Managing Differentiation in the automotive industry: challenges and opportunities AIC FORUM November 5 th, 2013

Transcription

1 Managing Differentiation in the automotive industry: challenges and opportunities AIC FORUM 2013 November 5 th, 2013

2 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 2

3 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 3

4 Key figures Short-term sales projections foresee over 97 million units sold worldwide by Vehicle manufacturing is a strategic industry in the EU, where 23,2% (16.2 million) of the world s cars, vans, trucks and buses are manufactured. Sales and production are further shifting to BRIC countries, China will be a major sales and production hub in The automotive sector is the EU s biggest investor in R&D, accounting for 25% of total R&D spending. The EU automotive industry invests over 32,0 billion into R&D. In 2012, a total of (56%) patents were filed by the automotive sector at the European Patent Office (EPO). The automotive industry generates 12.9 million jobs in the EU, representing 5.3% of the EU employed population. The 3,0 million high-skilled jobs in automotive manufacturing represent 10,0% of EU s manufacturing employment. Despite new technological developments, ICE downsizing is expected to be the leading solution for the foreseeable future. In the best case, electric vehicles will account around 14 millions of new vehicle sales by Production of light vehicles by region 57 M 69 M 114 M 6% 3% 11% 9% 8% 15% Other BRI 21% China 32% Triad 86% 59% 44% R&D shares of sectors and Patent applications 21% 56% 15% 8% EU Japan US Others 25% 7% 25% Source: The 2012 EU Industrial R&D Investment Scoreboard Powertrain electrification scenario % 86% EV+HEV ICE Powertrain Source: AIC Scope, EV Roadmap 4

5 Megatrends and global challenges The automotive industry is no stranger to evolution. The automotive industry is in the middle of significant change, with increasing challenges in consumer demands, technology development, globalization, integration and collaboration. Geopolitical change Demographic change Sustainability Evolution of mobility Technological change GLOBAL CHALLENGES Financial crisis Growth and overcapacity Emerging Markets New players Regulations Qualified people Role of suppliers Globalization Customization Product proliferation 5

6 A strategic vision for the EU automotive industry Key stakeholders of the industry will have to understand the principal scenarios and challenges to determine the needs and anticipated industry response to these megatrends. An automotive sector which remains of strategic importance and a cornerstone for the EU industry and economy, providing quality employment to millions of workers in the EU; A strong manufacturing base in the EU for road vehicles and components, manufacturing a sizeable part of the vehicles and parts sold on the EU market; An automotive industry that is leading in technology (clean, fuel-efficient, quiet, safe, connected), in coordinated action with the fuel supplier industry; A strong industrial network characterised by a flexible and integrated supply and distribution chain; A sector exporting a larger portfolio of vehicles to third markets, characterised by high-quality and high-technology; New vehicles purchased by EU consumers, which are clean in terms of regulated pollutants, more fuel-efficient, quiet, safe and connected; Appropriate refilling and recharging infrastructure for alternative fuel vehicles being built up, in line with their market potential; A workforce in both manufacturing, R&D and servicing that is trained and prepared to work with a multitude of technologies; Source: European Commission CARS 21, Final Report

7 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 7

8 Differentiation as a strategy what does it mean? Differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market, and this involves differentiating it from competitors' products as well as a firm's own products. Edward Chamberlin, Theory of Monopolistic Competition (1933). In this sense, a differentiation strategy seeks to provide products or services that offer benefits that are different from those of competitors and that are widely valued by buyers. It must be based on two key factors: Strategic customers, the company has to identify their needs and what they will value. Key competitors, to be different, the company has to identify against whom is competing. the aim of using a differentiation strategy is to achieve competitive advantage 8

9 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 9

10 The fundamentals of competitive differentiation The fundamentals of competitive differentiation for the Automotive Industry can be expressed as how an OEM/TIER innovates and delivers its products and services compared with the competition in three parameters: Quality and specifications Quantifiable measures (reliability, durability, NVH, etc.) are taking into account as well as dynamic measures (performance, ride and handling). Cost / Value Intelligent product design, advanced manufacturing, strategic sourcing, servitisation, etc. Timeliness measures Bringing new product quicker than competition. Importance of value creation and value appropriation. 10

11 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 11

12 Key winning strategies Covering the Product Life Cycle There are commonalities in the core principles that the leading automotive companies employ in their winning strategies to improve flexibility and responsiveness, reduce overall cost structure and enhance competitiveness. Investment in fresh, attractive, affordable, consumer-driven products. Accelerated product development. Intelligent platform and component sharing. Flexible manufacturing and work practices. Optimized order to delivery processes. Supplier leverage and partnering. KEY Focus on key developing markets. Continuous improvement mindset and commitment High qualified skills 12

13 Key winning strategies Investment in fresh, attractive, affordable, consumer-driven products There are commonalities in the core principles that the leading automotive companies employ in their winning strategies to improve flexibility and responsiveness, reduce overall cost structure and enhance competitiveness. Investment in fresh, attractive, affordable, consumer-driven products. Accelerated product development. Intelligent platform and component sharing. Flexible manufacturing and work practices. Optimized order to delivery processes. Supplier leverage and partnering. KEY Focus on key developing markets. Continuous improvement mindset and commitment High qualified skills 13

14 Key winning strategies Investment in fresh, attractive, affordable, consumer-driven products MERCEDES-BENZ INTELLIGENT DRIVE An integral safety concept is based on real-life traffic scenarios and accidents. Innovations for the mobility of the future Mercedes-Benz Intelligent Drive comprises a range of technologies, optimally configured for each specific model series and designed to enhance safety and comfort when driving. The Road to Accident-free Driving is based on a four-pillar strategy Prevention: Avoiding Danger, Providing Timely Warning And Assisting. Response: Actively mastering difficult situations with the vehicle. Protection: Mitigate the Consequences of Accidents for all Road Users. Rescue: Enabling Appropriate Action in Emergencies. Intelligent Drive includes DISTRONIC PLUS, Breake Assist PLUS, PRE-SAFE Brake, Highbeam Assist, Intelligent Light System, Night Vision PLUS, Active Lane Keeping Assist. Active Blind Spot Assist, Speed limit assist, PRE-SAFE, ATTENTION ASSIST, Adaptive brake light, Rearview camera and Parktronic. 14

15 Key winning strategies Intelligent platform and component sharing There are commonalities in the core principles that the leading automotive companies employ in their winning strategies to improve flexibility and responsiveness, reduce overall cost structure and enhance competitiveness. Investment in fresh, attractive, affordable, consumer-driven products. Accelerated product development. Intelligent platform and component sharing. Flexible manufacturing and work practices. Optimized order to delivery processes. Supplier leverage and partnering. KEY Focus on key developing markets. Continuous improvement mindset and commitment High qualified skills 15

16 Key winning strategies Intelligent platform and component sharing Ideal standardization strategy of OEMs Several OEMs are at various stages on the modularization curve 100% Distinctiveness (qualitative) Ideal OEM s standardization strategy Poor OEM s standardization strategy Product are not very different and share only few elements Commonly used elements (%) Product are very different and share many elements 100% Vehicle Affordability Cross-platform complex components sharing Platform-wide complex components sharing Simple components sharing Carry-over approaches Platform approaches Module approaches Most advanced OEMs PRINCIPLE: same component across range or for model renewal in order to spare development and increase community PRINCIPLE: platforms with maximal common parts between different models and brands PRINCIPLE: vehicle structure divided into modules, sharing standards interfaces an base components and further differentiated within variants. Progressive standardization strategies are being followed From carryover to modular approaches PRODUCT oriented standardization Scope: basic components. Governance: standardization plans managed by technical departments or by projects with cross functional teams. Scope: common technical parameters for several models (unperceived underbody). Governance: engineering organization according to technical platforms. Scope: complex systems or subsystems dedicated to an entire function. Governance: modular architecture organization. 16

17 Key winning strategies Intelligent platform and component sharing STRATEGIC OBJECTIVE (STRATEGY NUMBER ONE) Leading provider of premium products and premium services for individual mobility. Managing the technological change to remain future proof Managing volume growth, innovation and profitability through cost-conscious, efficient R&D Evolution Efficient combustion engines Innovative technologies Revolution Alternative drive trains Mobility services Without a Modular Strategy, a threefold increase in model numbers would send costs and resources spiralling along the process chain. The Modular Strategy enables shorter development cycles and enhanced flexibility in their plants. Common architecture, not platforms. In premium vehicles differentiation is key 17

18 Key winning strategies Flexible manufacturing and work practices There are commonalities in the core principles that the leading automotive companies employ in their winning strategies to improve flexibility and responsiveness, reduce overall cost structure and enhance competitiveness. Investment in fresh, attractive, affordable, consumer-driven products. Accelerated product development. Intelligent platform and component sharing. Flexible manufacturing and work practices. Optimized order to delivery processes. Supplier leverage and partnering. KEY Focus on key developing markets. Continuous improvement mindset and commitment High qualified skills 18

19 Key winning strategies Flexible manufacturing and work practices The Strategic Dimension Manufacturing is the biggest investor in research and innovation in modern economies. Manufacturing drives productivity improvement, innovations in work organisation and the application of technology, ahead of any other sector. R&D and productivity advantages in manufacturing spill over into the wider economy. Manufacturing drives the creation of high-end service jobs in particular, contributing to the upgrading of the service sector (the servitisation ). The Global Future of Manufacturing The importance of innovation in manufacturing as the key differentiating factor in success. The increasing complexity of manufacturing and the need for improved levels of customisation to meet highly differentiated demand. Infrastructure challenges created by transportation costs and capacity limitations, and by the cost of energy. Trade and currency-related challenges, in part driven by the recognition of manufacturing s importance in economies leading to increased protection, in part driven by currency volatility. Good policy settings will play an important role in manufacturing success. Automotive Industry in Basque Country 2012: 12,400 million Euros => 17% GDP Basque Country 75,000 direct employees worldwide Over 45% of Spain s car industry 300 component manufacturers and 1 plant DAIMLER 19

20 In today s dynamic environment, innovation is a strategic option...requiring new approaches TRADITIONAL STRATEGIES MEGATRENDS Geopolitical Demographic Sustainability Mobility Technological Automotive Industry Challenges The fundamentals of competitive differentiation Key winning strategies NEW APPROACHES Cooperation & Innovation 20

21 Table of content 1. Automotive Industry: key figures and challenges 2. Differentiation what does it mean? 3. The fundamentals of competitive differentiation 4. Key winning strategies 5. AIC: Innovation and Cooperation as a Strategic Option DIFFERENTIATION AS A STRATEGY FOR THE AUTOMOTIVE INDUSTRY 5 th November Autoworld, Brussels 21

22 based on a new concept of cooperation Identification and analysis of ideas and opportunities R&D activity Launch of new products and processes New business creation Competitive Intelligence Produces a report on EVs penetration in the market R&D Units is located at the AIC to perform research in electromechanics components Company Development Unit for the launch of a new product Electromobility Solution for Commercial Light Duty Vehicles A Collaborative Research Project is launched, led by an OEM and including Key Component Manufacturers and Technological Canters R&D cooperation R&D+I AIC technology cooperation develops electromechanics systems Joint development project presented to R&D public support program Results cooperative R&D Creation of a joint-venture set-up in the Incubator Training Specific modules for automotive industry (electric motors, HIL; BIW, vehicle dynamics, ) Support for Cooperation / Gathering of Resources AIC looks for synergies between companies, facilitates access to resources and supports the development of ideas throughout this process 22

23 Thank you - Eskerrik asko - Gracias