In today's fast-paced world, automotive businesses are facing significant challenges in their route to success, including volatility, gaining competitive advantages, and securing access to resources. Based on its annual survey among automotive executives, EY has identified the top five concerns and priorities for the C-suite in the coming years.
Professional services firm EY recently released the results of its third annual survey of top automotive executives across the globe in its ‘Changing lanes 2015–16’ report. As part of the survey, the consulting firm interviewed 125 global executives across the automotive value chain including automakers, component suppliers, automotive retailers and captive finance companies. The report highlights the business challenges global automotive executives are facing as they look to achieve growth and competitive advantage; these include responding to emerging markets and to Eurozone and political volatility, implementing key operational initiatives, and attracting and retaining talent.
Based on the survey, EY identifies the top five C-suite concerns and priorities for the next 18 months, of which Consultancy.uk provides a brief summary:
The automotive C-suite expects unfavourable volatility to continue, with emerging market demand and political instability topping the list of concerns. 63% of respondents indicate feeling unprepared to respond to such situations effectively and only one in five executives says their company is well-prepared to respond to volatility. To address the issue, executives should stress the need for flexibility to navigate through volatility, achieve an optimum capacity-demand balance at a regional level and focus on capitalise on the upside potential of North America and China.
Enhancing value proposition:
There is consensus across the industry on the value of features and functionality to drive loyalty, and a greater recognition of the critical role of digital in improving the customer experience. Seven out of 10 (71%) expect demand for digital experience to support their value proposition, however, only 29% say they are well-prepared to meet these changing consumer demands. EY recommends executives to align functional organisations to support the mobility and connectivity value proposition and to accelerate the transformation of distribution channels to give customers a “seamless online and dealer store experience.”
Gaining competitive advantage:
Market penetration/expansion, owning innovation and having an effective corporate strategy development process remain top priorities of C-suite to gain competitive advantage over the competition, with 71% of respondents believing that enhancing value proposition can give a competitive advantage. However, only 27% feel they are well prepared to implement strategic initiatives that could gain competitive advantage. Automotive companies should bridge the gap by establishing a network of technology and business model partners within and outside the auto industry and leverage marketing effectiveness monitoring and customer analytics tools to optimise their digital strategies.
Improving operational efficiency:
The survey shows that automotive executives put a strong focus on data management and analytics initiatives to drive operational efficiency, with profitability listed as the main driver for operational efficiency initiatives by 84%. Many executives, however, point out not feeling prepared, with only 16% feeling well-prepared to implement key operational efficiency initiatives. When responding to this, companies should spearhead data management and analytics capabilities and flex global capacity to create a competitive advantage.
Securing access to resources:
63% of the C-suite believes critical resources offer a competitive advantage, with talent topping the list, followed by infrastructure and technology. Securing these resources, however, continues to be a challenge for most of the automotive industry as only 17% believe they are well-prepared to meet this challenge. EY recommends the C-suite to focus on securing access to talent and ensuring compliance for business continuity, to extend the value chain to new industries to develop technology and infrastructure, and to devise innovative strategies to retain talent and utilize infrastructure to create competitive advantage.
Commenting on the survey results, Randy Miller, EY’s Global Automotive and Transportation Sector Leader, says: “Automotive executives must be prepared to respond to continued volatility, particularly in emerging markets, as some are experiencing recession that could hit other regions and change the sector growth overall. The sector needs to move faster to leverage the convergence of connectivity, mobility and IT security, and the adoption of analytics and data management tools to drive operational efficiency. A faster response to the shifting relationship with customers through a refreshed dealer and sales experience will also be paramount to drive and keep brand loyalty.”