Back in 2019 PwC Research predicted choppy financial waters for the automotive industry. The pandemic that followed might have rolled this crystal ball in a different direction, but the recommendations it made to carmakers tell a different story.
There’s a four-letter word used every day inside global carmakers: CASE.
For the auto industry, CASE is an acronym (connected, autonomous, shared and electrified). It’s sparked the biggest shake-up to carmaking since Henry Ford implemented the moving assembly line, forever changing how cars were made.
Today, CASE mobility is changing how cars are propelled and used.
This single syllable has mobilised billions of dollars in investment capital.
It’s driving regulation changes in new-vehicle markets.
And it’s put the world’s automakers under pressure to innovate – quickly.
These are seismic shifts. They’re so great they’ve called into question how many of the world’s carmakers are going to safely navigate them.
It’s a question PwC Research delved into a few years ago when it published its Automotive trends 2019, a report it sub-titled The auto industry must find a way to balance accelerating innovation and financial survival.
It’s a revealing read, especially more than three years on.
From the outset, PwC’s report made clear how big the impact CASE-related changes will be on carmakers:
“To be sure, CASE mobility will ultimately remake the auto industry. No one doubts that.”
The authors then revealed a troubling product-development conundrum facing the industry, driven by a cocktail of expensive factors, such as:
- The enormous cost of developing CASE-related (connected, autonomous, shared and electrified) vehicles
- The industry’s falling returns on invested capital – in the face of possibly higher costs for capital
- The migration of product value (and profit) to specialised technology suppliers
- The fact that many planned EV models were being targeted for traditionally lower-profit new-vehicle segments
- And others.
PwC’s assessment painted a bleak picture.
The researchers behind the report modelled three scenarios. They showed how global automakers could navigate the development costs for future CASE vehicles (specifically EVs) as well as the changing nature of the global auto industry. In all 3 cases the projections were far from positive.
But the authors then made four proposals carmakers could use:
- Embrace specialisation
- Focus on your value proposition
- Manage costs zealously
- Don’t do it all yourself
And they wrapped it nicely with this (back in 2019):
“Thus, this year, all successful approaches should involve the same overarching principles: a more specialised portfolio, a more focussed value proposition, more rigorous financial management, and more willingness to collaborate with other companies, particularly in CASE-oriented innovation and capital investment.”
These four proposals intended to help automakers navigate the CASE revolution that’s already underway. And my team and I watched many of our OEM carmaker clients implement them with us.
They applied them with their Premcar-led new-car enhancement programs (for current and future model ranges); new-vehicle engineering programs; and their electric vehicle (EV) conversion programs and new-vehicle EV development projects.
Fallout from the COVID-19 pandemic might have sent car-industry scoreboards spinning up and down like a pinball machine, but PwC Research shot a bullseye with these four suggestions for automakers – and not just for their CASE mobility programs, but also their internal combustion (IC) new-vehicle programs.
The report’s authors also made another prediction, which is exactly in line with Premcar’s operational relationship with OEM carmakers:
“It is possible that auto factories of the future will fall into two categories: One will be a highly automated ‘plug and play’ plant producing large volumes of cars with minimal variations among vehicle types for the discount arena; the other will produce customised, premium vehicles —including, but not limited to, those for the combustion engine, EV and AV markets.”
This is exactly the approach a number of our clients are taking.
A great example of this at work is the Nissan Navara Warrior program, where near-complete new cars are shipped from Nissan’s Thailand factory to our facilities in Melbourne, Australia for local enhancement and final production.
The last 3 years have been a solid test for this research paper, despite the effects of the global pandemic that followed in the months after its release.
Many of the report’s suggestions have proved to be wise advice for automakers.
We’re still seeing it with our clients, who are applying them.
Not only are these companies selling more cars and adding to their profits, they’ve locked in future harvests.
If I was an official new-vehicle importer, I know the four things I’d be doing right now.
Bernie Quinn – Engineering Director, Premcar Pty Ltd
About Premcar – Premcar Pty Ltd is a leading Australian vehicle engineering business that specialises in the automotive, defence and aerospace industries. For more than 25 years, global car-makers have made Premcar their go-to partner for the complete design, engineering and manufacture of niche-model new cars, full-scale new-vehicle development programs, and electric vehicle (EV) conversions and manufacturing. As the name behind more than 200,000 new cars and 55,000 new-vehicle engines, Premcar’s body of work is extensive and has delivered technical and sales success for major car brands from Europe, the USA, Japan, China and Australia. Visit premcar.com.
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