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Three Ways Technology is Set to Impact the Global Automotive Industry

July 31, 2019

By Dr. Christian Back

The global automotive industry is undergoing a radical technologically-driven transformation. From on-demand taxi services and car sharing apps to connected systems and driverless vehicles, technology is having a major impact on the automotive landscape. The disruption is also far reaching as it not only affects how vehicle components are produced, but also how we will use vehicles in the future. Based on our expertise and research*, Mazars has analysed these trends and outlined three ways in which we believe technology will impact the global automotive industry.

1. Redefining vehicle ownership

Alongside the high cost of car ownership, government policies aimed at reducing the consumption of goods that harm the environment are guiding consumers to make more informed choices on car ownership, particularly second car ownership. Rather than paying for an additional car that is used infrequently, consumers are using apps and platforms to assess new car hire and shared ownership models. This does not necessarily mean a reduction in car sales, as it’s expected that the increased use of fewer vehicles will require more frequent replacement. More importantly, we believe such trends open doors to create or improve synergies between the automotive industry and technology firms to respond to consumer demand for new and innovative vehicle ownership models. As a firm that offers support to the automotive industry on a range of related issues, Mazars understands the global challenges the industry now faces.

2. Power shift

As technology becomes more embedded in the industry, which business model holds the balance of power when it comes to mobility solutions is far from clear cut. If we take China as an example, there are intermediaries such as Didi who aggregate data to act as a link between providers of cars, bikes, taxis etc. with potential customers. Then there are providers such as Mobike which manufactures most of the distinctive orange bikes to capitalise on the growth of on-demand bicycle use. While there is the undoubted power of data, there is also control and expertise in the manufacturing process. Both use technology in different ways, but there are service synergies which has seen Didi sign partnership agreements to help OEMs market auto-sharing services and electric vehicles. Equally, Mobike integrated its services into WeChat, China’s largest social media platform. Either way, forging the right partnerships with a shared vision will continue to be key. Having a partner such as Mazars that can help navigate the issues will be crucial.

3. Supply chain challenge

While OEMs are finding themselves at the sharp end of technology disruption, it’s players in the automotive industry supply chain that potentially face the biggest challenges at business level. With electric vehicles (EVs) requiring fewer traditional components and materials, Tier 2 and 3 companies who currently focus on a small number of product lines that have limited EV crossover potential going forward will need to spend time developing their future strategy, particularly if they do not have the support of a Tier 1 player. As a result, some players in the supply chain are hedging their bets and investing heavily in technology to cope with life without combustion engines or traditional car materials. While Mazars is aware it’s a gamble to invest in expertise and capabilities 5-10 years before the landscape becomes readable, companies that delay plans to invest could potentially fall too far behind the curve so assessing options sooner rather than later is advisable.

*Sustainable Mobility – Mazars Global Automotive Study

This article was originally published by Mazars Insite for Good on July 31, 2019. Click here to view original article. 

 


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