The old adage used to go that a new vehicle lost 10 percent of its value as soon as you drove it out of the dealership – and around 40 percent by a year later. It’s a piece of long-standing wisdom that says everything about what used to happen in the transaction between a driver and their chosen auto manufacturer. Warranties and service deals aside, that manufacturer’s responsibilities ended as soon as the new car owner slid behind the wheel and turned the key. The owner took possession of a depreciating asset and all the responsibilities that went with it, including what to do with their vehicle when they were finished with it.
Future vehicle experiences will shift from intangible prestige and status to tangibles, such as reclaimed materials and recycled components. The future ecosystem built around cars will be more responsive, sustainable, and innovative, utilising the cloud for cost efficiency and environmental impact optimising.
The regulatory and resource challenge transforming auto business models
In the Middle East, the automotive aftermarket industry is preparing for significant changes over the next five years. This shift is driven by the growing demand for electric vehicles (EVs) and the need for sustainable practices in the region. For instance, Saudi Arabia plans to manufacture 300,000 cars annually by 2030. The demand for EVs in the UAE will increase at a compound annual growth rate of 30 percent between 2022 and 2028, according to the global Electric Mobility Readiness Index. These developments are transforming the role of auto brands and customers’ experiences, moving the concept of the circular economy into the fast lane.
Auto brands face regulatory and resource challenges due to EU legislation requiring battery producers to dispose of batteries, limiting landfill waste, and requiring minimal recycled content. The global shortage of essential commodities like lithium, cobalt, nickel, and manganese necessitates manufacturers to reclaim and reuse EV batteries to manage costs and mitigate financial risks. Both challenges point to the same solution: auto manufacturers need to track what happens to their vehicles and their batteries, reclaim those batteries when the time is right, and keep their components in use for as long as possible.
As the electric vehicle market is expected to grow in the Middle East, focus is given on recycling lithium-ion batteries. This is fueled by the increasing environmental and ethical issues concerning the mining of materials like cobalt, lithium, and nickel that are used in the manufacturing of these batteries. For instance, the UAE’s BEEAH Recycling has signed an agreement with the UAE Ministry of Energy and Infrastructure (MOEI) and the American University of Sharjah (AUS) to collaborate on establishing the nation’s first recycling plant for end-of-life batteries from electric vehicles.
A new type of relationship between drivers and auto brands
While electrification of driving continues to gain momentum in the region, the role of auto brands is evolving. Companies are increasingly focusing on providing a seamless customer experience, integrating their services with digital platforms, and leveraging cloud-based technologies.
The cloud-connected, circular journey of an EV battery starts in the gigafactory where it’s first produced (gigafactories take their name from the gigawatts of battery capacity that they supply). When batteries leave a cloud-connected gigafactory, they do so with a traceability document capturing the conditions and raw materials used in their manufacture – a type of digital passport that can then stay associated with the battery, gathering further information on how it’s charged and discharged from the technology embedded within cloud-connected vehicles. Solutions like AWS IoT TwinMaker can use this real-time data to create digital twins of each battery, virtual representations that show the state of the battery and its components, predict when it will start to fail and identify which cells will be responsible for it failing.
The evolving landscape of the automotive industry presents a golden opportunity for auto brands to redefine value for their customers. By embracing proactive engagement and prioritising vehicle longevity, these brands can transform the ownership experience from one marred by declining performance and escalating maintenance costs to one characterised by attentive support and enduring satisfaction.
As the industry moves away from relying solely on franchised dealerships to deliver on brand promises, a new path emerges—one that leads to a more connected, customer-centric, and value-driven future for the automotive sector.
