January 7, 2000
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 Wayne Bartel, PricewaterhouseCoopers global automotive leader 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 consumer oriented competencies such as vehicle concept and brand development, and building new retail channels and aftermarket alliances," Bartel 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 Bartel.
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
