The pandemic has been a difficult time for the automotive sector. Plummeting demand in 2020 meant new car sales in the UK fell by close to 30%, the biggest drop since 1943.
Yet, car sales were already steadily declining before the pandemic hit. Car registrations fell each year between 2017 and 2019. This fall in sales is indicative of structural changes within the industry, with one of the key sources of disruption being changing consumer expectations.
Driving change
For a long time, the car has been at the centre of the automotive industry. The focus has been on making cars that people want to buy new and buy regularly.
Until recently, consumers’ changing demands went relatively unheeded. But now, consumers are holding all the cards.
Consumers increasingly have specific wishes when it comes to what they want to buy and what kind of impact they would like to have on the environment. New models of personal mobility that incorporate shared or flexible ownership are increasingly popular. More and more drivers are turning to electric and hybrid vehicles, as they look to limit their personal impact on climate change; global sales of electric cars rose by 43% in 2020 while overall car sales fell, demonstrating a shift in preferences.
The way in which the public want to buy cars has also changed. Customers expect a seamless omni-channel experience, with more digital options to browse and buy. I am proud that NTT DATA is leading the way in pushing forward industry discussion in this area, helping dealers transform their sales and business processes to achieve sustained, profitable growth.
In order to keep up, the wider industry needs to refocus on the consumer. Increasingly, Original Equipment Manufacturers (or OEMs) see themselves as digital partners or technology providers, rather than car manufacturers. Rapid advances in autonomous and connected cars will open up even more opportunities for transformation over the coming decades.
In November 2020, voters in Massachusetts backed an extraordinary ballot measure expanding consumers’ right to repair the vehicles they own, and crucially, giving customers ownership of all the car’s data. The measure mandates that all vehicles sold in the state from 2022 must include telematics systems with a standardised open data platform accessible to owners and independent repair businesses, facilitating a host of innovative repair, maintenance and diagnostic testing use cases.
Skills
With a Brexit deal finalised, some certainty has returned to the industry. The government’s furlough scheme also safeguarded automotive jobs during the pandemic. NTT DATA UK’s recent survey of furloughed workers found that 53% of automotive workers were planning to stay in the sector when they returned to work. This compared to an average of 49% of people planning to stay across all industries surveyed.
Once the pandemic eases, the sector has reasons to be hopeful. The shift in focus towards the consumer will require innovation and technological expertise – already strengths of the UK economy.
But in order to make the transition, car manufacturers need to have technological expertise and thought leaders within their organisations. The widely reported skills shortage in the automotive sector poses a problem here. One recent study from UK car body shop owners/managers found 35% respondents feared a skills crisis was the ‘biggest threat’ to the sector. Fundamentally, the industry faces a dilemma about how to maintain and grow talent in the sector.
Fresh perspectives
The industry shift towards the customer requires a fresh approach. Reskilling for existing employees is an important first step to start to address the skills gap. There is also no better time to reassess recruitment strategies within the automotive sector to ensure that the most diverse and exciting talent can be a driving force behind this change.
To meet this challenge, it is well worth automotive leaders bringing in expertise and experience from outside the sector.
Industry outsiders bring new insight and a fresh perspective – not to mention inspiring others to follow in their footsteps. As it stands, the automotive industry remains dominated by men. By recruiting from out of sector, companies will have access to the diverse talent who can provide a plurality of viewpoints and lead the way in reimagining the future of mobility.
For example, Karen McElhatton was hired as Global CIO of McLaren in 2018. McElhatton had extensive experience in manufacturing and retail sectors, having worked at Procter & Gamble, TJX International, and JAB Luxury which oversees luxury brands such as Jimmy Choo, Bally, and Belstaff. She was able to bring her understanding of consumer needs and interests to her new role.
Changing perceptions
Thinking more broadly, to achieve greater diversity within automotive, we need to challenge the traditional images of the sector that focus mainly on manufacturing and making cars. Manufacturing is hugely important, but there is also so much more to the industry. There is plenty of room for talented individuals who can bring expertise in key fields such as customer experience, data and intelligence, and technological innovation.
Emphasising the varied nature of the sector will be important in appealing to a wider range of people. Challenging perceptions of the industry at school age will also help to garner greater interest when pupils decide on their future careers.
Final thoughts
As the pandemic eases, we cannot expect to see the automotive industry returning to the same volume of car sales as before. The way we think about mobility has changed forever, as more customers embrace sales of service (e.g. a shared vehicle) and move away from an owned product. By embracing this spirit of innovation, combined with a renewed emphasis on diversity in recruitment, the sector will be well-placed for success.