FAST 2030 FUTURE AUTOMOTIVE INDUSTRY STRUCTURE UNTIL 2030 THE IMPACT OF CURRENT TRENDS ON VALUE CREATION AND THEIR IMPLICATIONS 8 NOVEMBER, 2018 Alejandro Gaffner Johannes Berking Prepared for: Cluster de Automoción de Navarra © Oliver Wyman Contacts Alejandro Gaffner Johannes Berking Partner Principal Energy & Transportation Practices Automotive Practice Madrid Hamburg • Over 30 years of consulting • Over 12 years consulting experience in the Energy and in the automotive industry Transportation sectors • Oliver Wyman Global • Large experience on corporate Supplier Team and business strategy, marketing • Focus on strategy development, and sales, operational operations improvement improvement and organizational and transformations transformation • Author of various • Extensive international work in the Oliver Wyman studies Americas, Europe and Middle (e.g. FAST 2025, Value East and Cost Migration, • Focus on initiatives and studies E-Mobility 2035) regarding the future of Mobility Spain Contact Requests EU Contact Requests +34 91 531 7900 +49 (179) 697-8348 [email protected] [email protected] © Oliver Wyman 1 Section 0 Introduction to Oliver Wyman Introduction to Oliver Wyman Oliver Wyman Group is a Marsh & McLennan company, one of the leading global professional services firms • 2017 Revenue: US$14 BN • Staff: 65,000+ • Clients in more than 130 countries • New York Stock Exchange (MMC) Management, economic and brand Risk and reinsurance Talent, health, retirement Insurance broker and strategy consulting specialist and investment consulting risk advisor • Strategy • Reinsurance and risk • Personnel strategy • Risk management, • Organization management • HR systems consulting, and transfer • Operations • Contract management, claims • Compensation handling, and fiduciary • Financial solutions • Risk management accounting • Incentive systems and insurance • Transformation management • Communication program management services • 1984 year founded • 1922 year founded • 1937 year founded • 1871 year founded • 2,300 colleagues • 22,600 colleagues • 32,700 colleagues • 4,700 colleagues • 50+ offices worldwide • 170+ offices worldwide • 500 offices worldwide • 60+ offices worldwide • $1.2 BN 2017 revenue • $4.5 BN 2017 revenue • $6.4 BN 2017 revenue • $1.9 BN 2017 revenue © Oliver Wyman 3 Oliver Wyman Group overview Oliver Wyman Group has ~4,700 colleagues with expertise across a range of industries to help our clients address their greatest challenges Broad industry coverage Business Distribution & Health & Life Public Surface Automotive Energy Services Wholesale Sciences Sector Transportation Aviation, Comms., Retail & Financial Industrial Travel & Aerospace & Media & Education Products Consumer Leisure Defense Technology Services Products LIPPINCOTT Brand NERA Strategy Economic and Design Consulting Consulting Corporate Finance and Advisory Digital, Technology and Analytics Operations Organizational Effectiveness Pricing, Sales and Marketing Sustainability Center © Oliver Wyman 4 Example Presence at international forums We lead international discussions on key topics at game-changing events and international forums © Oliver Wyman 5 Oliver Wyman’s Global Automotive Practice Oliver Wyman is working for the world´s leading car manufacturers and suppliers on a broad range of topics Excerpt from client list Automotive manufacturers Automotive suppliers (passenger cars, commercial vehicles) • Extensive project experience at • More than 200 projects since leading global OEMs 2004 and more than 80 active clients: – BMW – Nine of the top 20 companies – Daimler – Medium-sized & family – Volkswagen Group companies – Peugeot/Citroën • Very good relations with top – GM management and owners – Ford • Broad coverage of topics and – Renault modules: – … – Strategy, market analyses & • Intensive contacts with top market entry, footprint management optimization, product portfolio, • Broad coverage of topics: M&A, brand management, sourcing, operational – Sourcing / product costs excellence, reorganization & – R&D strategy / core restructuring, performance competences improvement, product cost – Assembly processes reductions, supply chain – Risk management optimization, benchmarking, ... – Customer satisfaction – Engine, transmission, chassis, – Distribution network interior, body, exterior, electrical systems/ electronics, – Marketing engineering services, ... – Brand management – Service strategy – Financial services Source: Oliver Wyman – … © Oliver Wyman 6 Oliver Wyman Automotive service offering Together with our clients we develop innovative strategies and viable solutions for the main challenges of the automotive industry Research & Sales & After Sales, Development, Purchasing Production Marketing Services Product and Brand • Brand strategy and • Parts, components • Footprint evaluation • Sales • Financial services management and systems • Manufacturing • Wholesales, retail • Service and parts • Product portfolio • Material technology and • Distribution and product investment strategy • Fleet strategy • Production • Marketing equipment • Production • Other services • Innovation planning management • Supply chain • Shop floor management optimization and • R&D • Sourcing strategies indirect functions • Product • Launch and ramp- development up management process • Growth strategies and programs • Quality management • Customer satisfaction and customer loyalty Cross-functional topics Corporate strategy, Product costs, Quality and warranty, make or buy, core competencies, organizational redesign, partnerships / M&A, task forces Source: Oliver Wyman © Oliver Wyman 7 Introduction to The Harbour Report® Automotive The Harbour Report® is the leading global Automotive manufacturing benchmarking study • Harbour Report® basics • Guide to competitive analysis in manufacturing performance based on ~ 400 plants globally. Providing insights per shop, function and sourcing type by company, plant and product • Benchmarking data enables participants to focus improvement activities in numerous areas with highest potential for savings (cost, product design, manufacturing performance, etc.) • Over 30 years of proven methodology ensures comparability – Detailed definitions – Adjustments for sourcing • The Harbour Report® team as a trusted source of information and as a common platform for Automotive manufactures Source: Oliver Wyman © Oliver Wyman 8 Proprietary Intellectual Capital Oliver Wyman develops and applies innovative, leading-edge intellectual capital, especially in the area of value growth strategies Excerpt from publication Periodicals Studies and Industry Reports Automotive Perspectives on Digital Industry Mobility 2040 Visibility and Control FAST 2030 Manager 2017 Manufacturing industries 2017 Point of View Digitization of Robotics and Industrial E-Mobility 2035 Making money with car Manufacturing Sales Automation Systems service platforms Market Study Source: Oliver Wyman © Oliver Wyman 9 Section 1 Excerpt from FAST 2030 study for ACAN FAST 2030 Study outline Outline Sources • The automotive industry remains on track for This is the third edition of the FAST study, created success – in continuation of the recent years. every five years in collaboration between Oliver After the crisis years 2008–10, both OEMs and Wyman and the German Automotive Association suppliers have experienced a phase of prosperity (VDA) • However, this might turn out to be a short-lived • More than 100 expert interviews with global top chapter in light of the “Mighty Seven Industry managers in the automotive industry as well as Trends” – a perfect storm of transformative further external industry specialists technologies and changing customer behavior – • Triangulation of a vast set of market which challenge the core business pillars the publications, industry reports, and other industry is built on external sources to gather additional both • As a consequence, the shape of automotive value quantitative and qualitative insights on current and creation is expected to simultaneously shift in future developments three dimensions until 2030 – horizontally between • Insights from Oliver Wyman’s global internal vehicle systems, vertically between industry players, expert network, knowledge repository and and regionally recent intellectual proprietary on industry • Nine new business models are emerging for auto dynamics and transformative trends (amongst suppliers creating a need to re-define their role others, “E-Mobility 2035 study”, “Mobility 2040 and operating model in order to retain study”, “HMI point of view”) competitiveness • In parallel, both suppliers and vehicle manufacturers will have to foster holistic performance improvements to offset the needed investments and absorb other looming externalities. © Oliver Wyman 11 Agenda FAST 2030 1. Status: Current status of the automotive industry 2. Trends: Current and emerging trends changing the automotive industry 3. Value: Automotive value creation development until 2030 4. Impact: Areas of impact and strategic business model options for automotive suppliers © Oliver Wyman 12 1 STATUS: Current status of the automotive industry Current status of the automotive industry – Overview Overall, the automotive industry remains strong and continues to grow; suppliers are well positioned, but the road ahead is challenging Strong global Regional value Pressure both Healthy profit …but 1 growth of the 2 shifts in 3 from need for 4 margins for 5 increasing automotive key markets increased suppliers challenges