The Modular Future of Cars 

Of course, changing the principle of how the car is used over its entire lifecycle will cause a number of implications on the business of an OEM. For starters, the way vehicles are conceptualized, designed and manufactured would need to align with the required “modularity”. Seeing as most manufacturers have been looking to gain economies of scope with the use of shared platforms and components in recent years already, this would not be a completely novel approach, however. The planning would need to change from considering the typical model updates / life cycle impulses every few years to an upfront (and at the same time adaptable!) yearly or monthly release schedule. At the same time, just like it is practiced in software releases, in case of delays in development, certain components could be released at a point in time after the initial sales start. Considering the ongoing supply chain crisis (which is likely not a singular occurrence), such a model would allow for more flexibility in satisfying market demands.

exploding lists of equipment alternatives and model variants, we are observing a trend towards more simplification. The reason is twofold: On the one hand customers are confused by too many options, especially so if those options are interlinked in a non-intuitive way (“sorry, you can’t have heated seats with red brake calipers, please select the pet owner package”). On the other, a huge complexity of product options, readily available at the market launch, means development and production costs with no guarantee that the predicted demand will cover those costs. Not only would a modular architecture allow for an ongoing market analysis and better prediction of sales potential, but it would also limit the choice complexity at the moment of purchase, spreading it across the entire life cycle of the car. Moreover, the secondhand market would likely appreciate the update- and customization factors with a higher resale value compared to traditional vehicles.

The way such cars are displayed at the POS would also differ significantly from today’s standards: The focus would not solely be on the new vehicle model but much rather on the available modules and updates. This would imply changes for the physical space and the sales interaction alike. Showrooms would not need such a large footprint and vast open spaces: Displaying mostly parts and functionalities could simply be supported with interactive visualizations using high-res screens and VR. It would also be the functions and therefore the identification of true customer needs that would be the main point of the sales consultation. As increased customer orientation is one of the key arguments why OEMs are already introducing direct and/or agency sales models (rpc-own research on that matter will be published soon), such a different perspective on sales talks would support the transition in practice.

And what about pricing? Take inspiration from the gaming sector: Customers could purchase the bare-bones version and gradually upgrade it, paying for each module individually. Or they could opt for a subscription model which guarantees a certain number of upgrades in a defined timeframe. Offer a “season pass” with a yearly fee which gives access to all updates for those who know from the start that they will use it. Generation Alpha will feel right at home!

It is commonly known that retailers can expect their aftersales revenues to decline substantially in the coming years (check out our colleagues’ findings at Accenture and Deloitte). Electric vehicles do not need as much maintenance as their fossil fuel-powered counterparts. Rising autonomy and active safety measures decrease the demand for accident repairs. Over-the-air diagnostics are making it almost obsolete to come into the workshop. Desperate times are ahead for dealers and agents! That is, unless they were busy with installing upgrades. At the end of the day, you need a professional to install the parts and workshops can easily receive commission paid by the headquarters for the performed work on the customer’s car. The cherry on top: If designed properly from the start, many changes would not even have to be done in a workshop but at the customer’s location of choice, by a “flying mechanic” or even in pop-up workshops located in downtown parking garages.