of cars all over the world. The immediate aftereffects included shutting down plants and suspending production, causing delays and shortages in the supply chain that rippled across the auto industry worldwide. Now a year later, manufacturers have united to form a strong, cohesive network to provide automotive parts in the likelihood of disasters or unexpected events. Several manufacturers have also considered moving plants or setting up alternate production plants in other countries or locations.
Autonomous Driving Software
Since Tesla’s launch of autonomous driving software, more and more tech companies are looking to collaborate with automakers to drive innovation and reinvent ground transportation for the digital age. Japanese automotive components company Denso has invested heavily to support early stage technologies to support autonomous driving and improve cybersecurity in cars. Since 2011, the number of tech startups in transportation has doubled.
While high tech has been in the auto industry primarily as a supplier for a long time, it's only now that these companies are entering the market as direct competitors, according to Egil Juliussen, director of research at IHS Automotive, who has been tracking the changes in the automotive industry worldwide and particularly in car technology. In fact, the number of cars with connectivity has jumped to 81 million since 2015 and is expected to grow as much as 345 million by the year 2022.
New Opportunities Available in Auto Tech World
Given this new market potential with huge players from both the automotive and technology industries, it is clear that exponential growth is inevitable as smart technology integrated into cars becomes standard.
Japan Provides Great Beta Test Environment
In Japan where technology already plays such a significant role in the lives of consumers on a daily basis, this next step is not only natural but will be faster than in other areas of the world. This offers an unprecedented opportunity for auto manufacturers, technology companies and most notably, individuals who recognize this and take action to provide solutions. The Japanese market also offers a viable and fast beta testing environment for constant improvement, iteration and delivery.
Technology Driving Inventory Management
Additional areas of improvement in the automotive world where technology can provide better solutions include inventory management. For example, after the earthquake in Japan, Toyota and Nissan both developed supply chain databases to protect themselves against unexpected losses and to monitor usage and supply better.