Enterprise View: Succeeding in the Changing Automotive Industry

Emerging markets such as China, India and Russia have been major sources of growth for automotive manufacturers striving to succeed, particularly during these challenging economic times.

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But capturing market share in them will become largely a one-off exercise as new entrants and the increasing strength of local competition erode growth opportunities.

To sustain future growth, automakers will need to focus on markets—whether in emerging or developed economies like the United States and Europe—that are best suited for their presence, product line-up and brand positioning, based on their specific business models.  In other words, future profitable growth will lie in the ability of companies to combine the right vehicle segments with the right features in the right markets, no matter where they are in the world.

This will become increasingly crucial as companies ramp up manufacturing to respond to demand for more fuel-efficient and greener cars, as well as in-vehicle technologies such as infotainment (IVI) systems that provide safety, infomobility and other services.

According to Accenture research, which analyzed the performance of 16 of the top public auto manufacturers, a select group of six companies are managing to overcome industry challenges and position themselves to take advantage of future growth opportunities wherever they exist. They are doing so by focusing on three building blocks, which underpin high performance in all industries.

Automakers seeking long-term growth should adapt these building blocks to their particular situations to continue on the path to high performance. The three building blocks are:

1. Market Focus and Position—High performers identify suitable growth opportunities by tailoring a territorial footprint, product line-up and brand position.

2. Distinctive Capabilities—They develop two essential capabilities based on a superior cost structure that include:

• Lean Enterprise—a combination of low material costs, flexible and demand-driven manufacturing, and back-office efficiency that results in high product quality
• Customer-centric Enterprise—a focus on sustaining customer loyalty and generating new customers through rapid product development, including leading-edge IVI systems and telematics, aligned with multi-channel retail and zero-time-lost service experiences.

3. Performance Anatomy—Creating a culture and operating model driven by a winning mindset and superior execution.

• Centralized Control—Maintaining strong and continuous leadership with centralized decision-making
• Talent—Developing and retaining an exceptional talent base.

These building blocks will remain at the core of sustaining high performance. But again, future success will continue to be closely linked to specific market and segment combinations. For example, companies focused on the mass-market segment will need to expand their footprints in emerging markets, while continuing to develop the capabilities that support lean operations and build a distinctive company culture that nurtures and retains talent.

Sustaining growth

As the global automotive industry continues to evolve, auto manufacturers will face increasing challenges in terms of new sources of competition, shifting vehicle demand and consumer preferences for ever-more sophisticated in-vehicle technologies. The choice of both product segments and markets will vary from company to company. But, those agile enough to act on the specific market and segment combinations that will best fit their individual products and sales profiles will be in a much better position to sustain growth and high performance.

James Robbins, james.a.robbins@accenture.com, is a senior executive for Accenture, a global management consulting, technology services and outsourcing company.

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