3.6. Industry Driving Force
Automotive industry is facing tough challenges in the future. There are some challenges that carmakers need to address to sustain their profitability. Some industry driving forces that will shape the future of the automobile industry are as follow:
1. Shift in consumer demand. Greater numbers of customers are utilizing online technology. Consumers want more connectivity and expect a seamless service across the buying process decision .
2. New manufacturing technology : The very famous of manufacturing technology in automotive industry is assembly line, which had been initiated by Ford motor company many years ago. The current manufacturing technology relies on the labor capacity. However, as the emerging of new technology, manufacturing technology shift to the new method using robotic. This shifting in technology is driven by the new paradigm of beyond lean manufacture to win the competition. The new trend in 3-D printing will also force the industry to change it manufacturing techniques and technology. AT Kearney projected that the global market for 3-D printing is estimated to reach $50 billion by 2025 . The emerging of robotics technology and 3-D printing will enforce the carmakers to transform or replace the conventional manufacturing. 3. Increasing regulatory requirement : Another challenge that automotive industry should focus on is the regulations. US CAFÉ (Corporate Average Fuel Economy) standard mandated that the average fuel economy for vehicle must be 34.1 miles per gallons (mpg). This new standard will be effective in 2016, and the new average fuel economy standard increased 35% from the current CAFÉ standard, which is 25.3 mpg. It means that the automakers industry should build the fuel-efficient vehicles. The challenge is not only the changes in the manufacturing process but also the changes in target market of the vehicles. 4. Energy prices: The volatility of the energy prices, especially the oil prices affect the industry in many ways. For example the lower oil prices will lead customer to choose the vehicle with bigger volume of engine such as SUV or Trucks. However, if the oil prices increases the customers will change their preference into small efficient car. The of Industry ability to predict the energy prices in the long run is very crucial due to the dynamic of customers preference. 5. Level of discretionary …show more content…
Industry Key Success Factors
1. Innovative Product: To maintain the sustainability profit, the automakers should provide innovative product since the demand for the connected, efficient, and low cost vehicle is growing. Some challenges that affect the automotive industry to be more innovative are (1) the cost of electronics and software content is 20% lower than the cost 10 years ago, (2) electronics systems contribute more than 90% of innovations and new features of vehicles and (3) timeframe for automakers to launch new products is 3-4 years, however the cycle of the vehicle software is more faster than that .
2. Economies of scale: Automotive industry typically bears the big amount of fixed cost on their operations. Therefore, to maintain the lower total cost, the great number of production should be achieved. The number of production determined the price of the cars. As the number of production increases, the price of the vehicle will decrease. Therefore, to produce the vehicle in the size of economies of scale is important for automaker to achieve the sustainability growth and compete with the
Automotive industry is facing tough challenges in the future. There are some challenges that carmakers need to address to sustain their profitability. Some industry driving forces that will shape the future of the automobile industry are as follow:
1. Shift in consumer demand. Greater numbers of customers are utilizing online technology. Consumers want more connectivity and expect a seamless service across the buying process decision .
2. New manufacturing technology : The very famous of manufacturing technology in automotive industry is assembly line, which had been initiated by Ford motor company many years ago. The current manufacturing technology relies on the labor capacity. However, as the emerging of new technology, manufacturing technology shift to the new method using robotic. This shifting in technology is driven by the new paradigm of beyond lean manufacture to win the competition. The new trend in 3-D printing will also force the industry to change it manufacturing techniques and technology. AT Kearney projected that the global market for 3-D printing is estimated to reach $50 billion by 2025 . The emerging of robotics technology and 3-D printing will enforce the carmakers to transform or replace the conventional manufacturing. 3. Increasing regulatory requirement : Another challenge that automotive industry should focus on is the regulations. US CAFÉ (Corporate Average Fuel Economy) standard mandated that the average fuel economy for vehicle must be 34.1 miles per gallons (mpg). This new standard will be effective in 2016, and the new average fuel economy standard increased 35% from the current CAFÉ standard, which is 25.3 mpg. It means that the automakers industry should build the fuel-efficient vehicles. The challenge is not only the changes in the manufacturing process but also the changes in target market of the vehicles. 4. Energy prices: The volatility of the energy prices, especially the oil prices affect the industry in many ways. For example the lower oil prices will lead customer to choose the vehicle with bigger volume of engine such as SUV or Trucks. However, if the oil prices increases the customers will change their preference into small efficient car. The of Industry ability to predict the energy prices in the long run is very crucial due to the dynamic of customers preference. 5. Level of discretionary …show more content…
Industry Key Success Factors
1. Innovative Product: To maintain the sustainability profit, the automakers should provide innovative product since the demand for the connected, efficient, and low cost vehicle is growing. Some challenges that affect the automotive industry to be more innovative are (1) the cost of electronics and software content is 20% lower than the cost 10 years ago, (2) electronics systems contribute more than 90% of innovations and new features of vehicles and (3) timeframe for automakers to launch new products is 3-4 years, however the cycle of the vehicle software is more faster than that .
2. Economies of scale: Automotive industry typically bears the big amount of fixed cost on their operations. Therefore, to maintain the lower total cost, the great number of production should be achieved. The number of production determined the price of the cars. As the number of production increases, the price of the vehicle will decrease. Therefore, to produce the vehicle in the size of economies of scale is important for automaker to achieve the sustainability growth and compete with the