CEOs within the automotive industry are beginning to see sustainability as a top-line opportunity. It has moved from a moral obligation and is now considered as an opportunity for cost reduction, revenue growth, risk management, innovation, brand value and other intangibles. As competition in the industry becomes fierce, sustainability is starting to play a key role across many business functions and processes, and appears to be the new competitive battleground.
There are many macro forces in play contributing to the changing industry dynamics. Trends such as resource scarcity (leading to rising fuel prices), technological innovation, rising urbanization, changing demographics, new consumer attitudes toward ‘mobility’, increased regulation, intense competition (and more) are starting to create a market environment where sustainability will become a key component for success in the industry.
However, the transition needed for the automotive industry to become truly sustainable through the development of alternative power-train technologies is far more complex. This is creating much anxiety and uncertainty, and is leading to a fundamental shift in how the industry approaches sustainability.
Challenges include:
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Regulatory uncertainty. Automotive executives spoke of the need for greater clarity around the scope of future regulation.
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Technological uncertainty. Managing the innovation of multiple new technologies is complex, especially as their evolutionary path remains unclear.
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Consumer uncertainty. The effect of environmental impacts on consumer buying patterns remains unclear.
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Investor uncertainty. Many CEOs believe that investors are not supportive of corporate efforts to create value through sustainability, and are failing to factor performance on sustainability issues into valuation models.