Automotive

Major changes with continuous new challenges and opportunities – that's what fascinates me about the automotive industry day by day.

Dr. Heiko Rauscher

Partner

An industry reinvents itself – at a rapid speed

The automotive industry is undergoing radical change: for some time now, trends such as electrification, digitalisation, autonomous driving as well as new mobility concepts have been leading to diverse upheavals. Since the pandemic, the industry has also been struggling with supply chain problems and declining sales. And more recently, a massive rise in costs and the energy crisis have been added to the mix. With all the crises, however, there are also interesting opportunities. In order to remain successful in these times, certain factors are crucial: these include thinking in terms of options and scenarios, a high degree of flexibility, very active cost management, but also determination in developing new business.

Current situation in the industry

01

Overcoming global crises

A pandemic, supply chain problems, geopolitical uncertainties, climate change, cost explosion and energy concerns - a whole series of crises is hitting the automotive industry, which is already in the middle of a structural transformation process. Companies face the challenge to remain profitable even in the face of high fluctuations on the customer and supplier side, so flexibility is crucial. However, a higher degree of flexibility mostly requires investments and leads to additional costs. On the other hand, strongly rising costs (material, energy, wages, freight) as well as lower sales figures compared to the pre-Corona era require very active cost management. Companies must now make consistent decisions about where more flexibility is needed and where costs should be reduced.

Global crises have a deep impact on automotive companies – many performance and support areas are affected. Therefore, it is important to check the current resilience of companies just as systemically. There are many strategies and measures to increase flexibility and profitability. It is important to find the right mix for each company. This is where our strength lies.

Dr. Heiko Rauscher

Partner
02

Saying goodbye to the fossil era

The automotive industry plans to invest 150 billion euros in electromobility and digitalisation by 2025, according to an analysis by the VDA. The electrification of the powertrain in particular is like a disruption, because entire product categories will become obsolete. Who will benefit most from technology and what are the key success factors? And what will become of transmission builders and internal combustion engine specialists? They will have to train additional qualifications and establish new cooperations - and quickly, because the change to alternative drive systems has clearly picked up speed.

We have known the industry very well for decades and support it with clear and honest analyses. In the end, a convincing transformation concept is required to sustainably align the business model and convince customers, shareholders and financiers of this.

Portrait of Markus Herber

Markus Herber

Director
03

Embracing the digital opportunity

Digitalisation affects all corporate functions and allows for a multitude of improvements: Identifying risks in the supply chain early on and reacting appropriately to them, further increasing efficiency and quality in production, increasing the productivity of developers, reaching customers faster and in a more targeted manner. In addition, digitalisation leads to new product ideas and business models. As a result, there is considerable pressure to change for the entire automotive industry, with winners and losers. To be among the winners, the right digitisation concept, sufficient resources and partnerships are of high importance.

We have the key technological trends in mind when we review company processes, products and business models for opportunities for improvement. It's about translating the technological possibilities into economically viable concepts.

Portrait of Ralf Winzer

Ralf Winzer

Senior Partner & Member of the Board

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A look into the details - what we do in the automotive sector:

Expert Interview

How great is the pressure to act in the automotive industry, Heiko Rauscher?

How is the frequently discussed change in automotive engineering currently taking place?

OEMs and suppliers are currently exposed to a multitude of sometimes very strong change processes - much is in flux. On the one hand, companies must resolutely build up new business areas, but on the other hand they must also be adaptable and cost-conscious. This requires a holistic view, which is a demanding task. It is important to set the right strategic, operational, organisational and financial course based on the company's specific starting situation.

What are the implications for corporate risk management?

Managing risks has always been a central task. However, the importance of risk management has increased significantly in recent times: We currently have an unusually high number of strong changes, and this trend is more likely to continue in the future. Companies must therefore regularly identify and assess risks - opportunities as well as threats. Furthermore, strategy development should think more strongly in terms of options and consider different scenarios.

What impact do current trends have on the supply chain?

Multiple supply difficulties, geopolitical tensions, technological innovations, sustainability requirements and, in some cases, cost developments are severely challenging existing supply chains. Global supply relationships will continue to exist in the future. But companies have to ask themselves the question: Does it make sense to have a component produced far away for a few cents less if it is not delivered on time in the end and then considerable additional costs arise due to production delays? There are a number of levers for solving this problem: optimising one's own value creation, competences and locations, the supplier portfolio and supplier management, but of course also the target markets and the range of services.

What about the financial resources of the companies?

We are observing an increasingly tense financial situation, especially among some suppliers. Many companies are living off their substance or have already largely used up their reserves: Investments are postponed if possible and means of production are used as long as possible. In addition, some only react when the financial situation becomes critical. However, we then advise the companies not only on financing options and liquidity-securing measures, but also take a look at all essential instruments for increasing value and improving results. The strong change must be met with a holistic solution.

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