Addressing macroeconomic challenges in the automotive industry
Disrupted supply chains, raw material and energy cost volatility means that Automotive OEMs need a clear strategy to leverage new business models, make sustainability a true market differentiator and transform costs and investments.
TAKE A ZERO-BASED APPROACH
THE FUTURE IS SOFTWARE-DEFINED
PLUG INTO THE ELECTRIC REVOLUTION
CUSTOMER DEMANDS ARE ON THE RISE
In the face of structural changes across the automotive industry and financial and commercial pressures, OEMs should look to create leaner, more flexible and more efficient organizations.
A structural reinvention of the organizational model means being willing to rethink organizational boundaries, processes and roles. It allows companies to ask: How would they set up their business today? Which functions are necessary at the local market level and which can be centralized to efficiently support local market organizations? A zero-based approach helps businesses focus on future needs.
With consumers now demanding digital experiences from the vehicles they drive, OEMs must transform to design and deliver software-defined vehicles. The rewards are new sources of profit pools. But the challenges to get there are substantial.
Success will be rewarded to OEMs who manage to bring all building blocks into a consistent big picture and consequent implementation: building an end-to-end service-platform that reaches beyond the vehicle; owning the right control points in the technology stack; and becoming agile, digital enterprises that are focused on delivering unique user experiences for the future.
By 2030, half of the vehicles sold in Europe will be Battery Electric Vehicles (BEVs), reaching record-breaking numbers. But, the electric revolution is also a sales and aftersales revolution, urging automakers and their dealers to rethink their business. If no action is taken, profits could collapse by 50 to 60%.
Sales journeys need to be digitalized and accelerated, appearing simpler, faster, and of higher conversion rate than in the past. Similarly, investments in new service offerings, the digitalization of workshop processes, and a state-of-the-art technology foundation are all indispensable to get ready for an electric-driven future.
Serving customers today, and into the future, is no longer only about meeting their mobility needs. Today’s vehicle buyers are setting high standards for OEMs and dealers in the automotive industry, demanding more connected, virtual, and responsible customer experiences.
OEMs (together with dealers) have an opportunity to transcend their role as mobility providers to become a long-term partner to their customers. This involves rethinking their entire ecosystem, particularly their relationship with dealers, engaging customers across all touchpoints with an intelligent data-driven approach and building agility across every facet of their operations.
The Automotive industry, as we previously understood it, is obsolete. We are now operating in a Mobility ecosystem: the next iteration of Automotive.
Today’s megatrends are raising fundamental questions about the purpose of a vehicle—advances in connected and autonomous technology, the shift from hardware to software-defined vehicle, an emphasis on sustainability, and ever-changing customer expectations—pose threats to traditional automakers and also present exciting new opportunities.
All of this is creating a new value chain for the automotive industry. In this next iteration of Automotive, companies must get creative about how they reshape their products, structure their businesses, use technology, and reimagine the services and experiences they bring to their customers.
It’s time to embrace the ecosystem and collaborate beyond industry lines to find new ways of innovating and partnering for success.