How the car industry is reconsidering its business strategy
The rise of the sharing economy, along with the power and information now wielded by consumers thanks to social media networks and other digital technology platforms, is rapidly driving innovation and transforming the world. And the automotive industry, too.
The automotive industry has been undergoing a profound revolution over the past decade as it has adjusted to the demand for smart cars and adopted telematics systems capable of satisfying a range of needs: from greater safety to improved infotainment systems and from cost efficiency to automated maintenance and security alerts. Simultaneously, the global drive to produce more environmentally-friendly vehicles and the sharp rise in the sharing economy driven by the Millennial Generation is pushing the industry to confront and completely reconsider when, where, how and why cars are used and restructure its business model and supply chain systems accordingly.
In order to address this revolution, the automotive industry is increasingly called upon to embrace a vaster circular economy strategy: from the adoption of new polymers and lightweight materials that can easily be recycled, regenerated and reused to the use of modular designs that will make repairs and upgrades easier, quicker and more economically enticing.
Moreover, new business models such as car sharing are driving an increase in the use of vehicles, but decreasing their overall lifetime from about ten to six years. This clearly poses a further demand not only on the automotive industry to produce more efficient vehicles that can be easily maintained and upgraded, but also on the entire system of parts and component suppliers, who will also need to feed the circular economy and help “future-proof” the industry.
Finally, in order to efficiently complete a circular economy strategy, the industry must also perfect buy-back and recycling programmes that will allow producers to extract all remaining value from end-of-life vehicles and further expand its environmentally-friendly footprint.