ISG Provider Lens™ Automotive and Mobility Services and Solutions - Automotive Engineering and Manufacturing Services - APAC 2025

Automotive is one of the most dynamic verticals, rapidly progressing with digital interventions

The automotive industry is characterised by the increasingly sophisticated digital features, the electrification of drive systems, the emergence of autonomous vehicles and ongoing technological advancements. These developments significantly elevate the industry, requiring all ecosystem players to raise their bar accordingly and meet the evolving
expectations. The market for electric vehicles (EVs) and hybrid and autonomous vehicles in Asia Pacific (APAC) is experiencing rapid growth, driven by strong government support, urbanisation and environmental concerns.

Listed below are the key trends in the automotive industry:

Digital interventions: In the automotive industry, manufacturers are developing smart products with the most sophisticated features, leading to high customer demands for comfort and tailored requirements. Consequently,
service providers must scale up their competencies for end-to-end value system support, from inception, prototyping, testing, development and refinement to manufacturing of products. This approach results in shorter product lifecycles, reduced costs per prototyping, increased visibility and tenacity of supply chains, a shift in investments from capital-centric to consumption-based models and stronger acceptance of green initiatives.

Advancements in product engineering and manufacturing: In the engineering and manufacturing segment of the value chain, the advent of digital twin enables the replication of products and end-to-end processes in the digital world. The convergence of the physical and virtual offers the ability to simulate every possible real-life scenario with minimal effort, cost and accuracy. Digital threads offer traceability and transparency throughout the entire product lifecycle, eventually building the framework for the blockchain technology to establish trust and eliminate unnecessary dependencies, significantly reducing timelines, approvals and turnaround times. Digital intervention through Industry
4.0, IIOT and Smart Manufacturing makes the entire manufacturing process more visible, traceable, controllable, reliable and predictable. This approach is evident in the conventional internal combustion engine (ICE) vehicles and
electrified (hybrid included) vehicles.

In APAC, the automotive industry is experiencing rapid transformation driven by digitalisation and advanced technologies. Product lifecycles are shrinking as OEMs adopt Agile development methodology and digital twins. For instance, Toyota uses simulation to reduce physical prototyping. Prototyping costs are declining with 3D printing and virtual engineering, as observed in Hyundai’s use of additive manufacturing. Supply chains are becoming more  resilient and transparent through AI, with a focus on leveraging blockchain solutions. For example, Nissan has deployed predictive analytics to better manage disruptions. These advancements enable rapid time to market, more efficient production, and strong responsiveness to shifting consumer and regulatory demands.

Electrification and e-mobility: The need for electrification in transportation is driven by the increasing efficiencies of EVs (approximately 85-90 percent) against the conventional ICE vehicles (20-30 percent), implying that EVs have
three times the energy conversion efficiency for generating physical motion. This approach enhances the basic motion efficiency by using fewer moving parts and producing less noise, with reduced thermal impacts and minimal cooling requirement, thereby offering better ride comfort, starting torque and vehicle handling. In theory, systems are supposed to be smaller, simpler and easier for EVs than ICE vehicles; however, they are multidisciplinary and complex, integrating many virtual and embedded subsystems. Many physical systems are being converted to software-based
systems, with complexities in areas such as battery optimisation/management, drivetrain management and motor controllers. These systems must handle vehicle demand and supply, aligning driver expectations, vehicle environment and behaviour.

EVs are an engineering marvel, contributing to the evolution of advanced mobility and control. Apart from the conventional expectations from ICE vehicles, EV adoption introduces a new set of considerations for end users. These include vehicle range, the availability of charging stations for long journeys, thermal runaway risks due to battery chemistry, battery energy density in relation to size and mass, and cost optimisation — given that batteries comprise 40-50 percent of an EV’s total cost. These factors compel EV OEMs to build subsystems and large systems that align with end-user expectations. Consequently, service providers are planning to support these OEMs with digital enablers to enhance efficiencies at every stage of the vehicle’s lifecycle, including engineering, manufacturing, CX and  aftersales services. Electrification in transportation across the APAC region is accelerating, driven by supportive government policies, technological advancements and increasing consumer demand. This region is witnessing  increased investments in battery technologies, localised supply chains and public-private partnerships.

Autonomous and connected vehicles: The next level of complexity in mobility, whether for ICE vehicles or EVs, is the development of self-driven or autonomous vehicles. These vehicles need to become intelligent, capable of understanding their surrounding environment and making decisions regarding movement, braking, acceleration and navigation to travel from a start point to the defined destination without any or with minimal manual intervention. Perception systems such as Light Detection and Ranging (LiDAR) offer highresolution 3D mapping of the environment.
They work alongside GPS and inertial measurement units (IMU) to provide inputs for decision-making algorithms that handle vehicle manoeuvring. These systems include control mechanisms and connectivity technologies such as vehicle-to-everything (V2X), which integrate with the IIoT for navigation. This setup allows vehicles to continuously sense locations and navigate effectively from their starting point to their destination.

Vehicle OEMs face significant challenges in integrating the subsystems into a softwaredefined vehicle (SDV) architecture. The process involves digitally defining and designing subsystems, which leads to the creation of the
corresponding software. This software then goes through the cycle of testing and refinement to ensure that it is ready for real-life use.

Autonomous vehicles must be intelligent, leveraging the use of AI and ML for continuous self-learning, ensuring connectivity and being software-driven for operation and controlled runtime. Numerous systems and electronic control units (ECUs) must combine to operate such complex vehicles. To meet these challenges, automotive OEMs are  aligning their digital design-to-customer experience value chain, utilising their proven experiences and successes, and collaborating with service providers for reliable digital interventions.

The autonomous vehicle (AV) market in APAC is witnessing rapid growth, led by China and Southeast Asia with  projected CAGRs of over 20 percent. Countries such as Singapore and Japan are spearheading adoption through regulatory support and public trials. Technological advancements in AI, advanced driver assistance systems (ADAS), LiDAR and V2X communications are driving innovation. However, challenges such as regulatory alignment, infrastructure readiness and lack of public trust persist. Overall, APAC is emerging as a dynamic hub for AV  development and deployment.

Customer experience is key: With complex vehicles, it is crucial for manufacturers to offer advanced CX. Customers expect detailed insights, from vehicle delivery to gaining digital visibility into how the vehicle is built throughout the production process. Interfaces and customer touchpoints are investing in digital retailing tools, virtual showrooms and
augmented reality apps to offer immersive, convenient shopping experiences that blend the digital with the physical. The traditional car ownership model is evolving, with subscription services gaining popularity. These models offer flexibility to consumers, enabling them to access a variety of vehicles for a monthly fee without the long-term commitment of ownership. As vehicles become more connected, advanced technologies such as ADAS, over-the-air (OTA) updates and predictive maintenance are becoming crucial components of the aftermarket ecosystem. The entire ecosystem of automobiles, from production to consumption, is a digital experience.

Furthermore, a valid use case for auto insurance, where the vehicle is being digitally connected and tracked to build the driver profile (risky or safe driver) based on the driving data acquired, is leveraged to decide the insurance premium amount. Service providers are undertaking large transformation projects, mastering the technologies underneath and closely partnering with technology leaders in their respective space.

In APAC, the automotive industry is increasingly focusing on enhancing customer experiences through personalised digital journeys, omnichannel retail platforms and connected service ecosystems. Retail and aftermarket services are evolving with AIpowered service recommendations, predictive maintenance and e-commerce platforms for parts and accessories. This evolution is driven by rising customer expectations, increasing vehicle connectivity and growing adoption of digital technologies.

Accelerating sustainability: By greening their end-to-end value chain activities — from raw material sourcing to manufacturing, logistics and recycling — automotive OEMs are increasingly measuring and documenting these critical KPIs through carbon credit systems and decarbonisation technologies to offset emissions. Measuring and reducing carbon footprints across operations and supply chains has become a core strategic focus. These efforts align with the global climate goals to combat global warming through green mobility solutions and electrification in the automobile
sector. Across the APAC region, firms are embedding ESG principles into their strategy to meet regulatory  expectations and investor demands. For instance, Hyundai is committed to using 100 percent renewable energy at its
manufacturing sites by 2045, while Nissan aims for carbon neutrality by 2050, with a 52 percent reduction in CO₂ emissions per vehicle produced by 2030.

The automotive business in APAC is significantly influenced by major markets such as China, India, South Korea and Japan. Each of these countries contributes to the growth and dynamics of the automotive sector in different ways. The balance between these countries is driven by factors such as consumer demand, government regulations,  technological advancements and a growing shift towards sustainability. Several automotive OEMs and service providers are significantly increasing their investments in the APAC region, focusing on production, technology and EV
infrastructure to meet the growing demand and tap into new opportunities.

In summary, technology evolves rapidly, and digital solutions are essential for accelerating the entire ecosystem. This
report reflects the digital dimensions of the automobile industry as distinct focus quadrants: Automotive Engineering and Manufacturing Services encompass product design, development and manufacturing process; Electric Vehicles and Mobility Services focus on the nuances of electrification; Autonomous Systems and Software-defined Vehicles address intelligent and connected vehicle aspects; Automotive Retail and Aftermarket Services focus on improving digital CX; and Technology Transformation and Consulting demonstrate how automotive OEMs are expecting business and technology transformation and how service providers are equipped to cater to these needs digitally.

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