As COVID-19 ravaged economies across the globe, few industries and sectors were spared from the devastation. While the technology sector is thriving and breaking records, the travel industry is estimated to have contracted by 60% - 80%. Traditional industries unable to operate by their previous business models must pivot if they want to survive. The automotive industry was one to quickly respond to the pandemic, transforming its idle supply chains to build critical supplies. The automotive industry was quick to respond to the COVID-19 pandemic, transforming its idle supply chains to build critical supplies.
The likes of GM and Ford produced hundreds of thousands of ventilators, while andNissan, Toyota, Honda, and Fiat Chrysler produced millions of face masks. Car manufacturers stepped up to protect the people they serve,, but can they protect their own organizations from the current and future implications of a post-COVID-19 world?We’ve collected our insights from working with Fortune 500 clients and compiled in addition to research by other consultancies to anticipate future scenarios and potential opportunities that may arise.
Future Scenarios and Trends Post-COVID-19
- Travelers no longer feel comfortable with shared transportation (plane, train, public transit). People see private cars as the safest mode of transportation. How will automakers innovate to improve the the traveler experience for long-haul trips?
- Global auto supply chains are disrupted by global trade wars. Strategic decisions to exit unprofitable global markets and vehicle segments are accelerated, significantly lowering output as manufacturing capacity is consolidated. How will automotive sectors recreate supply chains locally?
- Customers no longer prefer to visit car showrooms. Dealers must pivot quickly to increased digital purchasing behavior considering that 61% of car buyers are now open to buying cars online during the pandemic compared to 32% before the pandemic. What does the customer experience look like in a fully remote and digital setting for purchasing?
- Reduced consumer demand may spark a global recession and minimize revenue and profitability. How can automakers expand business opportunities and capitalize on strategic advantages?
- Though car manufacturing is highly automated, the risk of front-line workers getting ill can dramatically impact production capacity and business. How will automakers lead in a prolonged remote work world?
Automotive Company Responses During COVID-19
Some car manufacturers have already innovated to combat the current challenges faced by the industry faces due to COVID-19. Porsche launched a new online platform called “Porsche Finder,” which allows customers to search for used vehicles across its dealership network. Ford’s restructuring efforts have allowed it to return to pre-COVID-19 production rates in six U.S. plants. For example, Ford factories now make use of An example of the efforts includes buzzing wristbands that vibrate when employees come within six feet of each other to make returning to work safer. General Motors shifted its strategy to refinance short-term loan maturities due to its high-rated credit standing instead of its larger $16.5B credit facility to boost its liquidity, like many other companies with high-rated credit standings.
Disrupt with New Products & Services in the Changing Market
The pandemic is an opportunity to future-proof manufacturers for a post-COVID-19 world and innovate in areas that disruptive startups have already entered. We’ve collected some of the most exciting disruptions that have the potential to massively change the market.
Electrification
Electrification of vehicles is shaping the industry with the main electric vehicle manufacturers including Tesla, Rivian, NIO, Byton, and Piëch. Global electric car stock increased by 40% over the last year while the traditional passenger car markets contracted.
Self-Driving
Self-driving is becoming a reality through Waymo (via Google), Cruise (via GM and Honda), Zoox (via Amazon), ArgoAI, Comma.ai, Uber ATG, Lyft Level 5, and Tesla Autopilot. With self-driving taxi networks, consumers may no longer need to own a traditional car.
Vehicle-to-Vehicle Communication
Cars may also begin to be connected through vehicle-to-vehicle (V2V) communication like Autotalks where cars coordinate with other cars and infrastructure to optimize routes and ride times. Cars that adopt V2V communication will be significantly safer as the NHTSA estimates it would reduce all target vehicle crashes by 81%.
Artificial Intelligence & Augmentation
With more cars shipping with internet access and smart sensors, cars can now be monitored and self-parked. These features may begin to become a requirement in consumer demand for new vehicle purchases. Camera sensors can be used to provide fleet learning data to self-driving car companies or to monitor a driver’s emotions and incorporating AI assistants. Startups like WayRay are leveraging Augmented Reality(AR) to add visualizations of performance metrics and navigation directly on the windshield. AIAssistants and AR dashboards will enhance the driver experience and allow automakers to differentiate themselves.
What's Next?
With these new products and services, an advanced, sci-fi-esque future of transportation may arrive sooner than we think. However, large automotive manufacturers must continue to innovate to survive these unprecedented times of uncertainty and disruption before that future arrives. The next leader in the automotive industry to emerge from the pandemic coming out of the pandemic will be the manufacturer that is best future-proofed.
Sources:
OECD Tourism Response to COVID-19
BCG Automotive Demand Post-COVID 19
CBInsights: The Future of Transportation. The Impact of Covid-19 on Mobility
Deloitte: Understanding COVID-19’s impact on the automotive sector
PwC COVID-19 and the automotive industry
TechCrunch: Porsche rolls out search platform for its US used-car inventory
Financial Post: Ford to return to pre-COVID production rates
Thomson Reuters: GM strategy shift shows how ‘liquidity is king’ during COVID-19 crisis
Startup Insights: Disrupting the Automotive Industry
NHTSA:Vehicle-to-Vehicle Communication Technology Fact Sheet
