The past month I was fortunate to attend and moderate a number of automotive industry briefings which highlight the challenges and opportunities the industry faces as it moves into its anticipated peak years of 2017-18. As was pointed out in August at the annual Management Briefing Seminar sponsored by the Center for Automotive Research (CAR: www.cargroup.org), 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 – and how best to emerge prepared and readied for the next wave of growth opportunities in a vastly different (and 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 again during his keynote and challenged those in the room with thinking differently and embracing the rapid digital changes sweeping the automotive industry. His head-scratcher question of “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 featuring presentations by FCA, Karma Automotive and Delphi which further explored how these companies were readying for – and embarking – on their digital journeys.
The Annual Original Equipment Supplier Association (OESA: www.oesa.org) further challenged the industry to move to a “new clock speed” and how the 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 need for transition planning at all levels of the workforce. (Catch my full audio recap of the OESA conference here).
And finally the Automotive Aftermarket Supplier Association (AASA: www.aftermarketsuppliers.org) Tech conference yielded a number of industry opportunities including the findings of the joint white paper with SAP. As part of our findings, we learned that the aftermarket segment does indeed have aspirations to move to digital – particularly in the on-line 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 preferences-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 Omni-channel (web, phone, app, etc.) sales in the segment. (Read the full discussion and find a link to our whitepaper here).
With the 2017 “peak year” on the horizon, automotive companies clearly have 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.