The automotive industry is at a customer experience (CX) crossroads as we enter 2025. OEMs aren’t meeting expectations, with one survey finding automakers ranked ninth among major consumer industries in terms of experience. Further, as a result of subpar CX and customer churn, OEMs and dealers lose up to $200 million per year. Among the dissatisfactions consumers reported with vehicle ownership is a “digital experience that’s not best in class.”
Now, OEMs have the opportunity to shift from a legacy transactional approach toward a transformational model that delivers ongoing value. To accomplish this, OEMs must leverage software, automation and AI and apply them in forecasting, planning and continuous optimization for other parts of the business. Three topics to start rethinking include software-defined-vehicle transition, connected-services pricing and supply-chain management.
Shifting to Software-Defined Vehicles
The widening gap between customer experience in automotive versus other industries, like mobile communications, has created new pressure on OEMs. Smartphone and smart home system owners are accustomed to regular updates that keep their devices secure, add new features and improve functionality. With smartphone apps already an integral part of the in-vehicle experience for many owners, consumers increasingly expect their vehicles to provide the same level of continuously improving experiences. This includes real-time navigation updates, seamless service integration, personalized infotainment recommendations, conversational voice controls and enhanced safety features.
Currently, not all manufacturers are meeting this expectation since their software-defined-vehicle transformation isn’t yet complete. As a result, the industry has reached an inflection point where maturing technology, shifting consumer behaviors and evolving OEM operations are paving the way for enhanced customer experiences and brand loyalty.
Specifically, OEMs need to focus on three key areas of software-driven transformation in the year ahead:
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The first area is customer experience. Rather than focusing on feature development first, OEMs need to focus on what their customers like, need and want out of a vehicle. For instance, does your organization understand what safety features customers find valuable?
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The second focus area is technical capabilities and platforms. OEMs need to recognize that the vehicle is becoming the hardware that houses a technology stack that can be personalized, updated and transferred to another vehicle to preserve continuity of user experience.
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Fully embracing that focus requires OEMs to be intentional about a third focus area: a transformational mindset. Building something that can be continuously updated and improved requires an enterprise-wide change in mindset, along with new approaches to collaboration as processes and organizational models adapt to take advantage of SDV capabilities.
Picking the Right Pricing Models
Picking the best pricing model for connected services delivery or enabling value-based access to the services is another challenge for the industry. The subscription model can generate ongoing revenue, but it’s risky due to subscription fatigue among consumers. 57% percent of consumers think they spend too much on subscriptions, and 40% think they have too many subscriptions. Meanwhile, free trials can create confusion and frustration if the trial timeline and eventual costs aren’t clear up front. In some instances, features such as remote locking, unlocking or vehicle start may be included for three years, the typical duration of a lease, before expiring and requiring drivers to pay a subscription fee. This shift leads to frustration and dissatisfaction as owners grow accustomed to features.
Monetization of connected services is possible but requires better marketing and loyalty strategies. To maximize return on connected services development and build brand loyalty, OEMs need to clearly define the everyday value their services provide and then price them via flexible and transparent models. Do your customers want their vehicle to be a delivery pod that consistently, reliably and efficiently gets them where they need to go? Or do they need a luxurious space in which to exhale, unwind and reset on the way home from work? Knowing what experience your customers want, the value they perceive and their willingness to pay for that value are critical to connected-services success.
Supply Chain Management Strategies
Automakers also face the challenge of keeping up with evolving supply chain needs. Digitization, Automation and AI have the power to make planning and logistics much timelier and more accurate. Rather than relying on historical data, the most competitive OEMs and suppliers will leverage real-time data to forecast and plan for the market impacts that can affect everything from port access to interest rates. Visibility and predictability enable shifts in assets, creating more revenue potential. For example, if a major storm is forecasted to interfere with deliveries to a specific port, the OEM could redirect shipments to a different port to avoid delays.
The goal in 2025 should be to use technology to create more reliable and agile supply chains, so that when OEMs identify specific scenarios that require adaptation, the supply chain can respond in real time.
Transformational CX Depends on Getting Back to Basics
OEMs are constantly seeking better ways for leveraging data to drive value and improve CX. With each new data and analytics solution, from CRMs to Gen AI, it can be easy to end up focused on the technology instead of the experience that the technology is supposed to transform. Instead, we must regularly ask what customers want, what experience is needed to meet their needs and how technology can enable that experience. Starting with customer needs will always increase the odds of success.
