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.