How Automakers are Recreating the Future of Automotives

The automobile business is advancing at a breakneck rate. The combination of advanced technology and changes in mobility is compelling the industry to modernize, adopting new procedures, and adapting to shifting markets.

FREMONT CA:  Electric mobility, autonomous vehicles, automated manufacturing, and ridesharing are just a few of the significant challenges the automotive industry faced before the COVID-19 crisis. With travel severely restricted due to the pandemic and amid global manufacturing closures, declining vehicle sales, and enormous layoffs, it's reasonable to ask what the auto sector's "new normal" will look like. People have seen the first signs of this automotive future emerge over several months, with the most significant industry changes yet to come.

Numerous recent events are cause for alarm. For example, the COVID-19 issue has caused about 95 percent of all German automotive-related businesses to place their workforces on temporary employment during the shutdown, a practice in which employees are temporarily laid off and receive a portion of their salary from the government. Globally, the COVID-19 problem has enormous and unprecedented ramifications. Indeed, several auto-retail locations have been shuttered for a month or more. Profits for the world's top 20 automakers are expected to drop by around $100 billion in 2020, a roughly six-percentage point decline from only two years earlier. It may take years for the company to recover from this loss of profits.

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At the operational level, the pandemic has expedited several years of progress in the automobile sector. Many of these developments are reasonable, such as the increase in internet traffic and OEMs' increased readiness to collaborate with partners—automotive and non-automotive—to address issues. On the other hand, others may have negative consequences, such as a proclivity to focus on core activities rather than expanding into other areas. While OEMs may be concentrating their efforts on the core to keep the lights on, failing to explore additional options might be costly in the long run.

Automotive executives may gain an edge in navigating this crisis by rethinking their organizational structures and processes. Five actions can aid companies in this process: refocusing entirely on digital channels, transitioning to recurring income sources, optimizing asset deployment, embracing zero-based budgeting, and establishing a resilient supply chain. Additionally, one guiding principle—the need to develop a solid decision-making cadence—will assist.