The green movement has hit the automotive industry as all car manufacturers are focusing their attention on producing more environmentally friendly and fuel efficient vehicles. As this infant market matures, there will be a demand for services from businesses that understand how to cater to these specific types of vehicles.


Overview

There are many macro forces in play contributing to the changing industry dynamics. Trends such as resource scarcity (leading to rising fuel prices), technological innovation, rising urbanization, changing demographics, new consumer attitudes toward ‘mobility’, increased regulation, intense competition (and more) are starting to create a market environment where sustainability will become a key component for success in the industry. We look at all these trends at length and help our clients achieve their goals.

However, the transition needed for the industry to become truly sustainable through the development of alternative power-train technologies or carbon fibre aircrafts is far more complex. This is creating much anxiety and uncertainty, and is leading to a fundamental shift in how the industry approaches sustainability.

Challenges include:

  • Regulatory uncertainty. Automotive & airline executives speak of the need for greater clarity around the scope of future regulation.
  • Technological uncertainty. Managing the innovation of multiple new technologies is complex, especially as their evolutionary path remains unclear.
  • Consumer uncertainty. The effect of environmental impacts on consumer buying patterns remains unclear.
  • Investor uncertainty. Many CEOs believe that investors are not supportive of corporate efforts to create value through sustainability, and are failing to factor performance on sustainability issues into valuation models.

Our clients include global leaders in transportation and logistics, including global airlines, express, parcel and post companies, trucking companies, third-party logistics providers, railways, port operators, ocean shippers and distributors. We bring our deep experience in these areas to every engagement, and we ensure that when we leave, our clients are equipped with the tools and capabilities they need to continue to improve and grow. Some of our consulting projects are

  • Corporate and business unit growth 
  • Performance improvement, including supply chain management
  • Employee & customer engagement
  • High Performance Culture (HPT) 

Insights

Revolution on the roads

Expect to see many rapid improvements in vehicle fuel efficiency using petrol and diesel, and many new ultra-efficient hybrid vehicles. Even if we only saw 30% energy saving in 30% of vehicle miles driven in developed nations over the next decade, we would save at least 9% in motoring energy use (at today’s rate of miles driven a year).  That would be the same as cutting today’s global emissions by more than 1%.

Electric Cars

Electric vehicles are one of the most important ways to reduce motoring costs, reduce carbon use in transport, improve air quality and reduce global warming.  Expect battery-powered vehicles to be 10% of the market by 2020.  Models like Nissan’s Leaf and Chevrolet’s Volt have led the way.  Much of government economic stimulus packages for the auto industry have been linked to green tech, of which a huge proportion is things like battery technology.

16 million new cars a year are sold in EU alone (2.4m in UK).  If we assume that up to 25% of the smallest car market could be electric cars within 10 years, that would mean over 1 million sold each year, at an average cost of EU11,000.  Electric car sales would then be worth at least EU11bn a year in the EU.

Global Airline Industry

The global airline industry expanded by 12% in 2012 to generate revenue of more than $501 billion. Research shows that the industry will be worth almost $714 billion in 2015, representing 42% growth in five years. In terms of volume, the global airline industry growth figure is forecast to climb more than 28% by 2015 to exceed 3 billion passengers.

Domestic demand represents the leading market segment within the global airline industry, accounting for almost 65% of the overall industry in terms of volume. Regionally, the Americas hold almost 45% of the industry in terms of value.

Like always the obstacles faced by airline operators include uncertain economic climate, slow economic growth and climbing crude oil prices. The economic recession took its toll on the industry as air travel plunged despite falling oil prices. As consumers cut back on non-essential spending, such as travel and holidays, due to falling levels of disposable income, rising unemployment and economic volatility, the global transport industry saw revenue fall.


Case Study Ford

What does the Automotive Franchise Industry Do?

The automotive industry is involved in the process of designing, manufacturing, and selling motor vehicles. However, it is not just about selling cars to consumers. The services required to maintain and distribute cars after the car’s initial sale are part of the automotive aftermarket, a 257 billion dollar market. These services include the car accessories and repairs vital for the automobile ecosystem to function.

Our client in this case is a Ford Franchise ($350m in revenue) selling Ford branded cars, providing maintenance and selling used cars.  Our client faced an issue of decline in the car sales putting a lot of pressure on the company. We consulted client. With our diagnostic we found that the employee value was very low and therefore the company wasn't able to bring in enough customer to buy the cars. The level of service was below normal which led to unhappy customers. Due to the size of the company there were a lot of things happening and no attention was being paid to becoming efficient through of simple workflow (there was a lot of rework) and integration of technology. 

We implemented the Business Performance program which lasted for almost a year.  

Impact

    • Reduction in cost savings of 20 percent to 30 percent of the addressable cost base, but its real advantages were reduced cycle times and increased quality and customer satisfaction.
    • Increase in efficiency and productivity by more than 60%.
    • 20% increase in employee satisfaction in first 3 months. 
    • Increase in EVA (Economic Value Added/Employee) by more than 80%.
    • The return on investment of more than 150% (9 months post implementation).