The industry remains mired in an endemic inability to truly change when it comes to modern vehicle development
What does the future hold for the traditional automotive industry? From the potential failure of Nissan to the controversial closure of factories by VW – long-established, familiar brands are struggling to compete with the new market dynamics. The issue is not just the swathe of cheaper, government-subsidized vehicles from China, or even the radically changing driver expectations and fast-diminishing customer loyalty. The industry has not failed to recognize the demands created by the new software-led, function-oriented car design and build model: these challenges are accepted. The problem is that the industry remains mired in an endemic inability to truly change.
Car manufacturers may have seen the writing on the wall for a decade. They have looked to streamline processes and embrace technology innovation. Yet when Chinese cars have a 20-month time to market and their European competitors take nearly three times as long, something is still very wrong.
Technology is a vital enabler of change but the industry urgently needs to let go of traditional processes, culture and mindset. And that means moving away from cherry picking areas of change and the implementation of tactical digital solutions that address just one issue. Automotive companies must urgently overhaul the entire business, from process to mindset.
Last chance
How long can the automotive industry in the UK and Europe rely on brand value? It is no longer valid to argue that the new Chinese entrants are immature, or that they lack customer appeal. For a digitally native generation, a car that greets the passengers, offers to take their picture and then post it on Instagram is far more relatable than a brand relying on decade’s old movie tie-ins.
The enormous gulf in time to market between old and new manufacturers is not just accelerating the innovation offered by new entrants, it is also enabling these companies to attract the instant-gratification cohort that sees no reason that a new car should not arrive as frequently as a new phone. In contrast, the time to market for legacy automotive companies continues to extend.
New market entrants, especially those from China, are able to introduce products based on an entirely different design, build and delivery model. In contrast to traditional automotive companies struggling to retrofit new thinking onto a completely outdated operational model, they have been able to embed function-centric vehicle creation from day one. And while new entrants may have sacrificed some build quality and reliability in the push for 20-month time to market and lacked the robust aftermarket infrastructure, these competitors are maturing fast.
Perhaps more significant is the fact that new automotive companies have a completely different notion of ‘compelling’ when it comes to cars and driving. While Lexus is emphasizing its smooth luxury driving experience with a re-release of its iconic champagne glass advert, in stark contrast BYD is promoting its self-driving hypercar with its ability to “jump” over road spikes and potholes. There is an enormous gulf between the gaming/social media style of the new generation and the calm, comfortable focus of the traditional automotive landscape. Just how much longer will old brand values, even traditional vehicle concepts, sustain a legacy automotive industry that is struggling for money, sales and customer loyalty?
Digital opportunity
The shift toward function-oriented development has required new processes. It has pushed traditional vendors to invest heavily in dedicated software expertise and adapt tried-and-trusted supply chains to include sensors, radar, cameras and ECUs. Automotive vendors are also at the vanguard of technology exploration, leveraging innovations in AI and virtual reality to quickly reproduce sophisticated design models, tweaking and innovating in real time.
Designers and engineers can collaborate from different countries, using Meta Quest and Apple Vision Pro to experience together the materials, haptics, even the reflections of the concept car. Viewing insights in real time and effectively conceptualizing changes enables the collaborative team to understand the impact and make decisions quickly. AI is enabling companies to run multiple design concepts simultaneously, combining financial evaluations, regulations and design ideas through rapid iterations in real time, shaving weeks, even months, off the process. The overall result is more confidence in decision-making, leading to faster, more efficient outcomes. Digitization is without any doubt fundamental to transforming the time to market for automotive manufacturers. And yet, time to market is getting longer, not shorter, due to the complexity and challenges associated with delivering function-oriented design within traditional automotive manufacturing processes.
Systemic and systematic change
Digitization is a foundation but technology alone will not be the solution. The issue is automotive companies’ inability, to date, to change internal behavior, culture and processes. The thinking is there but they have failed to activate and operationalize the new measures essential to achieving a new automotive paradigm.
This is where an independent third party can be a powerful enabler of change – not only by analyzing what is required but actively overseeing and implementing new processes and embedding new culture and mindset. End-to-end support leveraging process, methodology, tools, organization and data (PMTOD) can transform the speed and success of a change program. An organization with expertise in automotive and a background in software development can both help organizations define their direction and, critically, also can work with them to implement and execute the shifts required to achieve that goal by ensuring all employees are part of the process and have the support needed for long term success. The new automotive model, culture and thinking must be radically different.
Companies will have to step away from the traditional overspecification of every aspect of the process, from design through testing, and accept a less rigorous, but still safe, 100% to achieve a faster time to market. They will have to achieve a new matrix that breaks down the familiar silos. They must do more than encourage collaboration between diverse teams by actively demanding that cooperation. In the process, they will have to negotiate employee and union grievance and safeguard funding – all while accelerating innovation, hitting new targets for electric vehicle sales and meeting customer expectations. It is incredibly challenging but without this level of change, the current industry players will fail.
Where to next?
The automotive market is experiencing the most extraordinary pace of change in product innovation and technology, market dynamics, business models, and, as a result, customer expectation. Legacy manufacturers are squeezed from all directions and, with finances failing and customer loyalty dropping, fundamental, systemic change is urgent. Chinese challengers cannot be countered by a tweak at the edges to encourage better collaboration through the design and development process. Piecemeal plans to build software expertise in one area or build in further efficiencies to the supply chain are not enough. The industry requires a radical, end-to-end overhaul of mindset, culture and process.
Automotive manufacturers need to change now. It currently takes four to five years to bring a new car to market – and if that new vehicle does not match up to cheaper, more innovative alternatives, the writing will be on the wall. Companies know this. They know they need to change. It is now urgent that automative companies make a wholesale commitment to take actions today that truly embrace end-to-end transformation.
