2018
prepared by
Susanna Gotsch
Putting the AI in the Automotive Industry
Advances in digitalization, artifcial intelligence,
machine learning, the internet of things (IoT),
sensor and camera technology are driving
dramatic change and improvements in
automotive technology. And these advances
are creating a ripple efect throughout the
entire automotive ecosystem.
Accident avoidance technology, or advanced
driver assistance systems (ADAS), are
beginning to gain good market traction, and
the auto industry is beginning to explore what
the implications of these are to auto sales, auto
care, auto repair, and auto replacement. Layer
in car sharing, and autonomous vehicles, and
it’s clear that the traditional auto ownership
model will change.
In 2017 Crash Course we explored market
dynamics through the context of an
automotive claim. With data and technology
driving change into so many aspects of our
lives, this year we will instead look through
the lens of the full auto ownership life
cycle – from auto shopping to purchase
through vehicle end of life, hoping to provide
some visibility into how these will change in
the future.
We’ll begin with the ‘Buy’ decision, exploring
why consumers buy vehicles, how they
decide which vehicle to buy, how they pay
for the vehicle, how they choose to insure
the vehicle, and how auto industry sales have
fared to date and what they may look like
in the future. Today’s vehicles have a natural
depreciation and deterioration cycle that
ultimately leads to the need for replacement.
Will the replacement of the future involve a
new vehicle purchase or something like an
autonomous vehicle subscription
When the vehicle is acquired, we move into
the ‘Drive’ phase. In this section, we’ll explore
how driving has changed and how it may
change in the future. Will overall miles driven
continue to grow Who actually will be doing
the driving How might insurance change
when we consider the change in who is
control of the vehicle With the auto industry
reeling from numerous years of signifcant
vehicle recalls, how does more technology
that now controls the vehicle itself challenge
automakers in the future
With the focus on crash avoidance and,
ultimately, vehicle autonomy, will auto
‘Crash’(es) and fatalities fall And how
quickly Early benefts of ADAS have shown
marked improvement to bodily injury claim
frequency and costs. How might this change
insurance casualty claims Is the ‘Road
to Zero’ a possibility, and when might we
get there
When the vehicle does crash, and needs
‘Repair’, what further changes can we expect
in terms of the types of tooling, training, and
investment required of collision repairers How
will repair frequency and costs change With
OEM’s taking a more active role in providing
information on how the vehicle should be
repaired, how will that change our industry
And fnally, if the vehicle cannot be repaired,
what does that mean to the consumer and
her decision to jump back to the ‘Buy’ start of
the overall cycle
Finally, data and intelligence will continue to
drive market developments in each of these
areas. This year our guest authors will provide
some thoughts as to how digitalization, data,
analytics, and artifcial intelligence (AI) are
bringing change to our industry today.
“It’s Happening” was our 2017 theme for Crash
Course – and it’s safe to say that our industry
endured a good deal of transformation
throughout the year. With the promise
of rapidly advancing technology such as
AI, this year we’ll provide our viewpoint
“Putting the AI in the Automotive Industry.”
So, sit back, and we hope you enjoy this year’s
issue of CCC’s Crash Course!
executive
summary
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PART 2
DRIVE
PART 1
BUY
25
PART 3
CRASH
57
PART 4
REPAIR
79
What Americans
Are Buying Today
In 2017, over 90 million vehicles were sold
globally.1The United States continues to be
one of the single largest markets for vehicle
sales. In 2016, a record 17.55 million light
vehicles were sold in the U.S., beating the last
record set in 2000.In 2017, auto sales slowed
by 1.8 percent to 17.25 million; however, record
average new vehicle prices meant a majority
of automakers still considered it a very good
year (see Figure 1).Most analysts project
auto sales will slow to between 16.5 million
and 16.9 million in 2018, with less pent-up
demand, higher interest rates, and declining
used vehicle values driving sales down.At
the same time, continued growth in the U.S.
population, a strong economy and strong
employment, and consumer desire for new
auto features such as WiFi and advanced
driver assistance systems (ADAS), will help
bring customers back to the showroom, just
at a slower rate than the last three years.
Light truck sales achieved a new record –
64.5 percent of all new vehicle sales in 2017,
as car sales in 2017 fell 11.2 percent while light
truck sales grew 4.4 percent (see Figure 2).
The average new vehicle transaction price
rose 2 percent for the full year (versus 2.5
percent in 2015 and 2016), with December
2017’s transaction price of $36,113, setting
a new high, and largely driven by higher
light truck sales (see Figure 3).2Light
trucks – and full-size pickups in particular-
continue to drive a great deal of the proft for
automakers, particularly the U.S. automakers.
Proft margins on pickup trucks typically
are well above 10 percent and can outpace
margins on luxury cars.3With an average
selling price of over $47,000 for full-size
pickups in November 2017 (with upgrades
that price can jump to as much as
$60,000), it can be argued that
pickups are the new
luxury segment.4
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