A new era Accelerating toward 2020 — An automotive industry transformed
The transformations to come The restructuring imperative Changing customers, changing demands Technology to reflect new sets of demands Getting the right skills The next chapter in industry history Endnotes
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The transformations to come
At least now, the picture is clear For the past few years, automotive leaders and observers have witnessed an industry in peril. A slowing global economy, coupled with declining consumer confidence, has translated into dismal new car sales in most markets. But the slump has masked many outstanding industry advancements. Standards of quality and productivity, for example, have been raised without a corresponding increase in price. Cars today are safer, more fuel efficient, and more technically advanced than ever. And, the automotive workplace has evolved from an image of “dark, dirty and dangerous” to an environment of high skills, advanced technologies, and dynamic change. Despite this, competitive and financial pressures have led to a number of high-profile bankruptcies. Production utilization in North America, Western Europe, and Japan has dropped dramatically leading to widespread job losses. Even with discounts and other purchase incentives, consumers, wary of an uncertain economic future, have yet to return to the showroom without extraordinary government incentives. So, what will be the shape of the automotive industry as the world emerges from the economic downturn? In this report, Deloitte Touche Tohmatsu’s senior automotive leaders offer a perspective on the structural changes and major customer, technology, and people trends expected to transform the industry over the next decade. A massive shift in the competitive landscape will see China and India emerge as major players in the industry. These markets will join Western Europe, Japan, Korea, and the United States as the centers of design and manufacturing for original equipment manufacturers (OEMs) and their suppliers. By 2020, as few as ten volume OEMs groups based in these six major markets will account for 90 percent of global sales. To remain competitive, each will rely on higher volume global platforms supported by networked design centers in key emerging markets. An era of “conscious consumption” will emerge. Customers around the world will be more cost conscious, especially in the developing world where millions of drivers will make their first ever car purchase. Environmental considerations will also weigh heavily on the industry towards 2020. The fierce race to develop and produce electric vehicles, spurred by both customer demand and government incentives, will mean that up to a third of all cars purchased in developed countries in 2020 will not be propelled by an internal combustion engine. This technological imperative will escalate an already intense war for talent by 2020. The workforce of the future will not only need more complex skill sets but will also need to be flexible so that companies can employ them most productively. At every level, a more proactive approach to training will be implemented, as part of a more progressive and comprehensive approach to talent management. The challenge to attract highly skilled workers will be especially acute in developed markets. Emerging markets, with their younger demographics and plentiful engineering talent, will pick up the slack left by the talent shortage. What must not be lost in any of this is the increasing role of government. Governments in all major markets have become active industry players. Their investments through emergency loans and incentive packages will have a lasting impact on the industry’s direction. The nature of their continued support to domestic companies, as well as energy and environmental policies, will do much to mold the automotive sector over the next ten years. To be sure, there will be no resumption of the status quo. Automakers...
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