Industry Voices | Can Customer Experience Shift from Transactional to Transformative?

Entering 2025, the automotive industry is at a crossroads in customer experience (CX). OEMs have failed to meet consumer expectations—a survey shows that automakers rank only ninth in experience among major consumer industries. Additionally, due to poor customer experience and customer churn, OEMs and dealers lose up to $200 million annually. One of the reasons consumers are dissatisfied with the vehicle ownership experience is that "the digital experience has not yet reached the top tier of the industry."

Today, OEMs have the opportunity to shift from traditional transactional models to transformative models that continuously deliver value. To achieve this, OEMs must leverage software, automation, and artificial intelligence, applying them to forecasting, planning, and continuous optimization across other parts of the business. Three topics worth rethinking include: software-defined vehicle transformation, connected services pricing, and supply chain management.

Transforming to Software-Defined Vehicles

The growing gap in customer experience between the automotive industry and other sectors, such as mobile communications, is putting new pressure on OEMs. Smartphone and smart home system users are accustomed to regular updates that secure devices, add new features, and improve performance. As smartphone apps have become an integral part of the in-car experience for many owners, consumers increasingly expect their vehicles to offer a similar level of continuous improvement, including real-time navigation updates, seamless service integration, personalized infotainment recommendations, conversational voice control, and enhanced safety features.

Currently, not all manufacturers can meet this expectation because their software-defined vehicle transformation is not yet complete. Therefore, the industry has reached an inflection point: mature technologies, changing consumer behaviors, and evolving OEM operating models are paving the way for enhanced customer experience and brand loyalty.

Specifically, OEMs need to focus on three key areas of software-driven transformation in the coming year:

• The first area iscustomer experience. OEMs should not focus first on feature development, but rather on what customers like, need, and expect from their vehicles. For example, does your organization understand which safety features customers find valuable?

• The second focus area is technologycapabilities and platforms. OEMs need to recognize that vehicles are becoming hardware that carries a technology stack, which can be personalized, updated, and transferred to another vehicle to maintain continuity of the user experience.

• The third area OEMs must intentionally address to fully implement this focus istransformative thinking. Building products that are sustainably updated and improved requires an enterprise-wide mindset shift, along with new ways of collaborating as processes and organizational models adapt to SDV capabilities.

Choosing the Right Pricing Model

Selecting the best pricing model for connected services delivery, or enabling value-based access to services, is another challenge facing the industry. Subscription models can generate recurring revenue, but they carry risks due to consumer "subscription fatigue." 57% of consumers believe theyspend too muchon subscriptions, and 40% believe they have too many subscriptions. Meanwhile, free trials can cause confusion and dissatisfaction if the trial period and final costs are not clearly stated upfront. In some cases, features such as remote locking, unlocking, or remote start may be included for three years (the typical lease term), after which they expire, and owners must pay a subscription fee to continue using them. This shift can lead to frustration and dissatisfaction among owners who have become accustomed to these features.

Monetizing connected services is feasible, but it requires better marketing and loyalty strategies. To maximize returns on connected services development and build brand loyalty, OEMs need to clearly define the daily value of their service offerings, then price them through flexible and transparent models. Do your customers want a "mobility pod" that consistently, reliably, and efficiently gets them to their destination? Or do they need a luxurious space to relax, decompress, and recharge during their commute home? Understanding the experience customers expect, the value they perceive, and their willingness to pay for it is key to the success of connected services.

Supply Chain Management Strategies

Automakers also face the challenge of keeping up with evolving supply chain demands. Digitalization, automation, and artificial intelligence have the power to make planning and logistics more timely and accurate. The most competitive OEMs and suppliers will no longer rely on historical data but will use real-time data to predict and plan for market disruptions that could affect everything from port throughput to interest rates. Visibility and predictability enable asset deployment, creating more revenue potential. For example, if a major storm is predicted to disrupt deliveries at a specific port, an OEM can reroute cargo to another port to avoid delays.

The goal for 2025 should be to leverage technology to build more reliable and agile supply chains, so that when OEMs identify specific scenarios that need adaptation, the supply chain can respond in real time.

Transformative Customer Experience Depends on Returning to Basics

OEMs have been seeking better ways to leverage data to drive value and improve customer experience. With every new data and analytics solution, from CRM to generative AI, it is easy to end up focusing on the technology itself, losing sight of the experience it is meant to transform. Instead, we must regularly ask customers what they want, what kind of experience they need to meet their needs, and how technology can enable that experience. Starting from customer needs always increases the probability of success.

About the Authors