The automotive industry is showing some exciting new developments. Digitalization and electronic innovations, as well as advancement in automotive technology, and manufacturing has transformed the industry.
Digitalization, enables vehicle manufacturers and suppliers to benefit from increased productivity, greater flexibility and shorter times to market. Customers also benefit from personalised, higher-quality vehicles.
The modern automotive industry is highly capital-intensive and competitive. Operating against a backdrop of demand shifts, consumer preferences ambiguity, volatile oil prices, and increasingly uncertain returns, they continuously address critical strategic, operational, and systems issues required to leverage their capabilities and succeed in this rapidly evolving marketplace.
Trends impacting the next decade
As the industry recovers, automotive companies across the value chain must focus on:
According to Ernst & Young, automotive companies should ask themselves the following 5 questions to help prepare for the next decade:
profitable and sustainable growth
financial and operational flexibility
investments in new technologies
seizing opportunities in high-growth markets
How will products need to adapt?
How will business models need to adapt?
What are the new market dynamics?
What are the supply/value chain issues and implications?
How will demand for vehicles and mobility evolve?
The growing interest in alternative powertrain technologies, especially the increased electrification of vehicles, is affecting the entire automotive industry value chain and creating new mobility trends involving several new, non-automotive stakeholders.
Existing vehicle manufacturers are adding alternatively powered vehicles to their product line-ups, such as plug-in hybrids and pure electric vehicles, while new market entrants are using transformation of mobility drivers as their door into the automotive industry.
Leading companies position themselves flexibly and opportunistically by refocusing on their manufacturing, distribution and service network strategy in order to achieve sustainable growth.
Shifting Demand / substantial variation across geographies - China is now the largest light vehicle market in the world. Brazil, India and Russia have also experienced strong double digit annual growth in recent years. At the same time, U.S. and European demand dropped dramatically, while consumer preferences for vehicles are ambiguous in nature, resulting in segments which are still growing while others are in decline. Leading companies position themselves flexibly and opportunistically by refocusing on their manufacturing, distribution and service network strategy in order to achieve sustainable growth.
Lack of Standardisation Uncertainty - Energy, emissions, and fuel efficiency requirements are not standardised globally, which generates further uncertainty and the need to spread the risk across multiple powertrain technology platforms.
Restructuring - - Efforts are being made to clean balance sheets, remove excess capacity, and restructure costs - to make more efficient use of production capacity and make a profit at slimmer volumes
Firms must brace themselves for substantial changes against rising costs and decreasing demand.
All elements of cost—direct labour, material, and overhead—must be addressed in a comprehensive manner to create more affordable alternatives for customers demanding greater fuel efficiency and alternative ‘green’ fuel options.
With the advent of carbon emissions trading schemes in Europe and, increasingly, around the globe, the need to track and reduce carbon will grow increasingly important.