- Seven trends will reshape automotive industry by 2030
- The next five years will see more change than in the past 50
- North America, Europe, Japan and Korea will fall behind emerging markets
- Suppliers across the globe will face major challenges
GLOBAL consultancy firm Oliver Wyman predicts that seven automotive industry trends will totally reshape the car and the automotive industry.
It says that between now and 2030 the way we use the car will change dramatically in a report entitled “Future Automotive Industry Structure – FAST 2030.”
The Oliver Ryman report identifies these critical trends:
- connected vehicle,
- autonomous vehicles,
- digital industry,
- new pay-per-use distribution channels,
- changing customer structure,
- and the human-machine interface.
Joern Buss, Oliver Wyman partner and the report’s author said:
“The automotive industry is facing a perfect storm of transformative technology and changing customer behaviour.
“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.”
This third volume of the report, released every five years, with the German Association of the Automotive Industry (VDA), found global automotive value creation to rise by 30% by 2030 with global passenger car production also growing by 30% to 123 million units.
Value creation is defined as value added by all participants in the automotive production chain. These include suppliers, manufacturers, but also service providers for engineering activities, software and logistics.
While this growth is positive, said the report, it comes with considerable structural changes and cost pressure which the industry is ill-prepared.
The report found:
China gaining ground in the premium segment
Value creation will shift to emerging markets. According to the study, North America, Europe, Japan and Korea will lose 10 percentage points of their share of value creation to emerging markets by 2030. “China will soon overtake Europe to take the leadership position in manufacturing,” said Buss.
While Europe will continue to dominate the premium segment in 2030 – holding 50% of total value creation – China’s share will climb to 20%, up from 13%.
Suppliers face real challenges
New technologies, as well as increased CO2 regulation, is already creating a major market for electric and driverless cars.
However, the report said that suppliers will need to redesign and expand their existing product range – as more and more software-driven, dynamic vehicle and power control systems will be needed in the future.
If smaller and medium suppliers do not adapt to new business models or embed digital integrators, they may be left behind.
Meanwhile current global large-scale suppliers will expand by offering ever more complex systems, such as complete chassis “skateboards” for electric cars or entire systems for driverless cars.
At the opposite end of the value chain, online and direct after-market businesses will develop strongly and pose a challenge to suppliers. In addition, software and engineering providers will be increasingly relied upon during this fundamental shift.
“Despite cost pressure, companies are making huge investments in new technologies, both on the drive side and in digitisation,” 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 characterised by consolidation and realignment, and manufacturers will also have to adjust to this strategy.”