This fall I was fortunate to attend and moderate a number of automotive industry briefings highlighting the challenges and opportunities the industry faces as it moves into its anticipated peak years of 2017-18.
As pointed out in August at the annual Management Briefing Seminar, sponsored by the Center for Automotive Research (CAR), with the industry tapering to 17.7M units in North America for 2017, industry management skills can be historically challenged given the sharpness of action stemming from growth and decline cycles. Long-term, slow-growth remains vexing for most companies, making it more difficult to place their bets on how best to emerge prepared and readied for the next wave of growth opportunities in a vastly different digital ecosystem.
At the recent Best Practices for Automotive event, co-sponsored by SAP, ASUG, and Eventful Conferences, executive vice president of research Dave Andrea of CAR brought this topic up during his keynote and challenged those in the room to think differently and embrace the rapid digital changes sweeping the automotive industry. His head-scratcher question—“Is the automotive industry ready to become a utility?”— in light of emerging Transportation-as-a-Service (TaaS) models sweeping automaker boardroom left many attendees re-evaluating their own directional response to these changes.
IDC principal analyst Jeff Hojlo contended that key issues, from vehicle security to the open platform of the Internet of Things (IoT) and how we securely connect various components together to provide a personalized driver consumer experience, would remain at the forefront.
I had the pleasure of moderating the financial transformation track, which featured presentations by FCA, Karma Automotive, and Delphi that explored how these companies were preparing for – and embarking on – their digital journeys.
The Annual Original Equipment Supplier Association (OESA) further challenged the industry to move to a “new clock speed” and discussed how disruption in the industry has changed the notion of a “vehicle” to more a personalized transportation model. Tesla stands as a disruptor in this area, impacting the industry supply chain by behaving (and demanding) more and different relationships from suppliers while providing the personalized driver consumer experience echoing other briefings this season.
Management remains the top challenge facing suppliers, with talent management now the primary management issue given the continuing workforce transition, millennial shifts, and the need for transition planning at all levels of the workforce. (Catch my full audio recap of the OESA conference here or listen below).
And finally, the Automotive Aftermarket Supplier Association (AASA) Tech conference yielded a number of industry opportunities, including the findings of the joint white paper with SAP. We learned that the aftermarket segment does indeed have aspirations to move to digital – particularly in the online self-service consumption of product information that is so key to engaging millennial buyers.
However, the gap between where we want to go and where we are today across the industry is pretty stark. When buyers can go to Amazon.com and engage in a fully preference-driven experience – even touchless routing to recommended parts and equipment – it puts most conventional parts suppliers to shame. This high bar is reality today, and the “Big 4” aftermarket direct-to-consumer distributors (Amazon, Ebay, Autozone, and Napa) are capturing the lion’s share of omnichannel (web, phone, app, etc.) sales in the segment.
With the 2017 “peak year” on the horizon, automotive companies clearly need to focus their investments to prepare for a more digital and connected future. Making those decisions now will enable companies the ability to fund investments now while moving towards a more moderated growth forecast in the coming planning round cycles.
For more insight on digital disruption is impacting the auto industry, see 8 Trends Driving Innovation In The Auto Industry.