The International Motor Show held in Frankfurt recently showcased a host of innovations and new concepts, and offered a glimpse into the future of the automotive industry. The rapid pace of disruptive industry evolution and changing market landscapes was evident. From autonomous driving to electrification, vehicle marketplace to customer-centric mobility solutions, several concepts were on display at the IAA. Three key umbrella categories of trends stood out, 1) a focus on the future of the product coupled with the in-car experience, 2) putting the user in the driving seat, with customer centric solutions and 3) CASE: Connected, Autonomous, (Shared) Services and Electric technologies and solutions. While vehicle electrification stole the show, autonomous driving technology was pushed to the backseat, with the industry participants opting to showcase and prioritise more pressing, short-term challenges with EV development and newer retail/customer engagement driven value creation models. Here are some of the top trends that caught the attention of Frost & Sullivan analysts.

1. Internal car configuration is changing

Original Equipment Manufacturers (OEMs) are configuring in-vehicle seating arrangements specific to applications. There is immense scope for redesign of seating spaces in Level 4 and 5 autonomous driving vehicles. Audi AI Con, a level-5 autonomous vehicle, provides lounge style seating for highway transit.

This has been made possible through the usage of extra space created by the elimination of pedals and the steering wheel. The manufacturer, instead, has installed a King Chair in the front and a bench in the rear for two more passengers. Other models such as Daimler EQS Concept, BMW iNext, and VW Lounge Concept also have configured their seating, taking advantage of the L-5 technology.

Industry majors such as Audi, Daimler, Volkswagen, and BMW showcased cars that had used recyclable mono materials and sustainable wood and plastic in the interiors. This is a positive indication of further adoption of sustainable materials and technology across touch points. With customers becoming more ecologically conscious, this is a move to cater to the next generation of buyers.

2. Flexible interiors for shared autonomous vehicles

OEMs and tier-1 suppliers such as Daimler, Continental, Volkswagen, Magna and Bosch are developing flexible vehicles, which can be used either for passenger or goods delivery. A 9-12 seater vehicle with modular configuration can be adapted into a 2 or 3-seater depending on the necessity, and remaining space can be used for storage purposes.

OEMs and tier-1 suppliers are clearly demonstrating their capability in manufacturing shared autonomous vehicles. They are leveraging their expertise in modularity in manufacturing, achieved over the years, to the new shared autonomous vehicles scenario.

3. Lighting as a communication module

Even previously saturated technology such as lighting is witnessing a new round of innovation, indicating how the value-added services from technology can benefit customers in the future mobility world. In future, headlamps will go beyond its basic function of lighting, and become a medium for communication, providing vital information for the driver and pedestrians.

Daimler EQS Digital Headlight is one such innovation. The carmaker’s new headlamp technology features chips that work with a total of two million micromirrors per vehicle. Sensors detect other road users, powerful computers evaluate the data within milliseconds, and the headlamps are adjusted to distribute the light as per the situation. This technology will ensure optimum vision for the driver without dazzling other road users, say developers. Moreover, digital light systems can also beam messages like direction arrows or warnings onto the road.

This case is an example of the industry perception of how autonomous vehicles will embed with its ecosystem through new medium of communication and interaction, which could be vital for its acceptance.

4. Displays and Human-Machine Interfaces

Ways to interact with vehicles have evolved with the advent of retractable and interactive displays, voice-based software to access services, and digital assistants. Displays and interiors can be customized to cater to multiple users in the vehicle. Porsche Taycan uses ‘Voice Pilot’, which enables users to control temperature settings, input map coordinates, or make phone calls using just voice commands. The car also features a read aloud function that reads top news of the day for the commuters.

5. Digital Customer Experience

Industry majors such as Volkswagen and Valeo gave the first real insight into how OEMs can use a bottom-up approach in developing operating systems that can help create services that utilise vehicle and customer data. Volkswagen is putting together a “car software” unit to boost in-house software development. By 2025, it plans to increase the usage of in-house software from the current 10 per cent to at least 60 per cent. Subsequently, the automaker will provide the same uniform software, with all the basic features and functions, on all its group vehicles.

To maximize the usage of digital technology in providing allied services, a service called ‘Volkswagen We’ has been launched by the OEM. The service provides parking, shopping, and even delivery services for car users. Customers can use their phone as the parking meter and pay digitally. Similarly, when shopping from a partner, users can provide their vehicle boot as the delivery address. The parcel delivery service will use GPS to find the vehicle, and will be given excusive and secure access to the boot to leave the delivery.

6. Security and data privacy in the hands of the customer

The automotive industry has outdone the IT industry in keeping customer privacy and security at the centre of the value-added services that they offer. For instance, Porsche provides toggle switches on the car console for users to choose their preferred privacy levels, based on which services will be activated or deactivated in each mode.

Customer data will be pivotal in changing the value creation model, and many OEMs prefer enhancing their own services rather than monetizing the data directly. As a result, customer trust in the automotive industry, which has been a strong pillar in the past, is likely to continue in the digital world, potentially providing OEMs an edge in the new mobility market.

7. Ephemeral needs of customers changing

OEMs are designing vehicles that are not meant for outright sale, but for specific use cases. This is in keeping with the changing customer expectations – for mobility services to be more short-term and dynamic. With new customers preferring a subscription-style access to vehicles to meet their ephemeral needs, OEMs such as Audi are now considering designing and developing autonomous vehicles that are based on a new style of volume planning.

This highlights a major shift in how the automotive industry will design business models in the future. Audi has come up with four concepts cars in this regard – a vehicle for long distance travel with lounge style seating, small car for urban commute, van style vehicle for shared applications, and an off-roader for other terrains.

8. Marketplace within cars

Customers are being provided with an option of buying or accessing features on demand, rather than outright purchase. OEMs are also integrating the payment for these services in-car. This comes at a time when the industry is looking for new avenues of revenue generation, due to current stifling of profits, and OEMs are prioritizing selling ‘experiences’. These features on-demand services can extend along the lifetime of vehicles, and impact brand loyalty and retention schemes which can be central to future brand differentiation.

OEMs like Skoda showcased their location-based service delivery platform and the associated marketplace as a key differentiator in the highly competitive mid-range family vehicle segments, whereas suppliers like Tom Tom highlighted a key integration piece that may define the success of these marketplaces in the form of overlaying in-application payment technology embedded into the navigation engine.

9. Health, wellness, and wellbeing: The new differentiators

Industry majors are making a holistic approach to see how vehicles can be transformed into living spaces. This involves understanding the current environment and surroundings, and embracing the state of the customer’s vitals to adapt and provide customer-centric services and solutions.

Daimler offers an optional feature called Energize, which links various comfort systems in the vehicle to create a holistic living space for the passenger. It systematically uses functions such as the climate control system, fragrancing, seat warmers, ventilation, massagers, wall heating, lighting, and music players to enable a specific wellness set-up, tailored to the mood and need of the customer.

10. Autonomous Technology: Ready when the market is ready

Autonomous technology was portrayed more as a ‘when it comes’ scenario, rather than as ‘this is how’ showcase of technology. OEMs did not display much of the technology required to achieve autonomous driving. The uncertainties regarding regulations and timeline are likely to push autonomous driving to the backseat.

Further, as autonomous technology would require a complete shift in development, deployment and maintenance, roll out is likely to be very small and geo fenced within small pockets. As no clear product showcases were highlighted beyond the early prototypes, use cases in the Level-4 autonomous driving looked more realistic in the mid-term, beyond 4-5 years. The focus now seems to be on Electric Vehicles (EVs), personalized in-car experience concepts, and on connectivity focused on the life on-board.

11. New Mobility – Focus on developing infrastructure, underlying technology

Mobility technology was the focal point of the New Mobility World section at the IAA. As opposed to the provision of services, the sector is seeing an influx of providers in the fleet management and mobility marketplace spaces. Vulog, Ridecell, Karhoo, Here, and Bestmile were some of the players who showcased their products at the show.

As the mobility services sector is still struggling with profitability, provision of better technology solutions will improve chances of operators in making a profit. For the Mobility as a Service (MaaS) sector to take off, the industry requires a strong layer of underpinning technology, such as cloud solutions and mapping solutions. Here Mobility’s MaaS solution suite is one case of advancement in this direction.

12. Electrification Stole the Show

Original Equipment Manufacturers (OEMs) have formulated a diverse set of strategies to ensure the electric vehicle (EV) market plays by the regulations. OEMs producing high volumes have had to rework their strategy to include multi-energy platforms in the mix, by housing hybrids or plug-in hybrids, or by having dedicated EV platforms for mass production. Volkswagen showcased its full EV range at the show, including the much-awaited ID3, Porsche Taycan, and Lambo Siam. Daimler focused on PHEV competence.

The Volkswagen ID.3, a level-5 autonomous vehicle, was unveiled at the show. The automaker is planning to launch three battery versions – 45 kWh, 58 kWh and 77 kWh. The 58 kWh can recharge a range of up to 260 miles in just 30 minutes in the quick charge mode. The 77kWh one can travel up to 340 miles on full charge.


In conclusion, the 2019 IAA was a clear first indication of the demise of the traditional historical institution where motor shows have been about portraying the biggest and greatest technology innovations and highlighting the competitive prowess of the automotive value chain. Besides the obvious drive for cost reduction initiatives taken by BMW, Renault, PSA minimising their presence at the event and like Toyota, Ford and GM opting out of the event, it is seems representative of a fundamental shift in marketing and retail away from the Big Bang’s and cathedrals, towards a more continuous, multichannel, more digital and personalised experience throughout the sales and product life cycles.

It’s clear that the EVs were the frontrunner at the show, clearly indicating the way forward for short-term transformation. At the same time, automakers seemed uncertain about the short-term future of autonomous vehicles. Value creation models are evolving from being product-centric to customer-centric, and the industry is trying to create an ecosystem involving the IT and tech industry instead of directly competing with them on proprietary services.

Arunprasad Nandakumar

Arunprasad Nandakumar is Team Leader within Frost & Sullivan's Mobility practice, heading the team of Autonomous Driving Market experts. With a background in automotive engineering and industry experience through market research, consulting projects have spanned across various subdomains within autonomous driving to help clients reach their market objectives through precise project execution & logical reasoning.

Krishna Jayaraman

Krishna Jayaraman is a Program Manager - Connectivity & Telematics, Automotive & Transportation at Frost & Sullivan

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