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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