The automotive industry prides itself on a culture of constant innovation and change. The lean manufacturing principles that have made the sector a productivity powerhouse are based on the relentless reassessment of established methods and processes. If a better way to do something can be found, it is quickly standardized and adopted across the world.
Some changes, however, go beyond the incremental. Right now, automotive companies in every part of the industry and every tier of the supply chain are riding a wave of disruption that may transform the very basis of their businesses. When consultancy KPMG asked automotive executives earlier this year to rate the chances of major business model disruption in the sector, 83 percent said they thought such change was likely, up from only 12 percent two years ago.
The first of these forces is geography. Global demand for cars is still growing and annual motor vehicle production is expected to pass 100 million by the end of this decade. That growth is far from evenly distributed, however. Car ownership levels have stabilized in many developed economies, but they are rising rapidly elsewhere. Since car making is now a global business, that matters for all the original equipment manufacturers (OEMs) and their major suppliers. Adapting production and supply networks to match the distribution of new customers hasn't been easy, however. Of the four BRIC countries seen as key target markets at the turn of the century, two - Brazil and Russia - have been hit by recessions. India and China, by contrast, continue to grow rapidly.