The document discusses the future challenges facing the auto industry as the industry transforms. It notes that China is emerging as the world's largest auto market and is fueling the growth of domestic Chinese automakers. Governments are also increasing regulations around emissions, fuel economy, and other environmental issues. This will drive innovation but also force the industry to address questions around emerging markets, changing ownership models, digital competencies, connectivity, technology standards, and engaging with the public on regulatory issues. The future of the auto industry is uncertain as it navigates these challenges.
2012 Economic Analysis of the Automotive Industry - 10 MinutesRichard Chan, MBA
The automotive industry is a globalized industry with consumers worldwide. Ford, GM, and Chrysler are referred to as the “Big 3” / “Detroit 3” and are the largest automakers in the US and Canada. The “Big 3” are distinguished by their business model as the majority of their operations are unionized which results in higher labor costs than other multinational automakers, including those with plants in North America. There are numerous models between the automotive companies in the industry such gasoline-fueled cars, bio-fueled cars, electric cars, hybrid cars, diesel-fueled cars, and ethanol-powered cars, which slightly distinguishes the companies from one another. Ultimately, the challenges to this industry are the drive for lower cost structure, fuel efficient demand, product differentiation, and globalization.
Drive to Lower Cost Structure
As it is the goal of any corporation to maximize profit, in the short run, in order to decrease costs, many auto manufacturers have been moving away from Detroit to China, Mexico, and Central Europe due to high costs of labor in capital in the US. However, the US might see a resurgence of manufacturing due to the dollar versus other currencies in the short term, though, that could change as the value of the currencies move. In order to prevent shut downs, companies must ensure they are operating efficiently by setting their prices above the minimum average variable cost. It can be resourceful for automakers such as the “Big 3” to operate in locations in the US where unions are not as prevalent, such as the South.
Another factor in operating efficiently in the automotive industry is wage rates. Compared to the labor cost in countries such as Japan, domestic automakers cannot compete because of the high US cost of labor. The cost per hour for a US employee is significantly higher than those in Asia, and when US automakers can find a way to decrease their costs, they’ll be far more competitive. Moving manufacturing to the South and retiring models that do not sell are changes automakers, such as the “Big 3”, can make to help decrease the hourly cost per employee.
Evolution of Fuel Efficient Demand
Just as labor rates have a correlation to profitability, price correlates to demand. According to the economic theory of complement goods, “two goods are complements if an increase in the price of one of the goods causes consumers to demand less of the other good, all other things constant.” In the automobile industry, gasoline and automobiles are complement goods. Due in large part to rising oil prices, a key demand driver, consumer demand for automobiles declined dramatically in 2008. As a result, automakers faced historically low sales, resulting in a dramatic reduction in revenues. Not only did the overall sales of vehicles decline, but Detroit automakers saw a huge dip in sales in their SUV and light truck segment as consumers sought out more fuel efficient options.
2012 Economic Analysis of the Automotive Industry - 10 MinutesRichard Chan, MBA
The automotive industry is a globalized industry with consumers worldwide. Ford, GM, and Chrysler are referred to as the “Big 3” / “Detroit 3” and are the largest automakers in the US and Canada. The “Big 3” are distinguished by their business model as the majority of their operations are unionized which results in higher labor costs than other multinational automakers, including those with plants in North America. There are numerous models between the automotive companies in the industry such gasoline-fueled cars, bio-fueled cars, electric cars, hybrid cars, diesel-fueled cars, and ethanol-powered cars, which slightly distinguishes the companies from one another. Ultimately, the challenges to this industry are the drive for lower cost structure, fuel efficient demand, product differentiation, and globalization.
Drive to Lower Cost Structure
As it is the goal of any corporation to maximize profit, in the short run, in order to decrease costs, many auto manufacturers have been moving away from Detroit to China, Mexico, and Central Europe due to high costs of labor in capital in the US. However, the US might see a resurgence of manufacturing due to the dollar versus other currencies in the short term, though, that could change as the value of the currencies move. In order to prevent shut downs, companies must ensure they are operating efficiently by setting their prices above the minimum average variable cost. It can be resourceful for automakers such as the “Big 3” to operate in locations in the US where unions are not as prevalent, such as the South.
Another factor in operating efficiently in the automotive industry is wage rates. Compared to the labor cost in countries such as Japan, domestic automakers cannot compete because of the high US cost of labor. The cost per hour for a US employee is significantly higher than those in Asia, and when US automakers can find a way to decrease their costs, they’ll be far more competitive. Moving manufacturing to the South and retiring models that do not sell are changes automakers, such as the “Big 3”, can make to help decrease the hourly cost per employee.
Evolution of Fuel Efficient Demand
Just as labor rates have a correlation to profitability, price correlates to demand. According to the economic theory of complement goods, “two goods are complements if an increase in the price of one of the goods causes consumers to demand less of the other good, all other things constant.” In the automobile industry, gasoline and automobiles are complement goods. Due in large part to rising oil prices, a key demand driver, consumer demand for automobiles declined dramatically in 2008. As a result, automakers faced historically low sales, resulting in a dramatic reduction in revenues. Not only did the overall sales of vehicles decline, but Detroit automakers saw a huge dip in sales in their SUV and light truck segment as consumers sought out more fuel efficient options.
Yesterdays Luxuries are Today’s Necessities-A Review on Luxury cars.IOSRJBM
This review article made an attempt to throw light on the luxury cars which has become today’s necessity and one of the important parameter in human life. The reviews made by the researchers before globalization and after globalization, have observed changes in this review paper.
Automobile Industry in India, ATL & BTL Marketing spend, Luxury Car Market, Mercedes-Benz, BMW & Audi India analysis, Key Opportunities for marketers and Indian Consumer in 2015, Passenger car market, Commercial vehicle market, women as a consumer, auto component industry in India,
Best Branding Practices in China: Automotive IndustryLabbrand
品牌 (PINPAI) is the Chinese word for “brand”. With its unique culture and economic growth, China is one of the most ideal markets for international brands. For similar reasons, China is also at the center of media attention in terms of economy, politics and performance. Unlike most foreign market, the concept of branding is relatively new. Thus, the process of building PINPAI is different.
For 10 years, from 2001 to 2010, the Chinese automotive industry has experience tremendous growth at a staggering rate of 25.3% per year. This rate is much higher than the average global growth and led to a competitive industry with more than 100 different brands from both local and foreign companies.
In 2011, China has ended its high-speed growth and entered a stage of single digital expansion rate. On the macro level, factors that caused the slow-down include the Chinese Central Bank raising its deposit-reserve ratio for six times in 2011, which increased the difficulties to finance certain enterprises. In terms of regulations, the Chinese government has ended its stimulus packages and introduced tightening limit for new vehicle licensing in major cities. The soaring fuel prices also influenced purchase intention among Chinese consumers. The importance of establishing a strong brand in times like these could not be more evident.
Nissan motors leading toward green transformationtrungduong247
Follow up with the current industry’s trend to produce friendly, fuel-efficient gas-powered vehicles; Nissan is putting more effort into its R&D, as well as its engine segment in order to gain an optimal mass-market sale of affordable fuel-efficient cars- what would help the company to continue competing efficiently. Besides the traditional products, the company is recommended to pay thorough attention to developments of electric cars, which is seen as the future of the industry. By introducing Nissan LEAF –the first mass-market priced total-electric car in 2010 in the world, Nissan displayed its clear direction going forward: “SHIFT_the way you move”
Automotive Intelligence for Professionals: The Mexico AutoBook includes company profiles with contact information of OEM car makers, multinational and local automotive parts suppliers as well as organizations, media and exhibitions.
It also includes detailed statistics about Automotive sales, market share and OEM capacities.
The Mexico AutoBook helps you to identify new customers in the Automotive industry in Mexico and provides key contact information.
The South Korea AutoBook helps you to identify new customers in the Automotive industry and provides key contact information.
Automotive Intelligence for Professionals: The South Korea AutoBook includes company profiles of OEM car makers, multinational and local automotive parts suppliers as well as organizations, media and exhibitions.
It also includes detailed statistics about Automotive sales, market share and OEM capacities.
Yesterdays Luxuries are Today’s Necessities-A Review on Luxury cars.IOSRJBM
This review article made an attempt to throw light on the luxury cars which has become today’s necessity and one of the important parameter in human life. The reviews made by the researchers before globalization and after globalization, have observed changes in this review paper.
Automobile Industry in India, ATL & BTL Marketing spend, Luxury Car Market, Mercedes-Benz, BMW & Audi India analysis, Key Opportunities for marketers and Indian Consumer in 2015, Passenger car market, Commercial vehicle market, women as a consumer, auto component industry in India,
Best Branding Practices in China: Automotive IndustryLabbrand
品牌 (PINPAI) is the Chinese word for “brand”. With its unique culture and economic growth, China is one of the most ideal markets for international brands. For similar reasons, China is also at the center of media attention in terms of economy, politics and performance. Unlike most foreign market, the concept of branding is relatively new. Thus, the process of building PINPAI is different.
For 10 years, from 2001 to 2010, the Chinese automotive industry has experience tremendous growth at a staggering rate of 25.3% per year. This rate is much higher than the average global growth and led to a competitive industry with more than 100 different brands from both local and foreign companies.
In 2011, China has ended its high-speed growth and entered a stage of single digital expansion rate. On the macro level, factors that caused the slow-down include the Chinese Central Bank raising its deposit-reserve ratio for six times in 2011, which increased the difficulties to finance certain enterprises. In terms of regulations, the Chinese government has ended its stimulus packages and introduced tightening limit for new vehicle licensing in major cities. The soaring fuel prices also influenced purchase intention among Chinese consumers. The importance of establishing a strong brand in times like these could not be more evident.
Nissan motors leading toward green transformationtrungduong247
Follow up with the current industry’s trend to produce friendly, fuel-efficient gas-powered vehicles; Nissan is putting more effort into its R&D, as well as its engine segment in order to gain an optimal mass-market sale of affordable fuel-efficient cars- what would help the company to continue competing efficiently. Besides the traditional products, the company is recommended to pay thorough attention to developments of electric cars, which is seen as the future of the industry. By introducing Nissan LEAF –the first mass-market priced total-electric car in 2010 in the world, Nissan displayed its clear direction going forward: “SHIFT_the way you move”
Automotive Intelligence for Professionals: The Mexico AutoBook includes company profiles with contact information of OEM car makers, multinational and local automotive parts suppliers as well as organizations, media and exhibitions.
It also includes detailed statistics about Automotive sales, market share and OEM capacities.
The Mexico AutoBook helps you to identify new customers in the Automotive industry in Mexico and provides key contact information.
The South Korea AutoBook helps you to identify new customers in the Automotive industry and provides key contact information.
Automotive Intelligence for Professionals: The South Korea AutoBook includes company profiles of OEM car makers, multinational and local automotive parts suppliers as well as organizations, media and exhibitions.
It also includes detailed statistics about Automotive sales, market share and OEM capacities.
An Conghui, president of Zhejiang Geely Holding Group and CEO of Geely Auto Group, explains the future of flying cars and the value of an international brand.
The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles. It is one of the world's largest economic sectors by revenue.
Disruptive Trends That Will Transform The Automotive IndustryStradablog
Technology-driven trends will revolutionize how industry players respond to changing consumer behavior, develop partnerships, and drive transformational change.
“To Examine the Impact of Advertisement Effectiveness on Consumer”Keyur Modi
This Project is Help to the MBA Students.
Advertising is any form of paid non-personal presentation of ideas, good or services for the purpose of inducting people to buy.
Advertising is helpful to Kataria automobile towards increasing the sales of business. Advertisement helps to the automobile industry to awareness about new product to new customer and the brand.
This project focused on “To Examine the Impact of Advertisement Effectiveness on Consumer” at Kataria automobile in Bardoli.
I have used the descriptive research is descriptive research design because my research is descriptive in nature. I have use to primary data collection method through questionnaire for that I collect 200 questionnaires to Kataria automobile Bardoli employees.
I have finding many of customer are seen the advertisement of Maruti Suzuki through the TV and customers will agree with the statements that Maruti Suzuki advertisement is creative.
Get Automotive Smart - Automotive Futuresemmersons1
The automotive industry is ramping up to a period of transformation. But what does the future look like, and what do the predicted changes mean for existing players?
Global and china automotive seating industry report, 2014 2015ResearchInChina
The seemingly simple automotive seating actually reflects a country's machining ability. In the world, at most 20 companies are capable of producing automotive seating whose frames are made of precision metals via stamping, while nearly a thousand companies have the capability to produce automotive engines.
This in-depth research offers a perspective on where the automotive industry is headed. It is based on many discussions and interviews with the top management of leading automotive original equipment manufacturers (OEMs) and an analysis of data from the top 17 (by sales) global OEMs, which comprise 80 percent of global sales. This work was designed to answer the most crucial questions:
> How are the industry and the market evolving?
> What are the future challenges and opportunities?
> How can OEMs benefit from these new challenges and opportunities?
> What are the implications for different market segments?
Case Studiess10 video case study.pdfManagement Informatio.docxtidwellveronique
Case Studiess/10 video case study.pdf
Management Information Systems 13e
KENNETH C. LAUDON AND JANE P. LAUDON
continued
Systems
CHAPTER 10 E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
CASE 3 Ford AutoXchange B2B Marketplace
SUMMARY This is a fascinating story on a B2B “electronic marketplace” initially developed by Ford
called AutoXchange. In this vision of B2B commerce, the Internet would transform the
relationship between over 100,000 tier 1 and tier 2 auto parts suppliers, and a small
handful of very large, global automobile companies. In this electronic marketplace,
thousands of suppliers would compete against one another to provide parts to the auto
industry giants. In this way, the auto industry hoped to reduce the cost of parts, increase
quality, achieve greater flexibility, and rationalize the supply chain process. Ultimately, the
effort failed. Find out why. L= 4:58.
URL http://www.youtube.com/watch?v=qyO9QSo0FjU
CASE The automotive industry designs, develops, manufactures, markets, and sells the world’s
motor vehicles. In 2007, more than 73 million motor vehicles, including cars and commercial
vehicles were produced worldwide. In 2011, more than 65 million motor vehicles, including
cars and commercial vehicles, were produced worldwide. In 2011, a total of 64 million new
automobiles were sold worldwide: 16.8 million in Europe, 22.5 million in Asia-Pacific, 15.2
million in the USA and Canada, 4.6 million in Latin America, 2.8 million in the Middle East
and 1.8 million in Africa.
Because of the global financial meltdown and recession beginning in 2007, auto production
worldwide has fallen 20 percent, and even more in Europe. Asia, Russia, and Latin American
auto markets rose in unit sales during the period.
General Motors, Ford and Chrysler are not only by far the largest automakers in North
America, they were for a while the largest in the world and are still a mainstay in the top
http://www.youtube.com/watch?v=qyO9QSo0FjU
Chapter 10, Case 3 Ford autoXChange B2B MarketplaCe 2
continued
ten. Ford has held the position of second-ranked automaker for the previous 56 years, being
relegated to third in North American sales, after being overtaken by Toyota in 2007. In 2011,
Ford ranked fifth in global auto production with 4.8 million units, behind General Motors,
Volkswagen, Toyota, and Hyundai.
Ford Motor Company (NYSE: F) is an American multinational corporation. Based in Dearborn,
Michigan, a suburb of Detroit, the automaker was founded by Henry Ford and incorporated
on June 16, 1903. Ford’s former UK subsidiaries Jaguar and Land Rover were sold to Tata
Motors of India in March 2008.
While the global auto industry is very large by any standard, generating nearly $1 trillion
in sales worldwide each year, the size of the auto supplier industry worldwide is equally
impressive. There are an estimated 250,000 direct suppliers to the auto industry worldwide,
with about 100,000 suppliers in ...
Similar to A Road Map to the Future for the Auto Industry (18)
Automotive companies have started to respond to changing customer buying behavior by piloting new online business models. However, most current initiatives are still removed from what customers expect.
Human drivers have always been an essential requirement in the operation of a motor vehicle. At the same
time, research has repeatedly demonstrated that driver error plays a role in more than 90% of road crashes
(NHTSA 2008; Blanco et al. 2016). As such, in the past two decades, vehicle manufacturers have designed new
and increasingly sophisticated features that provide more assistance to drivers to help mitigate such errors. Such
features are an important precursor to the development of automated vehicles and, currently, expectations are
high that the advent of semi- or fully- automated vehicles will dramatically reduce road crashes
The race is on
Clearly, Canadian executives are feeling that the race is on; but it remains to be seen whether they act quickly enough and with the right focus to effectively transform and evolve. Among our findings:
75 percent of CEOs agree that the next three years will be more critical to their industry than the previous 50 years;
74 percent of CEOs believe their company will remain largely the same in the next 3 years;
98 percent are concerned about the loyalty of customers;
13 percent feel confident that they are fully prepared for a cyber-event.
"Trans Failsafe Prog" on your BMW X5 indicates potential transmission issues requiring immediate action. This safety feature activates in response to abnormalities like low fluid levels, leaks, faulty sensors, electrical or mechanical failures, and overheating.
Things to remember while upgrading the brakes of your carjennifermiller8137
Upgrading the brakes of your car? Keep these things in mind before doing so. Additionally, start using an OBD 2 GPS tracker so that you never miss a vehicle maintenance appointment. On top of this, a car GPS tracker will also let you master good driving habits that will let you increase the operational life of your car’s brakes.
Ever been troubled by the blinking sign and didn’t know what to do?
Here’s a handy guide to dashboard symbols so that you’ll never be confused again!
Save them for later and save the trouble!
𝘼𝙣𝙩𝙞𝙦𝙪𝙚 𝙋𝙡𝙖𝙨𝙩𝙞𝙘 𝙏𝙧𝙖𝙙𝙚𝙧𝙨 𝙞𝙨 𝙫𝙚𝙧𝙮 𝙛𝙖𝙢𝙤𝙪𝙨 𝙛𝙤𝙧 𝙢𝙖𝙣𝙪𝙛𝙖𝙘𝙩𝙪𝙧𝙞𝙣𝙜 𝙩𝙝𝙚𝙞𝙧 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙨. 𝙒𝙚 𝙝𝙖𝙫𝙚 𝙖𝙡𝙡 𝙩𝙝𝙚 𝙥𝙡𝙖𝙨𝙩𝙞𝙘 𝙜𝙧𝙖𝙣𝙪𝙡𝙚𝙨 𝙪𝙨𝙚𝙙 𝙞𝙣 𝙖𝙪𝙩𝙤𝙢𝙤𝙩𝙞𝙫𝙚 𝙖𝙣𝙙 𝙖𝙪𝙩𝙤 𝙥𝙖𝙧𝙩𝙨 𝙖𝙣𝙙 𝙖𝙡𝙡 𝙩𝙝𝙚 𝙛𝙖𝙢𝙤𝙪𝙨 𝙘𝙤𝙢𝙥𝙖𝙣𝙞𝙚𝙨 𝙗𝙪𝙮 𝙩𝙝𝙚 𝙜𝙧𝙖𝙣𝙪𝙡𝙚𝙨 𝙛𝙧𝙤𝙢 𝙪𝙨.
Over the 10 years, we have gained a strong foothold in the market due to our range's high quality, competitive prices, and time-lined delivery schedules.
What Does the PARKTRONIC Inoperative, See Owner's Manual Message Mean for You...Autohaus Service and Sales
Learn what "PARKTRONIC Inoperative, See Owner's Manual" means for your Mercedes-Benz. This message indicates a malfunction in the parking assistance system, potentially due to sensor issues or electrical faults. Prompt attention is crucial to ensure safety and functionality. Follow steps outlined for diagnosis and repair in the owner's manual.
Comprehensive program for Agricultural Finance, the Automotive Sector, and Empowerment . We will define the full scope and provide a detailed two-week plan for identifying strategic partners in each area within Limpopo, including target areas.:
1. Agricultural : Supporting Primary and Secondary Agriculture
• Scope: Provide support solutions to enhance agricultural productivity and sustainability.
• Target Areas: Polokwane, Tzaneen, Thohoyandou, Makhado, and Giyani.
2. Automotive Sector: Partnerships with Mechanics and Panel Beater Shops
• Scope: Develop collaborations with automotive service providers to improve service quality and business operations.
• Target Areas: Polokwane, Lephalale, Mokopane, Phalaborwa, and Bela-Bela.
3. Empowerment : Focusing on Women Empowerment
• Scope: Provide business support support and training to women-owned businesses, promoting economic inclusion.
• Target Areas: Polokwane, Thohoyandou, Musina, Burgersfort, and Louis Trichardt.
We will also prioritize Industrial Economic Zone areas and their priorities.
Sign up on https://profilesmes.online/welcome/
To be eligible:
1. You must have a registered business and operate in Limpopo
2. Generate revenue
3. Sectors : Agriculture ( primary and secondary) and Automative
Women and Youth are encouraged to apply even if you don't fall in those sectors.
Symptoms like intermittent starting and key recognition errors signal potential problems with your Mercedes’ EIS. Use diagnostic steps like error code checks and spare key tests. Professional diagnosis and solutions like EIS replacement ensure safe driving. Consult a qualified technician for accurate diagnosis and repair.
Fleet management these days is next to impossible without connected vehicle solutions. Why? Well, fleet trackers and accompanying connected vehicle management solutions tend to offer quite a few hard-to-ignore benefits to fleet managers and businesses alike. Let’s check them out!
What Exactly Is The Common Rail Direct Injection System & How Does It WorkMotor Cars International
Learn about Common Rail Direct Injection (CRDi) - the revolutionary technology that has made diesel engines more efficient. Explore its workings, advantages like enhanced fuel efficiency and increased power output, along with drawbacks such as complexity and higher initial cost. Compare CRDi with traditional diesel engines and discover why it's the preferred choice for modern engines.
Core technology of Hyundai Motor Group's EV platform 'E-GMP'Hyundai Motor Group
What’s the force behind Hyundai Motor Group's EV performance and quality?
Maximized driving performance and quick charging time through high-density battery pack and fast charging technology and applicable to various vehicle types!
Discover more about Hyundai Motor Group’s EV platform ‘E-GMP’!
Why Is Your BMW X3 Hood Not Responding To Release CommandsDart Auto
Experiencing difficulty opening your BMW X3's hood? This guide explores potential issues like mechanical obstruction, hood release mechanism failure, electrical problems, and emergency release malfunctions. Troubleshooting tips include basic checks, clearing obstructions, applying pressure, and using the emergency release.
In this presentation, we have discussed a very important feature of BMW X5 cars… the Comfort Access. Things that can significantly limit its functionality. And things that you can try to restore the functionality of such a convenient feature of your vehicle.
1. 1
OCTOB ER 2 014
A road map to
the future for the
auto industry
Paul Gao, Russell Hensley, and Andreas Zielke
As the sector transforms itself, will the automobile
keep its soul?
Automakers took center stage at the 1964 New York World’s
Fair. General Motors exhibited the Firebird IV concept car, which, as
the company explained, “anticipates the day when the family will
drive to the super-highway, turn over the car’s controls to an automatic,
programmed guidance system and travel in comfort and absolute
safety at more than twice the speed possible on today’s expressways.”1
Ford, by contrast, introduced a vehicle for the more immediate
future: the Mustang. With an eye toward the segment that would
later be named the baby boomers, the Ford Division’s general
manager (a not-yet-40-year-old engineer named Lee Iacocca) explained
that the car brought “total performance” to a “young America out
to have a good time.”2 Ford estimated it would sell 100,000 Mustangs
during that first year; in fact, it would sell more than 400,000.
The marriage of an exciting car to an exuberant generation was
clearly the right idea for Ford. And over the past 50 years, automobiles
have continued to be our “freedom machines,” a means of both
transportation and personal expression. Even so, as the industry rec-ognized,
the automobile is but one element of a mobility system—
an element governed by extensive regulations, constrained by a need
for fuel, and dependent on a network of roadways and parking spaces.
Automobiles are also a force for change. Over the past half century,
their very success has generated pollution and congestion while
straining the supply of global resources. The rapid surge of emerging
markets, particularly China, has heightened these dynamics.
1 Source materials for the 1964 New York World’s Fair are available at nywf64.com.
2 For a transcript of Lee Iacocca’s remarks, see “Ford Mustang introduced by Lee Iacocca at
the 1964 World’s Fair, @Ford Online, posted on August 21, 2013, on ford.com.
2. 2
Even more transformative change is on the way. Global competitive
intensity will rise as Chinese players expand from their vast
domestic market. Governments are examining the entire automotive
value chain and beyond with an eye toward addressing external-ities.
Technological advances—including interactive safety systems,
vehicle connectivity, and, ultimately, self-driving cars—will
change the game. The automobile, mechanical to its soul, will need to
compete in a digital world, and that will demand new expertise
and attract new competitors from outside the industry. As value chains
shift and data eclipses horsepower, the industry’s basic business
model could be transformed. Indeed, the very concept of cars as auto-nomous
freedom machines may shift markedly over the next
50 years. As mobility systems gain prominence, and vehicles are
programmed to drive themselves, can the soul of the car endure?
This is just one of the difficult questions (see sidebar, “Challenging
choices”) that confront the automotive industry as a result of the
forces described in this article.
The China factor
Fifty years of innovations in horsepower, safety, and rider amenities
have helped automobile sales grow by an average annual rate of
3 percent since 1964. This is roughly double the rate of global popu-lation
growth over the same period and makes for a planet with
over one billion vehicles on its roads.3 For the past 20 years, though,
sales in North America, Europe, and Japan have been relatively
flat. Growth has come from emerging markets—much of it in China,
which over the past decade has seen auto sales almost triple,
from slightly less than 8.5 million cars and trucks sold in 2004 to,
estimates suggest, about 25 million in 2014. IHS Automotive
predicts that more than 30 million vehicles a year will be sold in China
by 2020, up from nearly 22 million in 2013. China’s promise has
attracted more players to the country, so margins will naturally com-press.
Yet the country’s importance transcends these short-term
results. In the decades ahead, China’s emergence as a dominant market
and production center should have major implications for how
cars are designed. Chinese tastes and standards, particularly at the
luxury end, where automakers are notably raising the bar, will
have a global influence.
3 John Sousanis, “World vehicle population tops 1 billion units,” Ward’s Auto, August 14,
2011, wardsauto.com.
3. 3
A road map to the future for the auto industry
China’s emergence as the world’s largest automotive market also
is fueling a burgeoning domestic auto industry to compete alongside
more established global players. For decades, Japanese, North
American, and European OEMs formed a triad that, at its height,
produced an overwhelming majority of the world’s automobiles
(Exhibit 1). South Korea has since taken its place among the automotive
leaders, capturing over 10 percent of the world market in the past
15 years. The growth of Chinese players is changing the equation—and
things are moving fast. Ten years ago, only one Chinese OEM,
Shanghai Automotive Industry Corporation, made the Fortune Global
500. The 2014 list has six Chinese automakers.4 Given surging
local demand, the Chinese may just be getting started. While South
Korean OEMs Hyundai and Kia have created brands with global
reach, China’s OEMs do not yet export automobiles in a significant
way. With strong local demand as a base, a number of Chinese
automakers will probably consolidate, become better able to serve
their domestic market, and then seek to achieve an international
impact, perhaps through joint ventures, partnerships, or other com-binations
with global companies.
Regulating from ‘well to wheels’
Governments have been driving automotive development for decades.
Initially, they focused on safety, particularly passive safety. The
process started with seat belts and padded dashboards and moved
on to airbags, automotive “black boxes,” and rigorous structural
standards for crash-worthiness, as well as requirements for emissions
and fuel economy.
More recently, the automobile’s success has strained infrastructure
and the environment, especially as urbanization has accelerated.
Brown haze, gridlock, and a shortage of parking now affect many urban
areas in China, as they do in other cities around the world. Munici-palities
have begun to push back: Mexico City’s Hoy No Circula
(“no-drive days”) program uses the license-plate numbers of vehicles
to ration the number of days when they may be used, and dozens
of cities across Europe have already established low-emission zones
to restrict vehicles with internal-combustion engines.
4 The Fortune Global 500 issue (July 2014) lists Shanghai Automotive Industry
Corporation (now known as SAIC Motor), China FAW (First Automobile Works) Group,
Dongfeng Motor Group, Beijing Automotive Group, Guangzhou Automotive Industry
Group, and Zhejiang Geely Holding Group. For more, see fortune.com/global500.
4. 4
Challenging choices
Clearly, issues at play in the automotive industry are interrelated. Emerging
economies and widespread urbanization will not only affect global sales
and the competitive intensity of the industry but also help to shape its digi-tization.
Regulations will continue to compel innovation. And self-driving
technology—one of the industry’s greatest disruptions in the last hundred
years—will play out differently in different markets and regions, depending
on their regulatory, competitive, and customer landscape. Interrelated
uncertainties about these forces will create challenging questions for
industry leaders.
Emerging markets. What’s our strategy for China as annual sales
there increase to 30 million vehicles a year by 2020 and its aftermarket
blossoms? How will we respond if competition in China becomes
too intense? Which other emerging markets demand our focus now?
Demand constraints. To what extent do our future growth plans
incorporate the shifting attitudes of younger consumers toward car
ownership, the impact of rapid urbanization, and efforts to fight
congestion and other regulatory trends that could constrain demand?
Ownership models. How could developments such as car sharing
change who purchases our vehicles, how they are used, and when people
and organizations buy them?
Competencies and distinctions. What’s our plan for sourcing the
digital talent we need? How can we ensure that the soul of the car,
as reflected in our brand, endures—even as our offerings become more
digital and more autonomous?
Connectivity. What value can we contribute and capture in an
environment of increasingly networked mobility? What killer applications
can we deliver to meet growing demand for integrated transportation,
active safety, and seamless communication?
Mandated standards. What technology portfolio (engines, energy
sources, and lightweight materials) will best address increasingly stringent
emissions and fuel-economy requirements around the world—and
still keep our customers in different segments and geographies happy?
Engaging the public. As the scope of regulation expands beyond well to
wheels and as debates about congestion, pollution, carbon emissions,
and safety intensify, how can we contribute to the dialogue? How can we
best ensure a fair hearing for the social and economic benefits of mobility
and an equitable distribution of regulatory burdens across the value chain?
5. 5
A road map to the future for the auto industry
China too is acting. Influenced by its dependence on foreign oil and
by urban-pollution concerns, the government has indicated that
it favors electric vehicles, even though burning domestic coal to power
them can leave a larger carbon footprint.5 In Beijing, a driver
wishing to purchase a vehicle with an internal-combustion engine
must first enter a lottery and can wait two years before receiving
a license plate. Licenses are much easier to get for people who buy
state-approved electric vehicles.
We expect vehicle-use restrictions to grow more stringent as the level
of urbanization increases. Regulators are considering a more
aggressive “well to wheels” approach to gauge the social impact of
automobiles across the product life cycle rather than focusing on
Q4 2014
Autos
Exhibit 1 of 2
Exhibit 1
5 Alice Park, “Why electric cars are more polluting than gas guzzlers—at least in China,”
Time, February 14, 2012, time.com.
Global motor-vehicle sales have grown by nearly 3 percent a year for the
past two decades, with substantial variation in regional growth.
Car and truck sales by location, 1964−2014,1
millions of units
Recent growth,
2004–14, compound
annual growth rate, %
88 3.4
19
25
5
19
63
52
15
8
6
11
7
1
16 16
11
41
8
4
14
32
5
12
22
7
20
18
18
15
<1
1984 1994 2004 2014
(estimated)
2
1 0
11 13
1964 1974
2.7
11.4
–0.5
1.4
0.9
Rest of world2
China
Japan
Europe
North
America
0
2
1 Estimate of 1964–2004 data based on geographic sales trends of subsegments. Figures may not sum to total,
because of rounding.
2 Eastern Europe, Mexico, Middle East, South America, and South Korea.
Source: IHS Automotive/Polk; Ward’s Auto InfoBank; McKinsey analysis
6. 6
the automobiles themselves. This approach requires authorities to
make an integrated assessment of the costs and effects of extracting,
processing, and delivering a fuel or energy source to automobiles
(“well to tank”) and of using that fuel or energy source and gener-ating
emissions (“tank to wheels”).
For automakers, these developments mean a more challenging envi-ronment
in which the industry’s plans for growth and mix of vehi-cles
could collide with regulatory priorities. It could also lead to a new
type of segmentation. The reality of zero tailpipe emissions could
result in cars categorized by use. Instead of one type of vehicle meant
to do everything, smaller vehicles with no tailpipe emissions could
be designed specifically for urban travel. Larger, extended-range vehi-cles
could be used for longer routes.
Regulation would also create new opportunities beyond traditional
industry competencies. For example, some automakers are inves-tigating
potential plays across the value chain—such as developing
alternative fuels or investing in wind farms to generate power
for electric vehicles—to offset the emissions created by the vehicles
they sell.
In any event, the automotive industry should expect to remain
under regulatory scrutiny, and future emissions standards will prob-ably
require OEMs to adopt some form of electrified vehicle.6
Indeed, we believe that regulatory pressures, technology advances,
and the preferences of many consumers make the end of the
internal-combustion engine’s dominance more a matter of “when”
than of “if.” The interplay of those forces will ultimately determine
whether range-extended electric vehicles, battery electric vehicles, or
fuel-cell electric vehicles prevail.
Digital disruption
The car of the future will be connected—able not only to monitor, in
real time, its own working parts and the safety of conditions around
6 For more on the global prospects for energy and conservation, see Steve Chen, Maxine
Fu, and Arthur Wang, “Seizing China’s energy-efficiency opportunity: A case study,”
McKinsey Quarterly, June 2013, on mckinsey.com; and David Frankel, Stefan Heck, and
Humayun Tai, “Sizing the potential of behavioral energy-efficiency initiatives in the US
residential market,” McKinsey Global Institute, November 2013, available for download
on mckinsey.com.
7. 7
A road map to the future for the auto industry
it but also to communicate with other vehicles and with an increasingly
intelligent roadway infrastructure.7 These features will be must-haves
for all cars, which will become less like metal boxes and more
like integrators of multiple technologies, productive data centers—
and, ultimately, components of a larger mobility network. As every
vehicle becomes a source for receiving and transmitting bits of
information over millions of iterations, safety and efficiency should
improve and automakers should be in a position to capture valu-able
data. Electronic innovations have accounted for the overwhelming
majority of advances in modern vehicles. Today’s average high-end
car has roughly seven times more code than a Boeing 787.8
Digital technology augurs change for the industry’s economic model.
Over the past decades, automakers have poured their cost savings
into mechanical, performance-oriented features, such as horsepower
and gadgetry, that allow for higher returns. But that dynamic
is shifting; in the United States, a squeeze is developing as content
requirements of cars in emissions and safety continue to rise while
consumers pay no more for these features than they did a decade ago.9
While it’s unlikely that regulatory and competitive pressures will
abate, the shift from mechanical to solid-state systems will create new
opportunities to improve the automakers’ economics. The ability
to analyze real-time road data should improve the efficacy of sales
and marketing. Digital design and manufacturing can raise produc-tivity
in a dramatic way: big data simulations and virtual modeling
can lower development costs and speed up time to market. That
should resonate with customers conditioned to the innovation clock
speed of consumer electronics, such as smartphones.
Common online platforms can connect supply and demand globally
to increase the efficiency of players across the supply chain.
Embedded data sensors should enable more precise monitoring of
the performance of vehicles and components, suggesting new
opportunities for lean-manufacturing techniques to eliminate any-
7 For more, see “What’s driving the connected car,” September 2014, on mckinsey.com.
8 Digits, “Chart: A car has more lines of code than Vista,” blog entry by Brian R. Fitzgerald,
Wall Street Journal, November 11, 2013, blogs.wsj.com.
9 See Russell Hensley, Srikant Inampudi, Hans-Werner Kaas, and John R. S. Newman, “The
future of the North American automotive supplier industry: Evolution of component
costs, penetration, and value creation potential through 2020,” March 2012, available for
download on mckinsey.com.
8. 8
thing customers don’t value and dovetailing with the digitization
of operations to boost productivity, including the productivity of
suppliers, in unexpected ways.10 As automobiles become more
digitally enabled, expect connected services to flourish. When the
demands of driving are lifted, even the interiors of vehicles may
give automakers opportunities to generate revenue from the occu-pants’
connectivity and car time.
The industry’s digitization will create challenges as well as oppor-tunities
for OEMs. Disruptive technologies will give companies
a chance to leapfrog existing automotive leaders whose competence
lies in established ones. Attracting talent will be more difficult as
the core of automotive research and engineering migrates to software-driven
innovation hubs, such as Silicon Valley, Tel Aviv, or Bangalore.
And acquiring actionable data will become increasingly critical
for the design and operation of systems, drivetrains, safety features,
and more. The most difficult challenges may be cybersecurity and
emerging regulatory oversight. In the United States, for example, the
National Highway Traffic Safety Administration (NHTSA) recently
announced that it may make vehicle-to-vehicle communications
mandatory.11 Among other implications, this move would call into
question whether and to what extent OEMs can protect their
driver-generated data and keep them proprietary.
Rethinking ownership
Technology and connectivity pose the question of whether it’s necessary
to own an automobile. Car sharing is a prominent example:
the consumer pays to use vehicles only as needed and foregoes the
responsibilities—and benefits—of individual ownership. Car-sharing
services, which allow people to make a reservation at the tap
of a personal mobile device, are expected to grow significantly
in the next two years, with dramatic increases in the number of
users and in revenues.12 These developments also defy the
very notion of a car as a personal, autonomous machine. Already,
10 See Ewan Duncan and Ron Ritter, “Next frontiers for lean,” McKinsey Quarterly,
February 2014, on mckinsey.com.
11 See National Highway Traffic Safety Administration 49 CFR Part 571, “Federal Motor
Vehicle Safety Standards: Vehicle-to-Vehicle (V2V) Communications,” August 2014, gpo.gov.
12 See Andreas Cornet, Arnt-Philipp Hein, Detlev Mohr, Florian Weig, and Benno
Zerlin, “Mobility of the future: Opportunities for automotive OEMs,” February 2012,
available for download on mckinsey.com.
9. 9
A road map to the future for the auto industry
“millennials” (the 18–34 demographic) appear to place less
importance on car ownership than previous generations do. They
are more open to sharing cars and to the rapidly growing number of
“mobility services,” such as Uber and Lyft.
Yet increased car sharing does not necessarily translate into fewer car
sales. Our analysis suggests that as it becomes more common, both
car usage and wear and tear will rise in turn. The average distance
driven per person probably will not decrease; in fact, it may creep
up. We would expect a broad car-ownership regime to include a variety
of vehicle types, at both ends of the spectrum: not only more util-itarian,
almost “vandal-proof” fleet cars for shared rides but also
higher-performance “fun” cars for those who still enjoy being behind
the wheel for a Sunday drive. Often, the same drivers will be in
both segments—just as, for example, a consumer may purchase fast
food for some meals but still enjoy a Michelin-starred restaurant
for special occasions. In an era of megacities and congested urban
areas, personal-mobility services will help transportation become
more flexible.
Autonomous vehicles and the soul of the car
Currently, human error contributes to about 90 percent of all
accidents,13 but autonomous vehicles programmed not to crash are
on the horizon. To be sure, some technological issues remain,
emissions issues will linger, and regulators are sure to have a say.
Furthermore, combining autonomous and nonautonomous vehi-cles
in a single traffic mix will be a significant challenge. The most
difficult time is likely to be the transition period, while both kinds
of cars learn to share the road before self-driving ones predominate.
(“Self-drive only” lanes and dedicated roadways might be the
first step.) The technology, though, is no longer science fiction.
The possible benefits, by contrast, read like fantasy. If we imagine
cars programmed to avoid a crash—indeed, programmed
never to crash—we envision radical change (Exhibit 2). Passengers,
responsible only for choosing the destination, would have the
freedom to do what they please in a vehicle. Disabled, elderly, and
13 See “Human error as a cause of vehicle crashes,” blog entry by Bryant Walker
Smith, Center for Internet and Society at Stanford Law School, December 18, 2013,
cyberlaw.stanford.edu.
10. 10
Q4 2014
Autos
Exhibit 2 of 2
Collision-avoidance safety technologies relevant to crash type
From 1971 to 2013 Today Future
Vehicle
crash type A B C D E F G
Off roadway
Rear end
Lane
change
Opposite
direction
Bicyclist
Crossing
paths
Pedestrian
Animal
Backing
Other
A. Antilock brakes
B. Traction control
C. 3rd brake light
D. Electronic stability control
E. Forward collision warning
F. Adaptive cruise control
G. Lane-departure warning
H I J K L M N O P Q
H. Park assist and back-over
prevention
I. Adaptive headlights
J. Lane-departure
prevention
K. Blind-spot detection
L. Forward-collision
avoidance
M. Fatigue warning
N. Evasive maneuvers
O. Exit-to-exit highway driving1
P. Vehicle-to-vehicle (V2V)
communication
Q. Vehicle-to-infrastructure (V2I)2
communication
visually impaired people would enjoy much greater mobility.
Throughput on roads and highways would be continually optimized,
easing congestion and shortening commuting times.
And that would be only the beginning. Crash-free vehicles mean no
traffic police, no ticketing, no alcohol-impaired driving. Freed from
safety considerations such as crumple zones, bumpers, and air bags,
OEMs could significantly simplify the production of cars, which
would become considerably lighter and therefore less expensive to
buy and run. Related industries, such as automobile insurance,
Exhibit 2
Adoption of safety-related technology has grown dramatically,
addressing more types of vehicle crashes.
1Systems programmed to make smart decisions about navigating interstate on- and off-ramps.
2For example, communication between vehicle and traffic light.
Source: McKinsey analysis