5 minute read 4 Sep 2019
Aerial view shanghai highway

How agility becomes critical in the face of rapid market shifts

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.

5 minute read 4 Sep 2019

New regulations, economic conditions and changing customer preferences are forcing vehicle manufacturers and their suppliers become more agile.

Leaders of 17 automotive and transportation (A&T) companies, during public earnings calls with analysts, have revealed that they are being forced to improve their agility amid shifts in demand patterns. They are trying to balance the management of their operating costs while adequately supporting the development of new technologies.

The top 10 themes from the quarterly earnings calls:

  1. Geographic developments
  2. Evolution of mobility
  3. Operating costs
  4. Restructuring initiatives
  5. Inorganic growth (M&A, JV and partnerships)
  6. Regulatory issues
  7. Manufacturing and supply chain management
  8. Product evolution
  9. Working capital and cash flow management
  10. Geopolitical issues

Top three themes that stood out in 1Q19

Regional demand, evolution of mobility and operating costs remain the top three themes for 1Q19 just as they were for 4Q18. The fact that their positions have not shifted in this quarter indicate that local demands, technological advancements and macroeconomic conditions continue to play key roles in the growth strategies of A&T companies. These themes are discussed below:

  • Geographic developments: Holding the first position in the top 10 list for 1Q19 and 4Q18, the theme of regional demand indicates that A&T companies are responding to changing demands across Asia, Europe and North America. Although Asia is witnessing a slowdown in growth across several major vehicle segments, its overall economic growth rate is still higher than average. While manufacturers in Europe are facing new challenges due to new emissions regulations, there is evidence of an increasing interest in sport utility vehicles (SUVs), light trucks and crossovers across the US.
  • Evolution of mobility: Technological advancements remained at the second position both in 1Q19 and 4Q18, indicating that data and content management are becoming more integral to A&T companies. As the evolution of autonomous vehicle (AV) technology and electric vehicle (EV) technology continues to transform the market, companies are seeking new ways to improve their services and strengthen customer relations. This is also eventually affecting the demand for advanced driver-assistance systems, which is growing faster than estimated. Supporting these innovations is requiring manufacturers to look for acquisitions, JVs and in-house incubators that provide access to such technologies.
  • Operating costs: Operations teams in A&T companies are finding new challenges as macroeconomic conditions keep shifting. The major areas of concern are related to raw materials, foreign exchange (forex), technology, logistics and talent, with forex volatility remaining the top concern. These uncertainties and the higher costs associated with evolution of mobility are expected to continue in the next quarter. However, despite the increase in operating costs, analyses of the earnings calls indicate that costs related to technological developments are expected to support top-line growth in the long term.

New themes for 1Q19

Initiatives at the firm level and product evolution are the two new themes that have made entry to the list. While the former considers operational streamlining, business function reorganization and divestments, the latter looks at the shift in demand of vehicle types, increasing the advent of R&D and product innovation:

  • Restructuring initiatives: A&T companies are focusing on ways to improve structural efficiency while also ensuring reduction in operational costs. Some think hiring a digital-ready workforce would help them achieve this. There are also advocates of restructuring, which is becoming a “normal” aspect of business culture.
  • Product evolution: More A&T companies are seeking to introduce new initiatives to improve customer experience. New architectures, improved fuel efficiency and new infotainment features, along with renewed focus on meeting emission standards, continue to be the key focuses of new launches.
  • Scope, limitations and methodology

    This analysis reviews the top themes discussed by leaders of 17 A&T companies (including passenger vehicle, commercial vehicle and automotive suppliers) during public earnings calls with analysts. The report tracks the movement of these themes from quarter to quarter to provide a perspective on shifts in the sector landscape.


Automotive companies, including passenger vehicle, commercial vehicle and automotive suppliers, are being forced to become more agile than ever due to shifts in local economic conditions, operating costs associated with technological advancements and changing customer preferences.

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.