Automotive

The COVID-19 aftermath: How the Chinese car industry can turn crisis into opportunity

April 8, 2020

COVID-19 has turned into a global crisis, evolving at unprecedented speed and scale. It is creating a universal imperative for governments and organizations to take immediate action to protect their people.

Business leaders must make rapid decisions, and take immediate actions to sustain business operations to serve their customers, clients and communities, as well as protect and support their workers.

No industry is immune. The automotive industry is especially facing major challenges both on supply and demand side—new passenger car sales in the Chinese market slumped by over 80 percent in February 2020, resulting in the largest downturn in the past 20 years.

Thanks to the focus and rigor of both government and society, China has embarked on its way back to normality, and more and more companies are moving from crisis response to recovery and post-recovery planning.

Looking ahead—recovery by renewal

We at Accenture believe that the Chinese automotive industry—characterized by a disruption of the mobility playing field and changes in consumption patterns due to the spread of COVID-19—can turn crisis into opportunity with two key levers and five specific opportunities. Businesses that successfully capture them can build a decisive competitive edge and take the lead in the recovery.

Embrace the new to consolidate market share

Reset the focus within digital marketing and sales.
Boost consumer engagement through experience and data.

Rely on smart to evolve and strengthen the core

Upgrade to a smart supply chain.
Balance the reliance on labor in manufacturing.
Enable a smart organization.

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1. Reset the focus within digital marketing and sales

We believe that through smart, targeted, and interactive customer engagement online, car companies will not only increase their potential customer base, but also foster brand loyalty and—most importantly—increase sales conversion.

Instead of trying to “force” the complete sales transaction online, OEMs and dealers need to focus on how to nurture brand lovers by creating updated and dynamic digital content on highly relevant platforms. At the same time, a clearly structured omnichannel framework ensures that new fans and leads are directed to the right product and to face-to-face interaction at the right time.

2. Boost consumer engagement through experience and data

Now is the time that OEMs can leverage new consumer behavior to create “New Experiences” which can enhance consumer engagement and boost brand loyalty. Accenture believes there are three key levers OEMs can use to create a New Experience:

Understand consumer needs and behavior through data analytics and insights
Consider customer experience holistically over the lifecycle
Apply experiences and innovations from other industries

Through establishing a "360-degree single customer view" as well as end-to-end data analytics to generate customer insights, OEMs can eventually leverage individual customer insights to move to a data-driven operating model and base business decisions on the customer angle.

3. Upgrade to a smart supply chain

The automotive industry has faced great uncertainty in regards to parts supply since the outbreak. To cope with the unpredictable risks and chaos, establishing an intelligent and flexible supply chain will be of utmost importance to diversify risks and improve supply chain robustness.

4. Balance the reliance on labor in manufacturing

For companies in the auto industry, introducing Smart Manufacturing solutions can help to optimize engineering and automate process steps.

Smart, data-based decision making, and streamlined, augmented and more accurate production processes are a key to unlocking productivity boosts, a better balance of resources and eventually higher product quality. Accenture suggests focusing on three available Technology enablers to bring Smart Manufacturing into practice:

Intelligent Automation via IoT and data analytics
Digital Thread and Digital Twin
Augmented/Virtual Reality (AR/VR)

5. Enable a smart organization

Enhancing organizational effectiveness, employee productivity and “New Work” have been hot topics among OEMs for some time. Labor shortages, remote working and flexible working arrangements during the outbreak brought additional challenges to these topics.

A Fluid Human Resource Ecosystem consisting of dedicated fulltime staff, resources from external partners and freelancers can be implemented by leveraging outsourcing, partnerships, crowdsourcing and platform sharing to enhance flexibility and agility in human resources and in turn manage the fluctuating workload.

Three horizons to consider for the Chinese automotive industry

The current economic slowdown is hitting the automotive industry hard and fast. Mastering the key industry trends, such as digitalization and electrification, continues to be essential for survival in a post-crisis world. Transformational projects should be continued or suspended rather than cancelled. We are here to assist our clients not only in navigating the immediate challenges of the COVID-19 crisis, but also in creating responsive and intelligent solutions that will pave your way to a successful future.