The automotive industry has experienced annual sustained growth for 9 years, but BCG's modeling projects that a downturn is coming. Learn how you can stay ahead of the automotive downturn.
Currently in its ninth straight year of growth, the automotive industry has been enjoying one of the longest expansions of automotive manufacturing in history. But the telltale signs of an impending economic downturn are emerging, among them: weakening GDP growth, stalling global trade, declines in consumer sentiment, an increase in vehicle incentives, and an increasing number of auto loans in delinquency.
In combination, these trends will put the brakes on the momentum that has fueled growth in the automotive industry.
Automotive industry leaders might think that they have already learned the lessons they’ll need to get through the impending downturn by having survived the last one, The Great Recession. But BCG doesn’t expect the moves that helped in the slowdown that began in 2007 to be very useful this time. The coming downturn will differ fundamentally from the previous one because the forces at work are entirely different than those we witnessed in the past decade.
We are on the cusp of a major industry shift, with the convergence of sharing, autonomy, and electrification likely to permanently reshape the automotive landscape. An entirely new playbook will be needed to survive and thrive.
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To succeed, OEMs and suppliers must prioritize investment and strategic growth—and maximize their funding power and flexibility now.
Read the articleFor OEMs, the automotive downturn is an opportunity to transform and focus on SAEVs. If not, they could lose market share to non-traditional companies like Google, who will not be experiencing a downturn in their core market.
The industrywide shake-ups that result can persist for decades—presenting opportunities for organizations prepared to think and move in new ways. Thriving in a downturn requires far more than cutting cost. It demands that companies free up resources to make select investments while protecting critical bets to win in a new era of mobility.
Planning now for the coming reality can unlock meaningful value creation. We help our clients in the automotive industry achieve downturn readiness and resilience by engaging them in a three-phase effort:
