China Crisis
November 17, 2023

Multi-Facetted Challenges Need Clear Thinking & Rigorous Prioritisation

Like the fabled Hydra from Greek mythology, the automotive sector faces a multitude of challenges as it transitions to the wider mobility industry. Which challenge in what sequence? is the key strategic puzzle for OEMs to solve to ensure they have sufficient bandwidth to prosper going forward.

Through customer eyes these developments risk becoming increasingly opaque if not explained and operationalised in easy and convenient terms. Consider the confusion from misinformation surrounding the mass adoption of EV’s. Layer in new retail formats and the digitisation of the customer experience and top off with an array of new Chinese companies arriving in market to take the competitive environment beyond 40 brands.

From the OEM’s perspective, product strategy must centre on new powertrains (EV, Hybrid, Hydrogen, zero emission ICE?), advanced connectivity and increasing autonomous capability. All complicated by more stringent regulation towards vehicle performance and component sourcing.

Sales & Marketing teams are being continually challenged to substantially reduce distribution cost through new representation strategies and direct-to-customer models where roles and responsibilities between suppliers and vendors are in a state of flux. This is reducing traditional income streams requiring new revenue flows to be created where data is likely to prove the most important currency for sustainable profit if managed properly.

Finally, there is an onslaught of new entrants – 16 new brands, most from China at highly competitive price points with the latest EV technology, entering an already crowded market. Such competition will only put further pressure into the system forcing all players to review where they play and how they go to market. What products? Which channels? The role of brand? Customer experience ambition? – all must be considered.

All in all, the industry is facing significant challenges and seismic shifts in the market landscape – with the many new disruptors forcing change on an unprecedented level. And while all sides of the industry have their perspective on how this may play out, what do customers – current and future – think? Without this consumer insight any strategy is at risk of being based on narrow assumptions and blind-sided by internal factors and current operating models.

So, if you recognise some, or all the above, why not have an initial session with the SaturnFive automotive team? We have been working with organisations from across the industry on the challenge of facing multi-faceted change. Our team includes seasoned industry experts who can offer a 360-degree view of what the market might look like, what customers think and how best to navigate a shifting landscape. We stress-test your strategies, sense check your thinking and prioritisation to ensure, like Hercules, you will prevail versus the modern-day Hydra.

Author: Steve McLennan & Neil Burrows