Automotive Triple Transformation

Automotive Triple Transformation

A framework for auto industry success in the 2020s

Decision makers in the auto industry are facing unprecedented challenges. Amid a fundamental shift towards the trends of Mobility, Autonomous driving, Digitalization and Electrification (MADE), they are also dealing with a severe economic downturn catalyzed by the coronavirus crisis, as well as destabilizing megatrends such as deglobalization and sustainability.

Such challenges require decisive action, but have overwhelmed many executives. Roland Berger’s Triple Transformation framework brings clarity by focusing on three key dimensions – Position, Perform, Progress. These enable automotive OEMs to course-correct their strategy, ensure competitive performance and become a leading corporate citizen.

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Position: Course-correct your MADE strategy

The four MADE trends are driving disruption in the automotive industry. New mobility service providers threaten to wrest away the customer interface, downgrading OEMs to mere device manufacturers. At the same time, OEMs face losing ground to tech companies and digital players, while also having to shift to producing electric vehicles.

Many incumbent OEMs are behind the curve. To adapt to MADE, they need to re-think their strategy and long-term goals. This means re-visiting solutions to the four trends, and re-assessing business models, partnerships and investments, based on a realistic market development view.

Perform: Ensure competitive performance

The current severe economic downturn will limit the financial capabilities of auto companies for years to come. Significantly fewer light vehicles will be sold in the short term due to the coronavirus crisis, and in the longer term there is uncertainty about when pre-2020 sales levels will be achieved again.

Cost reductions and shifts in value creation will therefore be required. Companies need to streamline indirect costs to cut out slack and optimize the direct costs of value-creating activities. For example, how can product and service portfolios be radically streamlined? And how can complexity be holistically assessed, managed and reduced?

Progress: Develop into a good corporate citizen

We believe four socio-economic megatrends will shape the 2020s: the shift towards a post-fossil fuel society; growing demands for social justice; deglobalization; and economic volatility. To deal with these, companies need to renew their organization to meet the expectations of customers, employees and society.

They should improve environmental, social and governance sustainability, and develop more flexible value chains. Installing a governance system around the well-established ESG framework is one important measure. But it doesn’t stop there. For example, which UN sustainability goals should companies contribute to? And how can they become carbon neutral?

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