The automotive industry stands upon the precipice of significant disruption and the success factors driving growth for leading automotive manufacturers are changing. There are new rules of the game, influenced by the rapid integration of products and services, changing consumer preferences and shifts in owner-user-driver relationships. These will undoubtedly have knock on implications for suppliers, their manufactured commodities, and their investment strategies.

High performing global OEMs have strategies characterised by a focus on creating mobility, the bundling of products with services and design commonisation behind product diversification.

Embrace the change, because if you don’t, someone else will.

Mobility is a user-centric concept and trend whereby transportation is becoming increasingly more responsive to the needs, habits and preferences of consumers. Growing trends in mobility technology, such as car sharing, ride-hailing and a vast array of subscription services are fundamentally changing the way in which people use, value and relate to vehicles. The rate of change becomes more exponential overtime as more and more consumers see value in the services associated with transportation and change their relationship with vehicles accordingly. These new mobility services are contributing towards changes in preferences around vehicle ownership and towards “vehicle usership”, where new business models are being developed that do not necessarily rely on a user of a vehicle owning a car (or even driving it!).

This is being supported by a wider cultural shift where people are increasingly consuming services in a temporary way and ownership of physical product becomes less significant in process. Companies like Spotify and Rent the Runway are clear examples of how usership services have infiltrated mainstream. Consumers are now paying to access things temporarily that they used to buy outright to own.

While personal vehicle ownership remains dominant and prevalent, the trend and forecasts predict that this will likely decline as mobility alternatives gain momentum. Additional value-added services that are bundled with the purchase of vehicle are also on the increase and are expected to fundamentally change the manner in which consumers interact with their product. For example, the traditional “what you buy is what you drive” model of purchasing a vehicle which remains the same until you upgrade to a newer model is being challenged. Paid for and free service upgrades can dramatically change user experiences, and this can evolve over time – supporting and trend and move towards consumer customisation.

To remain competitive as mobility alternatives become more popular and the consumer becomes increasingly more demanding as their reliance on rapidly evolving technologies changes their demand preferences for the transportation, OEMs are exploring new opportunities to fuel their growth and long term sustainability.

A review of leading, high-performing OEM strategies highlights the following key growth drivers of the automotive industry:

  1. Value proposition increasingly reflects an integration of physical product and product enhancing services.
  2. Innovation in (e-)mobility solutions is being directed to support changing owner-driver-user relationships.
  3. Cost effective portfolio diversification is enabled through shared core technologies, processes and system.

The vehicle is an amazing technology space, and, as OEMs drive to push the boundaries of technology and connectivity within a vehicle to meet the changing needs of a consumer, so this has increased opportunities for suppliers and technology partners to support them. After all, the direction of change is clear, the pace is likely to be more rapid than is currently anticipated, and therefore the groundwork to capitalise on the opportunities should be laid now so as not to fall behind.