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Analysis

Interior Design, Cabin Experience: New Differentiators

By Antonio Gozain | Wed, 09/21/2022 - 09:30

As the automotive industry faces arguably the major transformation in history, with connectivity, autonomy, shared mobility and electrification (CASE) as the main drivers of change, vehicle interior design and cabin experience have become a major opportunity for differentiation among automakers, as the driving activity becomes rather commoditized.

While CASE mobility advances unevenly in different regions across the world, megatrends remain the same for OEMs. Self-driving, autonomy level 5 cars will shift drivers’ (or occupants) focus away from the road, opening them to experiencing the vehicle in new ways. There is still road ahead and although full vehicle autonomy is yet to be achieved, connectivity has already shifted interior design. OEMs continuously work to develop in-house infotainment technology and partnering with tech giants to access state-of-the-art technology in communications, sound, video and even gaming. The goal, according to McKinsey, is to make interior design part of the users’ digital ecosystem: “Imagine a world where affiliates of a vehicle brand are not waiting for the next start of production but for the next operating system update,” the firm says.

The industry’s shift toward EVs, in addition to changing customer needs, has also made engine power less relevant against other aesthetic and comfort-oriented features. The cabin experience is expected to take the spotlight away from automotive elements that have traditionally dominated headlines, according to McKinsey: “[Imagine a world] where car magazines discuss comfort levels rather than acceleration and horsepower.”

Finally, shared mobility, which is impacting the vehicle ownership concept worldwide and continuously introducing new players to the automotive industry ecosystem, is also expected to impact car interior design. Vehicles designed for ride-hailing will be more focused on passenger needs, featuring more durable materials and more spacious seating.

New Designs Already

In December 2021, several media outlets reported that UK startup Arrival had revealed the final design of its first bespoke passenger car, which was developed jointly with mobility giant Uber. Simply called the Arrival Car, the EV will begin production in 3Q23 and aims to accomplish Uber’s all-electric goals in London by 2025, while providing a cabin specifically designed for ride-hailing purposes. Priorities for the design and engineering teams were visibility, comfort, cost, safety and convenience, in addition to a projected annual kilometrage between 45,000 and 50,000 per year, instead of the 9,500km expected of the average private vehicle. “We have been working closely with Uber’s drivers to create a vehicle specifically for the ride-hailing industry, making it affordable, durable and great to look at. [We aim] to give the best possible experience to both drivers and passengers,” said Arrival.

Conventional OEMs are also working to meet the ever-changing mobility needs of the present and future. Kia, which has previously stated its intent to become a leader in purpose-built vehicles, recently presented the Niro Plus, which will be designed around the requirements of taxi and ride-hailing services. Based on the first-generation of the brand’s hybrid and electric SUV, the dedicated taxi variant of the Niro Plus will be offered exclusively as an EV. The automaker stretched the original vehicle body by nearly half an inch and raised the roof by 3.1 inches for additional interior room. Furthermore, the vehicle also features a single display integrating navigation, taximeter, among other data, such as EV charging station locations.

Recently, Hyundai presented the IONIQ Seven concept, which the automaker calls an “innovative living space on wheels.” The autonomous vehicle concept aims to take full advantage of space and self-driving freedom, offering a lounge-like interior design, with comfortable and movable seats. Hyundai also aims to give passengers “an unprecedented amount of freedom to change the architecture inside their vehicle.”

The shift toward interior, cabin and in-vehicle experience as a key differentiator was reflected in McKinsey’s ACES Survey, in which 50 percent of customers perceive interior as very important, 71 percent of automotive executives expect interior to become more important, while only 38 percent expect exterior to gain importance. Furthermore, 40 percent of global customers have a high interest in post-purchase feature activation and 56 percent of Chinese customers would change their car brand for better connectivity.

Strategies for Successful Interior Differentiation

While the exact direction of the automotive industry remains difficult to predict with absolute precision, CASE mobility trends are clearly impacting interior designs and, therefore, the entire supply chain. This has led OEMs to welcome new technology players, in addition to forcing traditional interior suppliers to keep up with the new trends and demands.

According to McKinsey’s “The Future of Interior in Automotive” study, there is no single, one-size-fits-all approach to preparing OEMs and suppliers for success in interior differentiation. However, the study does highlight “strategic imperatives” that all OEMs and suppliers should consider.

Given the importance of in-vehicle technology, OEMs and suppliers must build substantial new knowledge on Human-Machine Interface (HMI) and Over-The-Air (OTA) technologies, says the firm. Smart surfaces, holographic systems and voice recognition will be the most important HMI features by 2030, according to the study. On the OTA side, updates and connectivity features on demand are set to shift OEMs’ business models. However, there are still electrical/electronic architecture investments and advancements to be done, says McKinsey.

Material technology will play a pivotal role in the industry’s transformation due to its importance in the vehicle body, as well as in interiors. “New surface materials are required to generate durable and attractive surfaces for a true living-room-on-wheels experience,” according to McKinsey. Leather, which used to be the seating-material differentiator, is becoming increasingly unpopular, says the study.

McKinsey recommends two types of partnerships across the supply chain: horizontal and vertical. In the former, two or more players combine capabilities required for the future of interior and HMI concepts partnering within the same step of the value chain, such as a tier-one lighting supplier partnering with a tier-one plastic trim supplier to jointly develop an auto part. Vertical partnerships, on the other hand, aim to combine capabilities across value chain steps, including those beyond the traditional automotive ecosystem, such as technology players.

Partnerships are also a way to ensure competitiveness in a growing industry, as well. As vehicles become more software-dominated, automakers push to control the relationship with consumers, as tech giants could represent a threat to their businesses, reported MBN. "As we transition to software-defined vehicles, OEMs realize they run a significant risk of losing whatever ability they have to interact with the consumer unless they get their act together," said Evangelos Simoudis, Founder and Managing Director, Synapse Partners.

Automakers are also aware of the importance of entertainment systems for their customers. The 2021 J.D. Power Initial Quality Study showed that the largest complaint of new vehicle owners is the infotainment system and smartphone connectivity.

While automakers continue pushing toward innovative interior design, they have already negotiated several deals with tech giants. Amazon recently cut deals with OEMs to integrate its Alexa voice assistant in vehicles. Qualcomm Corp has signed chip deals with Volvo Group, Honda Motor and Renault, while Google has agreements with General Motors, Volvo Cars and the Renault-Nissan Alliance to provide software for the next generation of vehicle systems.

The data used in this article was sourced from:  
MBN, McKinsey, Arrival, KIA, Hyundai, J.D. Power
Photo by:   Hyundai Motor Group
Antonio Gozain Antonio Gozain Journalist and Industry Analyst