The future of the automotive industry: nine transformation challenges

Marcel Ramin Derakhchan - 14. April 2021

dla digital leaders advisory and BearingPoint explore the multi-layered issues that automotive companies must master and the massive changes that lie ahead for the labor market in the automotive industry.

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Megatrends such as e-mobility, digitalization, and increasing automation have prompted the automotive industry to undergo major structural changes in recent years. The changes are far-reaching and will have a massive impact on automotive companies and their labor market. Automotive companies will have to master numerous challenges to succeed. Management and technology consultancy BearingPoint, together with the HR consultancy dla digital leaders advisory, has defined nine key challenges for the automotive industry and developed recommendations for action for a successful transformation. Below are the nine transformational challenges facing the automotive industry:

1. IT skills not just in IT

Rapid digitalization, sophisticated cloud architectures, and the need for a workforce with a broad range of knowledge and skills are blurring the division between IT and other departments. IT skills are now in demand in all areas and departments. Cross-functional, agile collaboration and role models require more significant engagement with IT across the enterprise.

2. New needs due to mobility services

E-mobility, connectivity, and autonomous driving lead to new requirements for mobility services, especially in terms of infrastructure, insurance, maintenance, and entertainment. These services are altogether redefining established markets. New business models are opening up for companies, but that also means that they have to adapt their processes, organization, and IT to the changing market.

3. Software innovation: the digital car

Software is becoming the dominant factor for product development as software in vehicles increases sharply while hardware complexity decreases in e-mobility. That means a drastic change in the skills required for automotive manufacturers and suppliers and increasing competition for scarce IT resources. Companies need to make progress in software innovation if they do not want to mutate into pure hardware providers.

4. Automation in production and logistics

Exponentially advancing automation in production and logistics is leading to a massive decline in industrial jobs. Companies and manufacturing sites must meet this challenge by qualifying their employees today for new and changing deployment options.

5. Collaboration

Increased collaboration between OEMs, BigTech companies, and specialized start-ups will become essential to meet the growing demand for software expertise, new technologies, and specific human capital. As this happens, the automotive industry will move away from supply chains to complex ecosystems in which everyone will have to find and redefine their place.

6. Changing customer relationships

New digital sales channels and direct customer contact are leading to a rapid increase in direct sales on the part of car manufacturers, dramatically weakening the role and relevance of dealers. For dealers, this means an acute need for action, as they must define their future role and business models and adapt them to the needs of their customers.

7. Digital after-sales

Data-based fault detection, over-the-air updates, and reduced hardware complexity are revolutionizing the after-sales market. The future role and importance of workshops in the automotive industry ecosystem will change drastically. Software specialists will increasingly be in demand in after-sales, while mechanics will become less important.

8. Optimized management and data-driven decision-making processes

As a direct result of Big Data and machine learning, manual transactions in IT systems will become obsolete, greatly impacting organizations and their employees worldwide. For automotive manufacturers and their suppliers, this will require tremendous change management across the entire organization and structure.

9. Sustainability

The drive for greater sustainability and heightened environmental awareness is moving companies away from pure profit maximization toward more CSR-based business decisions. In the automotive industry, too, suppliers will have to face the question of whether their image, product range and positioning in the market are fit for the future and in line with changing consumer interests.

New leaders

Each of the nine challenges will require special leadership skills, and companies must deploy the appropriate leaders to drive the successful transformation forward. From thought leaders and social leaders to process leaders, results leaders, and data leaders in the various areas, all will be needed to meet the challenges. For example, data leaders are increasingly in demand for optimized administration and social leaders in sustainability.

Marcel Derakhchan, dla Managing Director: “The profound changes in the automotive industry call for new competencies and characteristics at the management level of all players. In particular, this involves strong leadership, a high level of data and technology expertise, and a deep understanding of the interdependencies in a market that is evolving into a complex and cross-industry ecosystem.”

Dr. Stefan Penthin, Global Leader Automotive at BearingPoint: “In the context of the rapidly changing reality, automotive groups are under tremendous pressure to transform. They need to quickly and comprehensively transform their old structures and develop new products, business models, and services. There is no single ignition key for the automotive industry to start and drive transformation goals successfully. Rather, a whole range of important structural changes are needed, which must be thought through and implemented accordingly. It is also clear that success for German automakers depends heavily on how well and quickly they master the issues of electromobility and digitalization.”

For more information, please visit:

https://www.bearingpoint.com/de-de/unsere-expertise/branchen/automotive/