According to the 2024 White Paper on Digital Transformation in the Automotive Industry, the digital transformation of Chinese automakers began with the spread and heated discussion of the topic of "Industry 4.0". In recent years, many industry insiders have pointed out that the improvement of digital capabilities can not only effectively empower the supply chain, but also create a safe and resilient automotive supply chain. With the rapid development of new energy vehicles, the rise of intelligent networked vehicles and the hot discussion of autonomous driving technology, the digital transformation of Chinese car companies has been further promoted. According to the white paper, the three core trends of the industry side, the user side, and the technology side are still driving the rapid evolution of digital transformation in China's automotive industry.
Industry side
Due to the subsidies and support of national policies, the number of domestic new energy vehicle companies once exceeded 480 in 2018, and only more than 40 will remain in 2023. The high elimination rate of more than 90% shows the lack of product competitiveness, unclear positioning and poor anti-risk ability of Chinese car companies. The brand reshuffle of new power car companies is accelerating, and new power brands such as Xpeng and Li have stood out in the market competition with advanced digital technology and business models. In order not to be eliminated by the market, some traditional car companies have to accelerate their digital transformation, learn from the successful experience of new brands, and improve their own technical level and operational efficiency. In order to take advantage of the explosive growth of new energy, traditional brands have also turned to new energy and intelligence.
Figure: Three core trends are driving the continuous upgrading and digital transformation of automakers
Driven by changes in the market environment
The Chinese auto market has shifted from an incremental market to an existing market, and the competition has become more intense, which has forced automakers to carry out digital transformation to improve their competitiveness. Since 2018, the automotive market has faced many challenges, such as the withdrawal of purchase tax incentives and the economic downturn, which have led to sales impacts. In the stock market environment, car companies need to optimize operational efficiency and reduce costs through digital means to cope with market changes. In addition, the frequent occurrence of black swan events such as the new crown epidemic also requires car companies to establish a rapid response mechanism and a flexible production system, and digital transformation is an effective means to achieve this goal.
Driven by the synergy of the industrial chain
Digital transformation can help car companies strengthen the collaboration between the upstream and downstream of the industrial chain. On the digital platform, car companies can share information and collaborate with suppliers, dealers and other partners to improve the efficiency of the entire industry chain. For example, Geely Automobile uses a low-code platform to break through information barriers and improve demand delivery efficiency. This digital collaboration of the industrial chain not only optimizes costs, but also enhances the ability of car companies to respond to the market and control product quality.
Driven by technological innovation
The rapid development of digital technology has provided technical support for the transformation of the automotive industry. Artificial intelligence and deep learning, for example, are widely used in the automotive industry, and through data mining and analysis, companies can better understand user needs and optimize product design. For example, user research and analysis based on big data promotes the rapid development of new energy vehicles. In addition, IoT technology enables vehicles to interact with their surroundings in real time, providing assisted driving functions such as intelligent warnings. The application of these technologies not only improves the intelligence level of automobiles, but also improves the user experience, prompting automotive companies to accelerate the pace of digital transformation.
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