The Motor Industry: Prescient, Prudent or Profligate?

The motor industry business model is based on three core elements: centralised large-scale centralized manufacturing allows the potential for scale economy. To key ingredients are ever growing markets, through adding global distribution, and ever growing volumes, by giving more cars for less. For manufacturers and dealers alike, margins on vehicles have become paper thin. Both make their money from after sales and finance products, rather than vehicles. In 2020, after almost 75 years of global growth, the industry is facing fundamental change: vehicles must become zero- carbon, from production through to disposal. and the the depletion of natural resources must be significantly reduced, if not sopped altogether. For the industry, it requires an entirely new business model based on three concepts: living within strict resource use and emissions limits backed up by regulations and penalties; transition towards electric vehicles as swiftly as the technology will allow; and, finally, new Key Performance Indicators that measure the costs from ‘cradle to grave’ of the vehicle. Only manufacturers and dealers who can make the transition quickly will be survivors.

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Car owning vs. car sharing: which will make a lasting impact on car dealer profitability?

Since the Millennium consultancies have been reporting that young, urbanites in the Triad markets (USA, China and the EU) have a growing appetite for car sharing solutions, such as ride hailing and car sharing. Those in the developing markets of China, India and south-east Asia are also less emotionally attached to car ownership. Adding into the mix the trend towards urbanization and concerns for global warming, it’s no surprise that some predict that these factors will lead to falling car sales and a squeeze on margins for car dealers. Zipcar claim that each car added to their fleet removes six cars from private ownership. What if the predictions are right? What if they’re wrong? Read on and find out.

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Emissions KPI’s: Which ones really count?

Like most business people, we’re familiar with key performance ratios such as production, sales and profit targets. But, when we’re told that our favourite calculations might be missing an important factor, we ask, “How can that be?” That’s where automotive production and distribution managers find themselves today. They measured production, sales and profits accurately, but not correctly. They missed one crucial item. They measured vehicle tailpipe emissions and watched them fall year on year. But, the calculation excluded the social costs of the vehicle’s contribution to air pollution and climate change, which have been evident for the last 50 years. Now, under the principle of ‘the polluter should pay”, vehicle manufacturers and distributors should expect some significant new policies,regulations and costs as governments try to clean up the environmental mess and avoid further damage. This post looks at what those policies and costs might be in the coming years for both vehicle makers and their distributors.

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Who gives a dime? The impact of Electric Vehicles on Jobs in Auto makers and retailers

As politicians and activists, auto-makers and early-adopters, embrace electric vehicles as the key transport development of the early 21st century, few are concerned about the impact on jobs. Automotive is one of the world’s largest industries with 8MN-10MN employed directly and another 20MN-25MN in support roles. The outlook for these stable, high quality jobs is at best uncertain. Up to 1MN jobs may be lost in manufacturing and another 13MN in support jobs. Does anyone give a dime?!

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