Disruption In Automobile Industry – Strategy With RS
Traditional industries are getting disrupted.
Take automobiles. It is in the throes of seismic disruption on every front.
Here’s why I think so!
Ownership Model: Outright purchase is giving way to:
Fractional ownership: Sharing economy is giving wings to this concept!
On Demand access to vehicles: This trend is fueled by Uber promise of being everybody’s personal driver!
Fuel: Automobiles will be increasingly powered not by fossil fuel but:
1) Combination of Electric + fossil fuel (Hybrid technology)
3) Hydrogen Fuel cells – being tested by Toyota
Technology: Internal Combustion engines will give way to:
Software – Cars will be run by software!
Driver: Humans will be made redundant by:
Self driving (Autonomous) cars
Competitors: Cross industry competitors like: Tesla, Apple, Google, Amazon
Ancillary units supporting automobile companies will come under pressure because:
Electric / battery operated cars have fewer moving parts – they do not have piston, fuel injectors etc
Hence, fewer parts will be required to be manufactured!
Service stations: They will come under pressure since
Electric Vehicles will require less maintenance & servicing
Software will diagnose the problems & dispatch ‘software patches’ via the Internet, to rectify the problems. The automobile does not have to go to the garage for repair!
Robots are replacing humans!
Automation has resulted in Robots taking up position in the assembly line. The new generation robots are self-learning who can be programed to learn new skill & can be retrained!
BTW a senior person belonging to Ford confessed that his nightmare is that, his company will be reduced to making merely Tin boxes which will run on software developed & owned by Apple, Google, Amazon…
Not just automobile industry but every industry is ripe for disruptions.
When ever technology collides with any industry disruptions will happen.
We should not be caught napping on the fly – proactively disruptions should be anticipated & our company should be prepared for it.
In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here