PricewaterhouseCoopers Forecasts Dramatic Changes for Auto Industry in 21st Century
7 January 2000
PricewaterhouseCoopers Forecasts Dramatic Changes for Auto Industry in 21st Century
DETROIT--Jan. 7, 2000--Production, Focus Shifts to the Consumer --
The traditional roles of vehicle manufacturers, suppliers and retailers will change significantly in the future, according to a new report published by PricewaterhouseCoopers, the world's leading professional services organisation, entitled "A2C: The Second Automotive Century."
In the Second Automotive Century, the need to generate better returns for investors and strengthen consumer relationships will lead to the re-deployment of assets and capabilities among members of an extended automotive enterprise.
Vehicle manufacturers will focus more on relationships with consumers, and transform themselves into "Vehicle Brand Owners" (VBO's), re-deploying much of their present responsibilities for co-ordination, sequencing and final assembly of vehicles to suppliers. Ultimately, production and assembly of entire vehicles could be outsourced to new mega-suppliers. The changes are already starting, and could be complete as early as 2005.
As portions of development, engineering and production assets concentrate in a few key suppliers, VBO's will focus their attention on vehicle concept design and the consumer's overall experience with their brand. Consumers are likely to see a broad range of service offers appear as VBO's compete for `one to one' consumer relationships.
"Within 5-10 years, we anticipate that fewer than seven VBO's, operating with something close to a global scale, will dominate the industry. Mergers between major VBO's will continue to be a part of the competitive landscape. Dynamic supplier networks will auction their capabilities to these global giants, helping them innovate, manufacture and even brand their products and services. Enabled by e-technologies, strong networks will acquire the vulnerable. Agile enterprises will devour the slow," said J Ferron, PricewaterhouseCoopers americas automotive partner and co-author of the report.
Mega-suppliers will emerge as important members of the Second Automotive Century enterprise.
"By 2010, there will be no more than 20 to 30 major systems suppliers globally. They will play key roles in the operations of the traditional auto maker/VBO. In fact, major system suppliers will begin to occupy much of the traditional auto maker space, as the current assemblers of vehicles outsource more operations and focus their attention on key consumeroriented competencies such as vehicle concept and brand development, and building new retail channels and aftermarket alliances," Ferron added.
"The companies most likely to succeed in the Second Automotive Century will be those companies that can innovate the way that they develop, design and deliver products and services to the consumer. The Automotive Enterprise of the Second Century will have completely rethought, realigned and re-deployed its competencies and assets among the competencies and assets of its supply-chain partners. Where redundancies exist between a VBO and its suppliers, or a VBO and its retailers, they will be eliminated or outsourced to the most efficient and most capable member of the extended enterprise," said Ferron.
Notes to Editors:
1. For further information, to view the executive summary of "A2C:
The Second Automotive Century," or to order a copy of the full
report, visit the PricewaterhouseCoopers website at
www.pwcglobal.com/auto. The executive summary will be posted to
the website as of 8:00 a.m. (EST) Monday, January 10, 2000.
2. Data quoted in this press release is provided by
PricewaterhouseCoopers/AUTOFACTS, the leading provider of
automotive strategy, market analysis and competitive intelligence
to the world's vehicle manufacturers and marketers, automotive
suppliers and support organisations.
3. PricewaterhouseCoopers (www.pwcglobal.com), is the world's
leading professional services organisation.
Drawing on the knowledge and skills of 150,000 people in 150
countries, we help our clients solve complex business problems
and measurably enhance their ability to build value, manage risk
and improve performance.
PricewaterhouseCoopers refers to the U.S. firm of
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PricewaterhouseCoopers organisation.
-- The name PricewaterhouseCoopers is one word, with upper case P,
upper case C, and all other letters in lower case.