Out-Law News 2 min. read

Tech giants could 'disrupt' automotive market


Technology giants like Apple and Google could have a "disruptive" influence on traditional car makers and suppliers, the head of a major car manufacturer has conceded.

Both Apple and Google have taken steps to develop technology for the automotive market in recent times, with Apple working on a new electric car and Google developing plans for autonomous vehicles. Fiat-Chrysler chief executive Sergio Marchionne said he believes the companies are serious about their plans, according to a BBC report.

Speaking at the Geneva Motor Show, Marchionne said: "They are incredibly serious. What's more, I think their interest is exactly what this industry needed. We needed a disruptive interloper to shake things up." However, Marchionne said the companies should not "underestimate carmakers' ability to respond and adapt" to changes in the market, according to the BBC report.

Other car manufacturers suggested that they would be interested in collaborating with Google and Apple, according to a report by Bloomberg.

Volkswagen chief executive Martin Winterkorn said the car manufacturer is "very interested in the technologies of Google and Apple", according to the report and that he believes Volkswagen "can bring together the digital and mobile world".

Didier Leroy, Toyota Europe president, was more explicit with his interest. According to Bloomberg, he said: "The key element is to make sure that when we’re working with them -- and we’re totally open to work with any of them -- it’s a real win-win."

"The carmakers don’t want just to become a kind of commodity, where somebody will only deliver an empty box and somebody will put in the box something which will be the real added value," Leroy said.

Marchionne said he was confident Fiat-Chrysler brands like Ferrari, Alfa Romeo and Maserati are well placed to stave off competition from new entrants to the automotive market like Apple and Google, according to a BBC report. However, he suggested he too was open to collaborating with technology companies, it said.

Jaguar Land Rover’s head of engineering, Wolfgang Ziebart, suggested a change in thinking is required within the automotive industry to capitalise on opportunities presented by new digital technology.

"The traditional thinking in the automotive industry isn’t suited to exploit the opportunities in the Internet community,” Ziebart said, according to the Bloomberg report. "If you need committees and so on to make decisions, then you’ve lost before you started."

Earlier this year, Ian Robertson, BMW head of sales and marketing, said that US technology companies and advertisers have been seeking access to the data generated by sensors in so-called 'connected cars'. He said, though, that BMW had so far decided to refuse such requests.

'Connected cars' is a general term used to refer to vehicles that allow information to be transmitted and received, often involving use of SIM cards and public communication networks, to enable a range of services in respect of the vehicle and its users. Examples include, an automatic lock/unlock feature, car operating status monitoring and access to 'infotainment' services.

Munich-based technology and outsourcing specialist Michael Horn of Pinsent Masons, the law firm behind Out-Law.com, previously said that car manufacturers must embrace the connected cars age or risk losing their market share.

He said that, in future, car manufacturers could enter into exclusive agreements with content providers to enhance their 'connected car' offerings, particularly around 'infotainment' services such as films on demand or games, to consumers.

"This might act as a point of potential differentiation in a market that will soon see consumers significantly influenced by factors beyond 'traditional' aspects such as engine performance and aesthetics," Horn said. "The range of connected services available and the ease with which those services can be purchased and used will become increasingly important to car buyers."

Late last year, a European Commission survey found that 51% of consumers in the EU would be willing to have a connected vehicle, while 38% said their acceptance would be subject to data anonymity or the ability to opt in to data connection services.

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