Here’s How Ford Can Benefit From Bringing “Alexa” To Its Cars

Recently Ford Motors (NYSE:F) announced that it had teamed up with Amazon to allow its users to access their car from home and call up other features from their vehicle via Alexa, Amazon’s voice assistant. The Alexa integration enables Ford drivers to listen to audiobooks inside their vehicles, request news, play music and add items to Amazon shopping lists. This announcement comes after General Motors announced its cognitive mobility platform which allows users to connect and interact with their favourite brands while driving. As companies look at optimizing the driver’s time spent in the car, this integration should enhance consumer experience in Ford vehicles. With the auto industry undergoing a transformation, the use of technology to make cars “smart” can help Ford in developing a competitive edge and furthering its mobility initiative.

With The Popularity Of Alexa, “Smart Vehicles” Can Build Competitive Edge

Amazon’s voice controlled speaker Echo, which is integrated with its Alexa voice assistant, is a leading smart home device. Experts estimate that 8.6 million total Echo devices will have been sold in 2016 and this number is likely to reach more than 40 million by 2020. According to our estimates, Ford is likely to sell around 9 million cars by 2020 in North America and the company has a 10% market share in the North American car market. If even 5% of Echo owners in 2020 have a Ford car, this would mean that more than 20% of Ford car owners in the region will benefit from the Alexa integration. Ford is transforming itself from an auto manufacturer to an auto and mobility solutions provider.  The effective use of technology to improve customer experiences can be critical for its long term revenue growth. We expect the contribution of its North American car division to the total revenues of Ford to decline as a percent of sales over our forecast period from around 17% in 2016 to nearly 11% by 2023.

We also expect the number of cars sold by Ford in North America to decline steadily over our forecast period.

Initiatives to integrate its cars with voice assistants can help arrest this decline and develop a competitive edge for Ford. While other automakers such as GM are working on similar initiatives, Ford is the first auto company to roll out the most comprehensive integration with Alexa. The company plans to expand the virtual assistants in its cars going forward.

Technology is disrupting the automotive industry and changing its landscape. While electric vehicles, autonomous vehicles and ride sharing are being touted as the future of this industry, these vehicles currently form a small portion of the total automotive vehicles. In this environment, improving the existing driving experience and making it more personalized and convenient can lead to customer delight and create a competitive edge for auto manufacturers. We believe the Alexa integration will provide this competitive edge to Ford Motors.

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