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Managing Complex Production Paradigms is Key for Future Automotive Market Leaders, According to PwC

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SOURCE PwC US

Of the 102 New Factories Planned From 2013 to 2020, 67 Will be Located in Asia

DETROIT, June 5, 2014 /PRNewswire/ -- Of the 102 new factories planned from 2013 to 2020, 67 will be located in Asia, according the PwC's Autofacts. In the latest publication titled, How to be No. 1: Facing future challenges in the automotive industry,' finding the right assembly location is one of the top priorities for automotive companies. 

PwC logo.

"A key trend in the industry is 'build where you sell,'" said Felix Kuhnert, PwC's European automotive leader. "Automakers continue to have their sights on the Chinese market where sales and assembly are forecasted to grow to approximately 30 million by 2020.  Each market has different customer preferences that automakers are producing to meet those local demands.  The level of that customization varies in complexity from market to market, impacting production costs."

PwC analysis indicates that an estimated 400 trillion possible variations are offered in a typical German mid-class vehicle model. This is compared to just 1,500 variants offered in a comparable vehicle in the Chinese market. 

Planning is critical for automakers.  While demand for different models and variants continues to change, automakers need flexible suppliers who are able to deliver the required modules and components reliably and on-time.  And the Original Equipment Manufacturers (OEMs) should to be able to install the right parts and produce their own customized versions where necessary.  That means flexible assembly lines, ideally those that can produce vehicles across different segments. 

In addition, shorter production cycles create other challenges, such as increasing the need to modify production processes.  That means it's important to plan ahead for future vehicle generations and work to integrate a high-level of standardization into platforms and vehicle architecture.

"Global platforms are essential to improving profit margins for automakers," noted Rick Hanna, PwC's global automotive leader. "Strategically companies approach global platforms to meet their needs based on R&D, vehicle segment, market, and a number of other factors. Having a plan to fulfill the production model of tomorrow can make the difference in gaining future market share."

As the automotive industry continues to grow to record levels, the industry should consider the challenges ahead, including:

  • Demographic changes and profound shifts in global economic power are causing massive upheavals in demand.
  • Consumer expectations are changing radically.
  • New technologies are dramatically changing vehicles, from the advent of the 'connected car' and enhanced driver support to better fuel efficiency and new or improved powertrains.

Automotive manufacturers and suppliers are confronted with complexity as a result of increasing numbers of products and options, shorter technology cycles, increasing pressure to innovate and global supply networks. And at the same time they need to balance the needs and demands of customers, investors, regulators, non-governmental organisations (NGOs) and the public.

Competition breeds efficiency, inventiveness, flexibility and decisiveness mandatory.  The key to success for the challenges in this fast moving environment are:

  • Knowing the markets
  • Building the brand
  • Adapting production strategies
  • Taking a long-term view

To gain insight into the automotive challenge ahead and staying number one in the market, please download the publication 'How to be No. 1: Facing future challenges in the automotive industry.' at www.pwc.com/auto

About PwC's Automotive Practice
PwC's global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality.  One of PwC's global automotive practice's key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends.  Autofacts provides our team of more than 4,800 automotive professionals and our clients with data and analysis to assess implications, make recommendations, and support decisions to compete in the global marketplace.

About the PwC Network
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 157 countries with more than 184,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 2014 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. 

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.  

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