Automotive Value Chain 2025+

Automotive Value Chain 2025+


[Music] to it’s 2025 I’ve seen my fair share of exciting cars come and go in fact I designed some of them 10 years ago everybody in the automotive industry was talking about imminent change Silicon Valley started to target mobility environmental concerns increased once again and government scandals abounded there was a time when structural change seemed unavoidable and yet still unpredictable do you remember let me remind you about four scenarios that all seem plausible back in 2016 [Music] by 2025 OMS expanded their dominance in the automotive value chain and open up new value streams based on gated software platforms before OMS derived 30% of their added value from financial services and the rest from selling cars today there is a new era of digital opportunity with potentially up to 30 percent additional turnover getting there was not easy on average om had to increase their R&D spending from 5 to 10 percent of turnover this led to an initial phase of low returns through alliances with IT giants om set the standards for connected services and modern life infrastructure in manufacturing om still control the final assembly the powertrain production focuses on alternative concepts which is caused workforce restructuring this also took place in the preliminary stages of production instead of brakes and axles high-tech sensors and software became the center of attention support of policy makers for OAM alliances the consent of unions and the trust of car users were crucial but these were neither cheap nor easy to obtain after data security scandals and accidents with autonomous cars om had to regain most competent through massive PR campaigns and patient lobbying however it all paid off consumers have grown accustomed to platform based services Oh II ends now own and control the value chain and the client loves you you in this world Oh II M’s have had to fight off the challenges from Silicon Valley and China the keys to success have been strategic investments in software development capabilities massive public relations campaigns and increasing spending on lobbying way above the single-digit minions mark the hyper run connectivity technology is fading quickly data protection issues became a top priority for customers and legislators and after some gruesome accidents with immature autonomous cars the IT jobs lost that confidence in the consumer acceptance of this new technology and finally discontinued their adventure into mobility the R&D departments of OEMs did not change significantly from the old days of managing development projects innovations are generated hand-in-hand with the suppliers under tight IP regulations the supplier landscape is controlled by the OEM strong procurement departments their focus on strict cost management is mirrored in the production space powertrain production has become more complex as combustion engines and alternative technologies coexist and mass customization is predominant this slow technology transition was the price to pay to make the structural changes in the workforce socially acceptable the fundamental structures of the automotive value chain remain largely unchanged I’m happy for my young colleagues who perhaps have job security but from an engineering point of view our products essentially stopped evolving years ago [Music] you in this world by 2025 much of the OEM brand value has diminished as regulators and clients have lost their trust the technology hyper and smart cars has decreased after several incidents of hacked vehicles causing accidents and fast the bubble of the ever connected high-tech car enhancing all aspects of our lives burst today innovation primarily exists on the cost side the one exception is autonomous driving industry Outsiders like uber pods have entered into exclusive alliances with huge automotive suppliers they have mastered the integration of Informatics and mechanical engineering and put the wind up established OEMs by providing affordable mass mobility OMS are suffering despite costly incentive schemes brain drain hinders innovation large-scale OAM R&D facilities with nearly 10,000 people are a thing of the past Outsiders now drive technology one of the remaining OEM core competences in this low margin market is finding the right suppliers who are willing to invest in new development cost focus has been replaced by relationship building OMS have even had to reintroduce formerly unattractive parts such as seats with fewer levers in procurement manufacturing processes have gained importance just in sequence is fully established and the use of robots is maximized the return on assets has gradually decreased the liquidity of OEMs and their capability to decide on future investments is at risk [Music] in this world in 2025 cars may still be high-tech products that OMS are only providing the hardware software players have gained access to the automotive world and cars are merely the shell new players have a strong and loyal customer base and unique technical capabilities after initial friendly collaborations between the IT Giants and OEMs the car companies were then forced to redefine cars as open platforms and car makers lost control of which technologies are fit to enter the car R&D has become merely a project management division the industry’s innovative talent now works all suppliers and Outsiders instead of the OEMs and consequently OAM struggled to capitalize on the new IT enabled value streams procurement is still focused on reducing costs for traditional car components but OMS also need to build relationships with core suppliers that symbiosis is the key to securing survival for both parties as margins about 7% no longer exists for suppliers as far as available capital allows OMS invest in improved production strategy and advanced robotics to increase their production efficiency and capacity utilization software champions now provide the platforms for software solutions in currents om have to dance to their tune successful OEMs master the increasing complexity ensure the proper functioning of the car and drive hardware innovation such as advanced powertrain concepts looking back at the scenarios can you imagine how I’m sure we all felt about the OEM future in 2016 today we know the only way to overcome that uncertainty was to acquire foresight apply strategic rigor and push flawless execution [Music]


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