Fleet Europe °95

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Why the current OEM business model is obsolete The thrust and speed of e-mobility is impacting the business model which OEMs have been using for the last 120 years. They need to do more in order to remain in the game as nontraditional competitors are starting to change the rules.


Although worldwide new car registrations remain rather stable, in 2017 the new e-sales already exceeded 1 million cars by November 2017 with more than 1% of the new car sales (Hybridcars.com, 2017; Irle, Pontes & Irle, 2017; Statista, 2017). China makes up 50 percent of that volume. That poses substantial challenges for automotive manufacturers and their sales organisations. The reasons mentioned frequently are1: • The increased number of electrical vehicles and especially the need for a different service infrastructure, be it for charging or for maintenance and repair. Especially for fleet managers and their cost consciousness this poses an important challenge for the OEMs not only in providing solutions but first to provide expertise. • Ever more knowledgeable customers in the digital world, frequently the customers have got more knowledge about electric cars and the surrounding aspects than the OEMs and their sales force.

CHANGE TO REGAIN GRIP OEMs need to rethink their business model as the current one loses profitability. In addition to the customer needs and pure market requirements there are regulatory constraints, which force OEMs to adapt. In 2014 the EU has defined a clear target for CO2 emissions for car manufacturers2, with heavy penalties involved in case of non-compliance. In the past, product and delivery competence were key driving factors. OEMs were experts in producing and shipping cars and dealers were experts in bringing them to the customers and making sure that they remain in perfect running condition. However, that is changing. In the e-mobility world the traditional car manufacturers are no longer the product experts, and the dealers are no longer the delivery and service experts. So logically, the access to the customers is significantly more difficult for e-cars for the existing players and that results in the need to change the business model. This change may well be necessary in order to become the mobility experts of tomorrow.

1. Roland Berger Strategy Consultants & IESE Business School, 2013; Hainz et al., 2015; Mandat, 2015; Fischer & Parkin, 2016; Latendorf, Kohl & Minarski, 2017 2. Mock, 2016; European Commission, 2017