Backdropped by what AlixPartners two years ago identified as the “CASE” trends that are completely revolutionizing the automotive industry – the connected, autonomous, shared and electric vehicles of the not-too-distant future — the global business-advisory firm today unveiled an analysis detailing how automakers, suppliers and other industry players need to evolve their organizations and their partnering approaches to successfully transition to a “new automotive ecosystem.” Using several examples, the firm detailed where companies, often relying on traditional auto-industry approaches, are falling behind and why they should consider revamping their operating models. Meanwhile, the report also forecasts a significant downturn in US sales ahead, to 16.9 million light-vehicle units this year and to a cyclical trough of 15.2 million units in 2019 – partly driven by a “used-car time bomb” of 500,000 more off-lease vehicle-returns in 2017 vs. 2016, on top of the 500,000 more in 2016 vs. 2015.
On the connectivity front, the analysis points to the example of Tesla Inc.’s “high-spec” center-stack display, featuring over-the-air upgrades from the company and iPad-like features. Though this feature has been on the market since the 2012 model year, and has garnered very strong reviews from consumers, no other major automaker has moved to match the system.
On the autonomous-vehicle front, the AlixPartners analysis finds there are now more than 50 major companies are now working on autonomous vehicles or full autonomous-vehicle systems, as well as a plethora of smaller companies and start-ups. This “Wild-West” environment will likely result in a handful of big winners, says the study, but on the other hand, also many disappointed investors. The report also notes that many of the newer high-tech entrants have completely different “DNAs” than traditional automotive companies, including being used to very high returns on capital. Given the white-hot competition brewing, the analysis predicts that AV systems-costs could drop 78% by 2025.
On the shared-mobility front, the analysis includes a survey of a total of 2,000 US adult consumers that shows just how fast things are changing in today’s automotive world. The survey polled 1,000 consumers across 10 large markets where both car-sharing and ride-sharing are popular (the metro areas of Austin, Boston, Chicago, Los Angeles, Miami, New York, Portland, Seattle, San Francisco-Oakland and Washington, D.C) and, as a control group, 1,000 respondents across the entire US. This mirrored a consumer survey by AlixPartners in November 2013. In this year’s survey, consumers in the 10 trend-setting markets said their awareness for virtually all major car-sharing brands (names such as Zipcar, Car2Go and Enterprise CarShare) has decreased, and 21% of respondents were unable to name any brands at all.