Kicking up a lot of dust, COVID-19 has made the form and shape of the future of automobility even more opaque. The objective of this insight is to function as a compass for players in the US automobility industry for the near-term future by providing a different perspective on what has and has not changed amidst the pandemic. The insight is structured into three sections: (1) A critical reflection of what American customers want, (2) a discussion of the impact on the automobility value chain, and (3) a synthesis of the strategic implications for automobility players operating across this value chain.
(1) WHAT CUSTOMERS WANT
The private vehicle will remain the cash cow of the automobility industry over the near-term future. Within this dominant segment, customers are demanding an omnichannel blend of physical and digital (retail) offerings. While connected services are on customers’ radar, their full unfolding is yet to come. Depending on the development of macroeconomic stimuli, electric passenger vehicles will remain a niche phenomenon in North America over the near-term future, just as automated driving.
(2) HOW AUTOMOBILITY PLAYERS REACT
Automobility supply has been shaken by COVID-19 with vehicle production having been kept at a standstill from mid-March through early May. The market capitalization and stellar performance of Tesla amidst the pandemic showcases the importance of greater digitalization of the customer experience. Beyond the immediate Corona manifestations, changes in the automobility value chain will rewrite the rules of the game. While incumbents’ DIY approach to the future of automobility gave room to new kids on the block, the required core competencies to champion this future will be too complex for a single player to handle alone.
(3) WHAT NOW
Future competition in the automobility industry will be between networks, not individual players. OEMs are recommended to internalize their home-turf core competencies at the customer interface and regarding the provision of the vehicle framework. CASE technologies should only be internalized if players can realistically achieve a sustainable competitive advantage in them. The underlying legal, financial, and technological risks of all other fields are best hedged in a network of complementary downstream and upstream partners.
Coping with the digital ramifications of the pandemic is only the qualifier for the longer-term game. Future success will be determined by performance within networks, not individual greatness. Formulate a clear vision and enhance prioritized core competencies, which will form your network value proposition. Now.
