Business Essentials for Professionals


Oliver Wyman Report Predicts Turbulent Times In The Future For Global Automotive Industry

Oliver Wyman Report Predicts Turbulent Times In The Future For Global Automotive Industry
According to a new Oliver Wyman report titled “Future Automotive Industry Structure – FAST 2030” has identified seven trends that will drastically change the automotive industry and the car itself and the manner in which they will be created and used.
The seven trends that have been identified in the report are connected vehicle, autonomous vehicles, e-mobility, digital industry, new pay-per-use distribution channels, changing customer structure and the human-machine interface.
“The automotive industry is facing a perfect storm of transformative technology and changing customer behavior,” said Joern Buss, Oliver Wyman partner and author of the report. “There will be turbulent times ahead, which will not only impact manufacturers but also suppliers, many of whom will need to reassess their existing business strategies to stay competitive in the future.”
There would be a 30 per cent increase in the global passenger car production at 123 million units by 2030 while there would be a 30 per cent increase in the global automotive value creation in the same period, claimed the report that is published every five year5s in collaboration with the German Association of the Automotive Industry (VDA). The report defines value creation as value added by all participants in the automotive production chain.
The report further claimed that there would be a significant shift towards emerging markets in value creation for the global automotive industry. By 2030, about 10 percentage points would be lost by North America, Europe, Japan and Korea to emerging market, claims the study. “China will soon overtake Europe to take the leadership position in manufacturing,” said Buss.
A major market for electric and driverless cars is being created by new technologies and the enhanced and stricter regulations for CO2 emissions. However, in the future, there would be need for more software-driven, dynamic vehicle and power control systems and hence there would be need for suppliers to redesign and expand their existing product range.
The report notes that smaller and medium suppliers would be left behind if they are not bale to adapt to new business models and to embed digital integrators. On the other hand, the global large-scale suppliers would find that their role would be expanded as they would need to offer even more complex systems like the complete chassis “skateboards” for electric cars and complete systems for driverless cars.
Another challenge to suppliers would be the strong development of online and direct after-market businesses. And during this fundamental shift, there would be increasing reliability on software and engineering providers.
“Despite cost pressure, companies are making huge investments in new technologies, both on the drive side and in digitization,” said Johannes Berking, Oliver Wyman principal and co-author of the report.
“They can’t afford not to, because only those who are already laying the foundations for new structures and approaches – while also attracting and retaining highly qualified talent -- will be successful going forward. ‘Re-innovation in a time of disruption’ will become a survival strategy in a supplier landscape characterized by consolidation and realignment, and manufacturers will also have to adjust to this strategy,” he said.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc