Automotive industry to witness complete digital disruption in three years, Gartner says
E-commerce has undoubtedly become one of the fastest-growing sectors – especially after the Coronavirus pandemic. Online transactions and smoother payment options have disrupted the way cash was used. Now, according to research firm Gartner the in-vehicle payments is set to rise to $1bn by 2023 – a figure which stands at less than $100m currently.
This ten-fold growth will be led by cloud platforms which will connect to the vehicle and drivers will then be able to use a third-party app or a blockchain-based smart wallet to get money. Additionally, the latter will enable the driver to receive and make payments through cryptocurrency.
Commenting on the report, Mike Ramsey, research vice president at Gartner said:
“Car drivers can currently make in-vehicle payments by using applications such as Alexa, Xevo Market or the Banma platform to purchase fuel, food, or pay for parking.
“The types of services available will continue to increase as automakers, merchant brands and services, and software suppliers’ partnerships proliferate.”
Ramsey added: “The car would have a unique ID and function almost like a credit card with the ability to make transactions.”
The study further predicted that the automotive industry will witness a complete digital disruption with 20% of all new cars sold online. Despite online car sales being lesser than 1% currently, the study said that an increasing number of automakers are already boosting their online presence. Furthermore, they are also making platforms conducive to the entire process starting from “ordering, finance, purchase and home delivery.”
While it sounds ideal on paper, doing online sales for cars is seemingly fraught with challenges. For instance, automakers will require to get rid of the bureaucracy, unnecessary paperwork and extra time wasted in the buying process. Whatever the process entails, every step from the beginning until the buyer gets the delivery, would have to be crystal clear to avoid any miscommunication. This will essentially make buying cars smoother and easier for potential buyers.
Indeed, the automotive industry has been slower compared to others in terms of embracing modern technologies but the pandemic has fastened the process.
Speaking about the shift from bricks to clicks in the car industry, Pedro Pacheco, senior research director at Gartner said: “New technologies have taken a long time to proliferate in the automotive industry. As the car becomes more of a digital platform that will change.
“Car manufacturers are shifting from hardware capabilities to software platforms that are tied to cloud-based ecosystems which will combine functions such as payments and commerce.”
He concluded: “The COVID-19 pandemic has accelerated the sales of cars online and convinced a growing number of customers to avoid showrooms for future purchases.”
Admittedly, smart mobility and smart cities might soon become mainstream and we are all for it.