Following the 2008–09 financial crisis, the auto industry has
been thriving for the last couple
years, however it is facing new and pressing challenges. Globalization,
individualizations, digitalization and increasing competition. In addition,
increasing safety requirements and voluntary environmental commitments by the
automotive industry have also contributed to the changes ahead autonomous
vehicles (AVs). This emerging connected car market invite companies outside the
traditional automotive market like Intel, Cisco and Nokia’s HERE to invest multimillion-dollar funds for
connected car technologies. Furthermore, Google with its Android Auto and Apple
with its CarPlay are both making plays for the automotive market with
Because of this, the industry will undergo a substantial restructuring
which will force most automakers to redefine themselves, enhance the
capabilities of their workforces and the skills of their dealerships. Thus, the
task of strategic analysis and planning in the automotive businesses has become
Some of the most trusted and widely recognized companies like Honda,
Toyota and Ford don’t make the exception to these challenges. Therefore, these
three companies will have to navigate through a number of difficult challenges,
and figure out how to take advantage of a few surprising opportunities.
In the case of Honda, they are ahead of the game by investing more in
Research & Development (R&D) and restructuring their strategy. The
newly appointed CEO Hachigo has already set up a strategy “Prioritize quality
over quantity”. Hachigo spent years setting up the structure under his
predecessor, Takanobu Ito, before taking over last June. He said that the rapid expansion put too much
strain on R&D resources in Japan and needed clearer lines of control.
“We have come to see some issues in the front lines of our development and
production facilities,” Hachigo said. “This could seriously harm the
engine behind Honda’s creativity.”
To steer the next phase, Hachigo replaced nearly a third of
the board and promoted younger executives for new blood. He appointed new
people to key roles in charge of R&D, North America and automotive operations.
The changes clear the top ranks of some prominent, older-generation executives
Hachigo said electrification will play a big role in
Honda’s new aura. By 2030, he wants two-thirds of Honda’s global sales to come
from green cars such as hybrids, plug-ins, fuel cell vehicles and pure electric
vehicles. That’s up from just 5 percent today.
“We need to realize renovation of Honda’s
manufacturing,” Hachigo said. “Management, including myself, must
lead in changing our mindset, and every associate needs to change their
perception and the way they work.”
Toyota is also following the footsteps of
their Japanese counterpart by implementing new strategy and focusing more on
R&D. On their website it says “In the near future, cars are expected to connect
with people and communities and take on new roles as part of the social
infrastructure. New areas, such as AI, automated driving, robotics, and
connected cars, are becoming especially important, and it is no longer enough
to focus just on developing excellent cars and technologies or to carry on
sales and service in the same old ways.
To take on a new breed of initiatives, we
therefore felt it crucial to form a new team, rather than use previous
frameworks. Accordingly, in January 2016, we established Toyota Research
Institute, Inc. (TRI), and welcoming Dr. Gill Pratt as its CEO.”
When it comes to the fifth biggest automobile manufacturer in the
world, Ford are still struggling to come up with a clear strategy how they are
going to compete in this new market.
Ford Motor Company’s newly appointed CEO,
Jim Hackett, delivered in a presentation his strategy for the future of the
company which outlined five principles:
We will prepare for disruption by becoming fit.
We will be in the vehicle business — moving both people and
Our vehicles will be smart and connected.
These smart vehicles will thrive in a new transportation
We will evolve to capitalize on new business opportunities
within this transportation operating system.
His strategy was initially met with some
skepticism due to the lack of specific details and a vague grand-scheme
strategy for a rapidly evolving automotive industry.
In conclusion, Strategic planning is crucial
for all the organizations in all the major industries. In the automotive
industry, it is clear that not all the current competitors will survive but only
those companies that plan strategies and implement them effectively will
prosper. By bringing on board experts in cloud and connected services, big
data, and digital content and investing and partnering with technology
companies will help them establish a coherent connected product strategy and
therefore design and build AVs.