6 minute read 17 Sep 2019
2q19 mobility quarterly istock

How technological collaboration is driving growth through the mobility industry

By Randall Miller

EY Global Advanced Manufacturing & Mobility Leader

Passionate about manufacturing, mobility and disruption. Champion for women and diversity & inclusiveness in the Advanced Manufacturing & Mobility industries.

6 minute read 17 Sep 2019

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  • 2Q19 Mobility Quarterly Final (pdf)

Mobility industries are investing on their digitization and analytics initiatives to drive operational efficiency amid changing demand patterns.

With the demand patterns varying across geographical subsectors, mobility companies are gearing up for disruptions from all directions in 2Q19. During the public earnings calls with analysts, leaders of 20 automotive and transportation (A&T) companies have stated that they have accelerated digitization and analytics initiatives to maintain efficiencies in this period of unprecedented change.

“Geographic developments” continue to be the top theme in 2Q19. However, “operating costs” and “restructuring initiatives” have come up to the second and third position respectively, pushing “evolution of mobility” down to fourth position.

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Top 10 themes from this quarter:

1. Geographic developments — market conditions by region

A combination of elements, such as extended macroeconomic uncertainty and regulatory constraints, has led to reduced buying activity in India and China. In contrast, the US market is seeing a large-scale shift from cars, raising demand for light trucks and hybrids. Truck sales have also reached new heights owing to a flourishing delivery and shipment system. Latin America remains unstable, reflecting slow economic growth and volatile exchange rates in the region.

2. Operating costs — moderation in raw material costs while prices rise

As major currencies continue to weaken against US dollar, price increases are aiding markets in fighting high inflation. Most companies report moderation of raw material costs as they count on the benefits of pricing actions, restructuring programs and mix enhancements to improve the bottom line. R&D spending remains high as companies prioritize the development of vehicle architectures and technology for electrification, autonomy and connected mobility.

3. Restructuring initiatives — reorganization brings focus back to high-growth segments

Several peers are reviewing their current and future portfolios to focus resources on the most relevant businesses. Automotive companies are realigning business units to gain greater visibility into financial returns by product segment, region, customer and program. While manufacturing capacity is being adjusted by region, overall headcount is still being reduced.

4. Evolution of mobility — electrified vehicles poised for an upgrade

Original equipment manufacturers (OEMs) from China and elsewhere are pursuing zero-emission offerings including four-wheel-drive, high-power, high-performance electrified vehicles. Commercial vehicle (CV) peers believe that the mobility industry is at the tipping point for adoption of autonomy in the mining sector. Component suppliers continue to secure business wins for high-growth product segments such as advanced driver-assistance systems.

5. Product evolution — changing demand patterns mandate product innovation

Most automakers have stated that they are transitioning to scalable smart vehicle architecture systems. Transportation peers are stretching capabilities to offer more speed and convenience to customers by providing services such as all-week delivery. Passenger vehicle (PV) makers are shifting capital allocations of trucks, SUVs, crossovers and performance vehicles owing to strong consumer demand globally. Premium OEMs have announced plans to launch series of fuel cell vehicles, potentially replacing battery technology.

6. Inorganic growth (M&A, joint ventures and partnerships) — collaboration is crucial

In an effort to increase market share, reduce cost structure, innovate products and services, and advance technical capabilities, many peers and suppliers are collaborating with technology companies. Transportation companies are acquiring freight solution companies to enhance their service portfolios and expand their geographic bases. Many PV companies opt for joint development of new electric and internal combustion engine (ICE) vehicle segments.

7. Working capital and cash flow management — changes from the prior quarter

Though the operating cash flow continues to improve for most peers, some companies are witnessing a decline because of demand volatility and higher restructuring costs. Rightsizing the inventory at the micro level is a key priority as companies increase flexibility in their supply chains. PV peers are looking to normalize inventories and do not forecast growth in dealer inventory in 2H19.

8. Manufacturing and supply chain management — modernizing manufacturing and supply chain

Multiyear programs to reduce manufacturing costs and increase productivity are continuing to yield positive results in 2Q19. Adoption of flexible production, and standardization of equipment and processes has brought down capital investment for some PV peers. Many automakers are adopting digital vehicle platforms that integrate systems such as electric propulsion, cybersecurity protection and advanced active safety systems.

9. Regulatory issues — government policies tighten around emissions

Automakers across regions are actively updating their portfolios in line with CO2 requirements as compliance costs and certification backlogs increase. Early adoption of next-stage emission standards in India (BS VI) and China (China VI) is considered as the biggest challenge in a decade by automakers. France’s reduction of incentives under its car fleet renewal program is expected to impact demand in 2H19.

10. Organic growth (product, strategy and innovation) — activity in key product lines and capacity adjustments

Several companies increase spending for new offerings and digital technologies. CV peers are incubating electric technology offerings for allied sectors while transportation peers aim for large e-commerce customers. They are also looking at expanded capacity and enhanced technological capabilities through automated hubs and flexible networks.

  • Scope, limitations and methodology

    This analysis reviews the top themes discussed by leaders of 20 A&T companies (including passenger vehicle, commercial vehicle and automotive suppliers) during public earnings calls with analysts. Our report tracks the movement of these themes from quarter to quarter to provide a perspective on shifts in the sector landscape.


With disruptions coming from all directions, the mobility industry is gearing up to manage a new phase of variation. Shifting demand patterns in geographical subsectors along with evolving mobility solutions, intensifying competition, product innovation, stringent regulations and unfavorable political scenarios make for a volatile playground for mobility peers this quarter. To counter this, companies have accelerated digitization and analytics initiatives to drive operational efficiencies — from manufacturing footprint optimization to supply chain visibility.

About this article

By Randall Miller

EY Global Advanced Manufacturing & Mobility Leader

Passionate about manufacturing, mobility and disruption. Champion for women and diversity & inclusiveness in the Advanced Manufacturing & Mobility industries.