Anil Valsan, EY Knowledge

1. Drivers of change for the auto industry
over the next decade
Anil Valsan
Global A&T Lead Analyst, EY

2. Page 2
Drivers of change that will reshape the future of automotive industry
Key factors signalling the urgency to change faster
June 2016 Drivers of change for the auto industry over the next decade
Our analysis of the automotive C-suite’s
agenda indicates majority of the
organisations lack preparedness, execution
and resource alignment to enable faster
change
1
2
3
4
5
6
Accelerating pace
of disruptive
competition and
innovation
Battling for
relationship
management
“Digitalization”
across the value
chain
Securing strategic
resources
Diverse sources
of unpredictability
Heightened
scrutiny and
accountability

3. Page 3
Accelerating pace of disruptive competition and innovation
New entrants and collaborations drive disruptions across value chain:
June 2016 Drivers of change for the auto industry over the next decade
1
a.
Value
propositions
– vehicles, services
as well as
components /
modules / systems
c.
Challenging the
innovation pace
and cycle
– leveraging software
and v2x connectivity
to refresh content
rather than the
product itself
b.Challenging
business
model drivers
of incumbents
– attacking cost
drivers, pricing,
customer
engagement
process
Is the pace of innovation in your
company progressive or disruptive?
If software and connectivity define
future vehicles, will tech companies
add the most value to vehicles?
Is disruption coming from where
investments are not taking place?

4. Page 4
Battling for relationship management
An increasingly redefined marketplace with re-articulated customer and consumer roles
June 2016 Drivers of change for the auto industry over the next decade
2
a.
Customer
ownership
– Separation of
customers (owners
of vehicles) and
consumers (users of
vehicles and
services)
c.
Attention and
engagement
– Digital lifestyle
changing preferred
channels for
researching / buying
/ consumption
b.
Loyalty
– Growing
acceptance of
collaborative
consumption
Battle for..
When consumers embrace shared
mobility, will they still be your
customers?
When will market share and
valuations be driven by customer
miles rather than vehicle volumes
- how will it impact the industry
value chain?
Are you doing enough to secure
your customers’ loyalty?

5. Page 5
“Digitalization” across the value chain
Seamless connectivity overwhelms auto industry’s data management and process transformation
capabilities
June 2016 Drivers of change for the auto industry over the next decade
3
a.
Determining the
value and
ownership of
customer and
value chain data
b.
Defining
accountability
and adequacy of
cyber security
and data privacy
measures
d.
Mobility and
connectivity
challenges
traditional work
place models
c.
Digital
transformation of
business processes
driven by greater
visibility of asset
utilization and
efficiency across
functions
Who owns
“digitalization" at
your company?
How secure are
your network of
networks from
security
breaches?

6. Page 6
Securing strategic resources
Business plans collapse without meaningful resource acquisition, staffing and business continuity
initiatives
June 2016 Drivers of change for the auto industry over the next decade
4
a.
Talent
– Data talent,
leadership
c.
Technology
capital
- Securing access to
intellectual property
and disruptive
innovation
b.
Knowledge
management
- Infrastructure to
manage, leverage,
capture
knowledge
Can your leaders drive the
transformation necessary to
survive disruptions?
Can the automotive industry
attract the brightest tech.
experts?

7. Page 7
Diverse sources of unpredictability
Local volatilities challenge management’s ability to deliver overall results
June 2016 Drivers of change for the auto industry over the next decade
5
a.
Unpredictability
of local volatility
across emerging
and developed
markets
b.
Economic
convergence not
straight cycle
d.
Global trade
dynamics and
protectionism
among
developed and
emerging
markets
c.
Geo-political
instability
Is operating
environment
unpredictability a
strategic or an
operational issue?

8. Page 8
Delivering to heightened scrutiny and accountability
Automakers deal with multi-faceted expectations of complying with regulations while driving value
creation and return for stakeholders
June 2016 Drivers of change for the auto industry over the next decade
6
a.
Regulators
– demand trust,
compliance,
governance,
transparency
c.
Advocacy groups
including
hacktivists
– governance,
environment, CSR,
security
b.
Activist investors
– demand capital
returns
Stakeholders – advocates or
adversaries?
Responding to stakeholder
demands – blind spots or
business as usual?
Do you have robust processes
to anticipate stakeholder
demands?

9. Page 9
Critical to understand the correlation between and also collective impact of
these mega trends
June 2016 Drivers of change for the auto industry over the next decade
Our analysis of the automotive C-suite’s
agenda indicates majority of the
organisations lack preparedness, execution
and resource alignment to enable faster
change
1Accelerating pace
of disruptive
competition and
innovation
2Battling for
relationship
management
3
“Digitalization”
across the value
chain
4Securing strategic
resources
5Diverse sources
of unpredictability
6Heightened
scrutiny and
accountability

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How Ernst & Young’s Global Automotive Center can help your business
The global recession reset the automotive industry landscape. As the industry recovers,
automotive companies across the value chain must focus on profitable and sustainable
growth, financial and operational stability, investments in new technologies and seizing
opportunities in high-growth markets. If you lead an automotive business, you need to
anticipate trends, identify implications and make informed decisions that support your
business goals. Our Global Automotive Center enables our worldwide network of more than
7,000 industry-focused assurance, tax, transaction and advisory professionals to share
powerful insights and deep sector knowledge with businesses like yours. These insights,
combined with our technical experience in every major global automotive market, will help
you to accelerate strategies and improve performance. Whichever segment of the
automotive industry you are in — from component suppliers to commercial or light vehicle
manufacturers or retailers — we can provide the insights you need to realize your potential
today and tomorrow.
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www.ey.com/automotive
June 2016 Drivers of change for the auto industry over the next decade