Frenemies: The Rise of Silicon Valley in the Automotive Industry

January 18, 2017

The automotive industry may excel in hardware and manufacturing, but when it comes to software and connectivity – undoubtedly the future of driving – they don’t hold a candle to Silicon Valley.

As the world’s top automakers have enjoyed a recent resurgence in sales, the majority have long identified an unsettling shift taking place that threatens the very nature of their business – that is, the rising involvement of tech companies in automotive.

Google led the autonomous car movement long before carmakers seriously considered it, Apple is currently developing its own self-driving vehicle platform, Uber and Lyft used slick UX and affordability to turn ride-sharing into a global behemoth and Tesla successfully blurred the line between a car and a consumer electronics device.

Those are just the big players – several other tech companies in Silicon Valley are finding ways to offer new automotive innovations in an industry that, until very recently, has been historically slow to adopt the latest trends.

If You Can’t Beat ‘Em…

Rather than sit back and watch Silicon Valley slowly make them obsolete, traditional car companies are using their massive capital to acquire tech smarts through traditional means – buying and partnering with startups that could be seen as a threat, as well as hiring top talent and establishing their own R&D facilities out West.

For automakers, these partnerships and acquisitions mostly cover initiatives the industry has historically been too slow or ill-equipped to handle – such as autonomous technology, connected cars and ride-sharing.

The massive collusion between Silicon Valley and the auto industry can only grow stronger as technological shifts and evolving consumer preferences cause traditional automakers and car dealerships to change faster than they can keep up.

A Global Scale

This unprecedented disruption is far from limited to the automotive sector – a shifting consumer mindset and advancements in technology are causing virtually all industry models to be upended by tech counterparts in Silicon Valley and beyond.

In the media and entertainment industry, this can be seen in the rise of content streaming sites like Hulu, Netflix and Amazon. In the hospitality industry, Airbnb has been single-handedly changing the way people travel. In the music industry, iTunes was one of the first technology companies in any sector to revolutionize traditional business models. The list could go on.

With technology influencing business in all industries worldwide, traditional companies are forced to keep up through their own accelerated R&D, partnerships or acquisitions – lest they become obscure and unnecessary in a new, digitally oriented landscape.

Technology and Dealerships

The automotive remarketing industry is also experiencing disruption, with new technologies coming out that seek to improve the way dealers buy and sell cars. Partnerships in this space include Pearl Technology Holdings, who is working with GM and others to develop analytics software that helps dealers with tasks like forecasting sales; and TradeRev, whose revolutionary online remarketing platform makes it easier and more convenient for car dealers to buy and sell inventory.

With car dealers seeking ways to become more efficient and tech-friendly, it’s crucial for dealerships to consider implementing new platforms and processes that keep them on the cutting-edge. By doing this, dealerships might be able to own their consumers, enabling car trading experiences to be well-remembered.