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)

2) Battery

3) Hydrogen Fuel cells – being tested by Toyota

 

Technology: Internal Combustion engines will give way to:

Electric

Battery

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

 

Repair:

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!

 

Manufacturing plants:                                                                                                                                                              

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…

Bottom Line:

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.

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rajesh-srivastava-insideiim

 

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

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