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Cars | The competitive landscape will become harder, more complex

Cars | The competitive landscape will become harder, more complex

Carmakers will need to depend on their best asset—the brand

Guillaume Saint

Global Automotive Practice Lead



Due to ongoing urbanization and macro-economic factors in developing markets, global automotive sales growth is expected to be positive over the coming 15 years, with growth estimated at 10-to15 percent between today and 2030, according to several industry studies. This is good news is even better because of several factors that will contribute to cleaner, more sustainable, and more efficient mobility:

  • This growth will help more people gain geographical and economical independence thanks to optimized mobility;
  • The share of petrol and diesel vehicles will decline quickly as hybrid and electric vehicles gain in share. Several studies predict that 38-to-45 percent of global annual sales will be hybrid and electric vehicles by 2030; and
  • Studies expect shared cars to reach 10 percent of global sales by 2030.

As I said, this is good news! However, large auto brands should be aware that the outlook is not all positive. Competition will be intense along the way. There will be three layers of competition—direct, indirect, and mobility providers. And each will require a specific plan of action.

Direct Competition

There will be strong direct competition from other large established auto brands on product, user experience, and distribution.

  • Product Over the last decade, most large auto brands have extended their range of vehicles across all segments. For example, premium brands are now also selling city cars and mainstream brands have developed their own high-end SUVs. As a result, the number of models available to choose from has never been so high.
  • User experience With the growing importance of on-board technology, such as connectivity and automation, as well as external influences, like brand communities, auto brands are entering a new competitive field, focusing on the end-to-end user experience.
  • Distribution Ford and Hyundai, to name just two brands, as well as independent online sales companies, are starting to work on digitalizing part of the customer journey, including car configuration and ordering, test drives, and purchase confirmation. Clearly, the traditional automotive distribution model is challenged.

Indirect Competition

There will be indirect competition from new, agile brands. After 80 years of consolidation among auto brands, auto brands must now cope with the arrival of new, agile brands (some of which were born digital) such as Tesla (US), Byton (China), and Polestar (Volvo) in the premium segment, and Wey (China), LYNK & Co (China), VinFast (Vietnam) and Venuccia (China) for the lower segments. Some of these brands are still local, whereas others clearly have global ambitions. This new agile and innovative competition is forcing the traditional automotive industry to react, adjust, and ultimately to move forward.

Mobility Providers

Leveraging the transition from car ownership to car usage, and powered by digital technology, mobility as a service is taking a fair share of commuter’s travel time and budget. Relatively new operators such as Uber, Lyft, Car2Go, Free2Move, BlaBlaCar and many others are forcing established auto brands to think out of the box, address the mobility solution they provide through a different angle and innovate their business model to stay in the race.

Such a highly competitive context creates multiple mobility alternatives for the driver or the commuter, reducing “the share of mobility time” dedicated to traditional individual car. In this context, the strongest asset that auto brands can rely on is the brand. A brand that tells a story, a brand that engages both implicitly and explicitly, a brand that reassures, a brand that connects through its beliefs and its values, a brand that offers a unique and exciting experience, and a brand that is loved and respected. The brands that effectively build their customer value proposition on these criteria are the brands that will succeed in this context.

Once the winning strategy is defined, it is essential to keep messages consistent across multiple communication and experiential touch points to optimize return on investment. Interestingly, you’ll see that auto brands ranked in the BrandZ Cars Top 10 are great examples of innovative, purposeful, and differentiated brands that inspire consumers and engage with their customers with a high level of clarity.