The automotive world is experiencing unprecedented change. By 2040 the industry will be polarized, automated, connected and electrified – or PACE, for short.
Automotive industry: new world order
China's automotive industry pushes into the European market
New technologies, geopolitical tensions, and pressure to be sustainable are changing the rules of the game in the industry.
Manufacturers and suppliers are under enormous pressure to adapt: those who fail to reposition themselves will lose out. Cooperation, new markets, and technological innovations are the key levers for surviving in an increasingly competitive global market.
Mobility in Motion, a special supplement we produced for the International Motor Show (IAA), highlights the most important areas of action and approaches to successful transformation.
China speed – Speed as a competitive advantage
China is currently setting the pace for the global automotive industry. Short development cycles, high cost efficiency, and an uncompromising market orientation have put the country in a position to define trends rather than follow them. This puts immense pressure on European OEMs and suppliers : product development must become faster, processes more efficient, and business models more flexible. A convincing response lies in new partnerships, local value creation in Europe, and business models that consistently take different market conditions into account. Only in this way can Europe remain competitive in the global marketplace.
Small and medium-sized enterprises between pressure and opportunity
German small and medium-sized enterprises in particular – long the backbone of the industry – are facing a test. Rising costs, a shortage of skilled workers, and increasingly fierce international competition are putting companies under pressure. But every crisis also presents an opportunity: targeted diversification, for example into the defense or aviation industries, opens up new business areas and growth potential. Today, resilience means broadening your business model without losing sight of your core competencies. Those who act boldly now can secure their role in the ecosystem for the long term.
"European manufacturers need to significantly shorten their development cycles in China and tailor their products much more closely to local customer requirements."
Global markets in transition
The balance of power is shifting rapidly: China has become the largest and most important automotive market, while Europe and the US are increasingly struggling to remain competitive. At the same time, new, dynamic sales regions are emerging in India, South America, and the Middle East. For the industry, this means consistently regionalizing its strategies and actively exploiting opportunities in the “Global South.” Those who understand the different requirements of these markets and develop tailored offerings can open up new growth paths while becoming less dependent on established markets.
Technologies of the future: batteries and autonomous driving
Electrification remains the key driver of transformation. In an interview, CATL CEO Robin Zeng emphasizes the importance of standardization and sustainability in battery cells in order to achieve economies of scale and combine ecological and economic goals. At the same time, the use of artificial intelligence and autonomous driving functions is changing the entire value chain – from production and logistics to after-sales. Regional ecosystems and targeted joint ventures are crucial for managing the associated investments and bringing innovations to market more quickly. Companies that actively shape these technologies are securing sustainable competitive advantages.
Cooperation as the key
Whether in battery technologies , software development, or new mobility solutions, transformation can only succeed through cooperation. In an interview, Volkswagen CEO Thomas Schäfer emphasizes that OEMs, suppliers, politicians, and technology partners must attend forces to tackle the major challenges of the coming years. In the report, Roland Berger experts such as Wolfgang Bernhart, Marcus Berret, and Falko Rieß present concrete approaches for how companies can gain speed with new cooperation models while simultaneously mitigating risks. The path to the future is not a solo endeavor – only by working together will the industry develop the necessary clout.
Outlook
The automotive industry is at a turning point. Geopolitical risks, changing customer requirements, and new competitors require quick and bold decisions. Those who position themselves clearly now, enter into partnerships, and tap into new markets will not only survive but emerge stronger from the transformation. Roland Berger supports companies in developing the right strategies and consistently driving their implementation – from analyzing global markets to the concrete implementation of innovative business models.
You can find more insights, interviews, and analyses in our full report: “Automotive Industry 2025 – Transformation in Global Competition.”
Download the full supplement here
Register now to download "Mobility in Motion", a special supplement we realized together with "Automobilwoche".
Further readings
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