Capture value through revenue models impacted by digital servitization in the automotive industry An interview study at CEVT

Examensarbete för masterexamen
Master's Thesis
Management and economics of innovation (MPMEI), MSc
Berg, Amanda
Ellmarker, Moa
As a result of digital servitization, the automotive industry has undergone significant transformations disrupting traditional revenue models and revolutionizing how companies generate revenue from their vehicles. Digital servitization has created opportunities for the introduction of new revenue sources such as mobility solutions as well as the opportunity to offer smart digital services as an additional revenue source. A main challenge however is the servitization paradox, which becomes present along with these changes. It indicates that it is harder to generate high profit margins from pure services, which puts the automotive industry in a complex situation of how to be profitable. To stay profitable, it puts high demands on understanding the user-value and how to capture this value through different revenue models. By grasping how the transformation in the automotive industry impacts how companies can stay profitable, the purpose of this study is to explore how digital servitization impacts how value can be captured through existing and new revenue models in the automotive industry. To gain this understanding the study has been conducted at the innovative R&D company CEVT through an interview study. By fulfilling the purpose, the study also aims to give insights to CEVT on how to take strategic decisions and build compelling business cases with strong profitability analysis in this new automotive industry. The findings of this study are mainly presented in the shape of archetypes visualizing how value can be captured in specific revenue models in the automotive industry. Significantly the shift from traditional to more innovative revenue models show how the impact on user-value shift from originating from the hardware and car-specification in the vehicle, to softer factors such as convenience, flexibility, and freedom of responsibility. Unexpectedly, findings showed that the potential of selling digital services as an additional revenue is equally big between traditional and innovative revenue models, if they are distributed the right way. Furthermore, the study emphasizes the importance of including value-based pricing strategy when moving across the scale of digital servitization and towards more innovative revenue models. The main theoretical contribution of this study is the proposed value-driven product-service framework that combines the theoretical concepts of digital servitization, user-value and revenue models.
Digital servitization , User-value , Capture value , Value-based pricing , Revenue model , Revenue source , Digital service
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