Shifting the Auto Industry into High Gear

Taking a new shape and approach

Well over 100 years after Henry Ford’s first assembly line began rolling in 1913, the industry is undergoing another shift. For decades the industry could be segmented into manufacturing, sales, and finance, with dealers and service thrown into the mix. Today, demands like customer expectations of an experience and C-suite’s desire for a harmonized view of the organization, are driving integration of business units, processes and data. Says Kevin Foster, senior manager, Deloitte Consulting LLP, “These are significant pressures in a highly competitive industry, and to truly transform the business, automotive organizations are being required to shift their way of thinking and break down silos that have existed for a very long time.”

Along with idling factories and closing dealerships, the pandemic also forced dealers and OEMs (original equipment manufacturers) to quickly adapt to not only selling a vehicle virtually, but do so seamlessly and still deliver an experience to the consumer. No small feat, says Ryan Robinson, director, Deloitte Canada, “Virtual selling wasn’t really part of the industry. Getting different parts of the automotive value chain together to do in such a short period of time was actually quite impressive.”

Cloud and advanced analytics

For decades the industry has been addressing a complex—and complicated—problem: Deliver regional market customization with standardized global capabilities. Said differently: Automakers need to deliver competitively priced vehicles built with standardized processes (saving costs) to highly fragmented local markets around the world, while driving quality, innovation, and efficiencies across their enterprises.

For Hernan De la Torre, principal, Deloitte Consulting LLP, this is where cloud technology can shift an organization into high gear. “Cloud can deliver flexibility, scalability and speed to market, so OEMs can build internal capabilities, strengthen manufacturing and the supply chain, address technical debt and still deliver what regional customers want.”

Foster adds that, when paired with cloud technologies, advanced analytics can effectively drive costs down and profitability up. With both, companies can rapidly access the entire dataset of a specific product level to determine what configurations are selling well (and which ones are lagging), and learn where to focus for the future. “Companies can take that insight upstream to R&D to make sure they select a profitable platform for future designs and avoid getting stuck with unprofitable products they have to contend with until the next model change.”

Data rich, insight rich

Getting past the sticky point of who actually owns the data generated and transmitted by millions and millions of vehicles, having access to it via cloud technologies enables companies to get out in front of expensive warranty issues. Says Robinson, “Real-time—or at least near real-time—operational data from vehicles allows manufacturers to pinpoint the problem and potentially engineer a solution on the fly so subsequent vehicles coming off the line have avoided it entirely.”

Datasets generated by vehicles are enormous. With that in mind, De la Torre cautions against data saturation and recommends companies would do well to apply discipline and rigor to their analysis. “Use data in ways that are important, valuable and profitable to the business, not just interesting to know.”

Selective Transformation

For leaders considering the most impactful, efficient way to build agility and resilience into the business with technology, greenfield is rarely—if ever—a viable option. That’s where a Selective Transformation approach can be a turbo-charged brownfield solution. It means companies can renew their platform foundation without starting from square one, while also reaping the benefits of edge solutions faster. “The concept of ‘the Big Bang’ in a transformation is obsolete,” says De la Torre. “There are many ways to drive innovation in an organization without having to tackle every single plan and line of business across functions, all at once.”

Disruption in the auto industry is significant, with the rise of electric and autonomous-driving vehicles that, as Robinson sees it, technology will be key. “The future may not actually support all of the current players. There will be winners and losers and using technology to figure out how to put the pieces of the puzzle together is where successful companies are going to go.”

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