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In an unstable global market, the automotive sector is prioritising operational and financial efficiency in order to improve its margins
While manufacturers have to deal with the diverse challenge posed by emerging markets and their widely varying dynamics, they must also respond to new trends in mature markets and take into account the changing nature of relationships between Western consumers and their vehicles.
The automobile sector faces a major paradox: despite its structural difficulties, inducing the need for exhaustive self-reassessment after more than a century of existence, the sector still has strong potential for growth worldwide.
Globalization, growing regulatory constraints, urban-development challenges and the impacts of the digitization of consumer behaviors require automotive manufacturers to pursue their efforts to combine flexibility and innovation to increase efficiency.
Pursuing the dynamic adaptation of your offer to the fast evolution of the driver experience is key to success in this sector
New modes of mobility (car-pooling, car-sharing, multi-modularity) are symptomatic of the changes affecting the driver - vehicle relationship nowadays. Against a background of economic instability and increasing concern over environmental issues, these new behaviors will continue to spread beyond big cities, where they are most visible today.
Lighter equipment, the development of electric and hybrid vehicles and the acceleration of R&D investment in heat engines are all signs that automotive manufacturers are on-boarding environmental issues and consumers' new expectations - which are more and more focused on travelling safely and responsibly.
Consequently, the automobile sector must respond to these issues by offering ever more innovative products that reflect these new consumer habits and expectations.
Developing an ‘industrial footprint’ in response to globalization issues
European manufacturing plants have been affected by a recurring problem of overproduction for over a decade and must now adapt to shrinking sales volumes due to the 2007 crisis. This industry requirement is to be added to another: the development of industrial capacities (manufacturing and even R&D) that are as close as possible to new customers' market in emerging countries such as China (now the world’s biggest market), Latin America, India, and Russia. This entails finding an improved combination of manufacturing-cost benchmarks for a broader product range (low-cost, low-end, niche and high-end vehicles).
Players in the sector are therefore forced to conduct strategic analyses to explore key locations and global level industrial choices, which will significantly affect their mid-term performance.
Increasing manoeuvrability and flexibility in development and manufacturing
In 2016, half of the world’s production was concentrated on 27 platforms, compared to 31 in 2012. Modularity linked to stronger configuration management is becoming a key issue for reducing design costs, shortening cycle time and optimising flexible manufacturing costs, while meeting increasing consumer demand for vehicle customization.
These new concepts are compelling organizations to adapt radically by changing their practices and ensuring that all their operational teams apply the new methods appropriately.
Developing an omnichannel customer itinerary and achieving operational excellence of physical distribution networks
Digitization of the buying experience has contributed to changes in consumer behavior. Customers now have access to ever more sophisticated information, which enables them to meticulously compare offers and share their experiences on social media. They are increasingly well-informed and less and less predictable. Consequently, operators in the sector must invest in the Web as a medium to promote their products and win over consumers at source.
Facilitation of customer-relations flow on the Internet, e-reputation management, mass-processing of customer information (using Big Data) and the connected vehicle concept are all ongoing developments that characterise the huge potential of digital technology for operators in the automotive sector.
The customer’s digital itinerary is now designed to follow the physical point-of-sale itinerary. Today, points of sale must continue their digital transformation and help teams adopt practices and behaviors that produce a consistent high-quality purchasing experience from start to finish.
As well as improving the customer experience, points of sale must also review their organization to keep in mind economic viability. The optimization of management systems and the development of management and business-steering skills are potential levers to increase distribution networks' performance.