Changing lanes 2016–17 The automotive C-suite’s agenda

2 | Changing lanes 2016-17: the automotive C- suite’ s ag end a

“ The C - suite are optimistic about the value that digital and demand evolution can bring to their businesses. There is an urgency to change faster to bridge the preparedness gap by responding to political and regulatory unpredictability, embedding digitaliz ation across the ecosystem, improving data management and analytics capabilities to drive value, and partnering for disruptive innovation. The industry needs to understand how new mobility preferences ( vehicle access over ownership) can fit into its business strategy and develop approaches for dealing with these preferences. Developing a talent strategy for attracting and retaining in- demand digital talent is the need of the hour, as the industry is looking to accelerate development of capabilities for leveraging convergence of mobility, connectivity and security. ”

Randall J . Miller G lobal A utomotive & Transportation S ector L eader, E Y

2013 – 14

U r genc y o f st r at egic and t ac t ic al m o v es t o m anage r isk s and r einv ent ing v alu e p r o p o sit io n:

• Developed markets slowdown

• V ehicle ownership losing attractiveness

• C onnectivity and mobility

2014 – 15

Embedding flexibility to react to the unexpected:

• E merging markets volatility

• Resource availability

• C ompetition from new sectors and market entrants

2015 – 16

O p t im ist ic ab o u t st r at egic init iat iv es b u t c o nc er ned ab o u t :

• P reparedness for volatility

• C hallenges in implementing operational and technological initiatives

• S ecuring resources, particularly talent

2016– 17

U r genc y t o c hange:

• Responding to political and regulatory unpredictability

• E mbedding digitaliz ation across the ecosystem

• P artnering for disruptive innovation

o a n e fin n o Changing lanes stud ies over the y ears

Chang ing lanes 2 0 1 6 - 1 7

Executive summary

H ow w ell are the C- suite respond ing to e o c an e o e t e ne t eca e

e o ac o t e auto ot e a ue c a n

e a act t ate e an e a e ne to e ecute

C-su it e p r io r it ies f o r t he next 18 months

K ey c o nsid er at io ns f o r t he C-su it e

a e o content

34

5

6 – 1 0

1 1

t e ou t e t on o o a auto ot e u te tu e nte e e o e o a e ecut e to un e tan t e oa oo a en a o t e ne t ont an o e t e a e e a e to e on to t e a o

e o c an e o t e ne t eca e

3Changing lanes 2016-17: the automotive C- suite’ s ag end a |

t t at e ect o auto co an e ac e a e ne to e on to t e ne c an e e

The mix of markets driving the global automotive sales has changed yet again. G rowth has shifted to markets such as the U S , W estern E urope and C hina while the emerging markets have cooled off.A lso, the pace of global vehicles sales growth is expected to slow down over the next few years. W e believe the auto industry is likely to witness more changes in the next decade than in the last 2 0 years. W e have identified six drivers of change that will shape the automotive ecosystem over the next decade. The drivers of change are likely to have impact on the future viability, strategy, business model and performance results of multiple stakeholders across the automotive ecosystem. They point toward the need for a radical pace of change, whereas, looking at the automotive C - suite’ s agenda, they appear to focus on progressive change. In short, the only way the auto industry executives can expect to bridge the gap will be to drive the sense of urgency to change throughout their organiz ation and also business ecosystem.

T u r b o c har ged d isr u p t io n — accelerating pace of disruptive innovation driven by new entrants, competition and collaborations

R ec alib r at ing t he v alu e p r o p o sit io n — industry looking to cater to demand for mobility innovation, fleet management solutions and an engaging digital customer experience

E y es o n t he c u st o m er … o r t he c o nsu m er ? — battling to own relationships in a digital marketplace that is driving divergence of customers and consumers

F ir ing o n all c y lind er s — leveraging big data and analytics to maximiz e value of data; however, need to address data privacy, cybersecurity and q uality risks

N av igat ing d igit aliz at io n ac r o ss t he v alu e c hain — digitaliz ation and seamless connectivity overwhelming automotive industry’ s data management and process transformation capabilities

M o v ing int o t he lead — industry focusing on catering to demand from growing regions, and looking at cross/ within sector partnerships

S ec u r ing st r at egic r eso u r c es — business plans collapse without meaningful resource acq uisition, staffing and business continuity initiatives

S ec u r ing c r it ic al r eso u r c es — focus on attracting, developing and retaining the right talent and gaining access to nontraditional technology and intellectual property

U np r ed ic t ab ilit y ahead — global footprint exposes the auto industry to diverse sources of unpredictability that will challenge companies’ ability to deliver results

U np r ec ed ent ed sc r u t iny ! — the automotive industry faces unprecedented scrutiny from regulators, activist investors, advocacy groups and the public

Auto ot e c an e e o t e ne t eca e

85% o e on ent a ee e an o a a e t an o t an o t e ce oo o u ne b ut u t 15% a e e e a e to ta e a anta e

1 in 3 respond ents b elieve talent is k ey to d riving

nno at on u t 3% a e e e a e to att act t

1 in 2 ca anu actu e an cu to e ata ana t c a a to o t ut u t 5% o t e a e

e e a e to e e enue o t t a

82% o e on ent e e e t at cu enc e c an e ate a e a ne at e act on u ne ut on 1 in 5 a e e e a e to tac e t e e

75% o e on ent e e e t ate c a tne a e ta to tu oc a e nno at on ut u t 15% ee ea to e ent t e e n t at e

L iv ing w it h u np r ed ic t ab ilit y — uncertainty in the operating environment vis- à - vis regulatory, geopolitical, economic scenario across the globe

ecut e u ao e a e t e u te e on n to e o c an e o e t e

ne t eca e

u te o t e o e t e ne t ont

4 | Changing lanes 2016-17: the automotive C- suite’ s ag end a

A u t o m ak er executives

Demand evolution- mobility and vehicle types and digital experience top the C - suites’ agenda. H owever, they are concerned about demand scenario in emerging markets and evolving product regulations, and are not well- prepared to tackle them.

C - suite feel well- prepared to tackle core product innovation, and product- related regulations ( emissions, safety, etc. ) . H owever, concerns exist around demand for disruptive innovation by OE Ms and implementing flexible production systems.

C - suite believe they are well- prepared to cater to demand for fuel efficiency, safety, vehicle performance analytics and fleet management solutions. They are aiming to strengthen data management across organiz ations, and talent attraction and retention.

They expect regulatory environment to be challenging, but appear well- prepared to tackle it. They are focused on implementing customer data analytics to enable real- time decision- making, and enhancing the digital experience by engaging customers across multiple digital touch points.

A u t o m o t iv e f inanc e executives

S u p p lier executives

Co m m er c ial v ehic le executives

Economic value drivers for the auto industry for the next decadeOur discussions with the automotive C - suite confirms that the factors that will drive economic value in the ecosystem will be very different from the past. Their views for the future recogniz e the urgency to shift from a product- oriented model in the past to a service- and digital-based business.

T he t o p f iv e d r iv er s o f v alu e o v er all w er e:• Digital experience• Demand evolution — mobility and vehicle types• Data management and analytics• Innovation management• Organic growth strategy — products, services strategy and innovation

Digital experience

Demand and evolution — mobility and vehicle types

Car manufacturers

Auto component suppliers

Auto financecompanies

Commercialvehicle manufacturers

Data managementand analytics

Innovation management

Organic growth strategy – products, services and innovation

Inorganic growth strategy

Talent Manufacturing and supply chainmanagement

Rank

Co m p ar ing t he v iew s ac r o ss su b sec t o r s

H o w t he C-su it e p r io r it ies d if f er ac r o ss su b sec t o r s

ecut e u a cont nue

e o ac o t e auto ot e a ue c a n

5Changing lanes 2016-17: the automotive C- suite’ s ag end a |

L iv ing w it h u np r ed ic t ab ilit yThe automotive C - suite remain concerned about demand unpredictability in developed and developing markets, and forex fluctuations. While regulatory and political uncertainties have taken center stage, few feel their organiz ations are ready to respond effectively.

are prepared to respond effectively.

feel that operating environment is unfavorable.

R ec alib r at ing t he v alu e p r o p o sit io n

M o v ing int o t he lead

F ir ing o n all c y lind er s

S ec u r ing c r it ic al r eso u r c es

Demand for car sharing, fleet management solutions and integrated mobility services should all drive value for the industry. The automotive C - suite also expect engaging digital customer experiences to support their overall value proposition; however, the overall level of preparedness seems low.

The industry continues to focus on exploiting demand from growing regions. F urther, partnerships within and across industries for product innovation and new mobility services are all priority strategic initiatives, but few feel well- prepared.

C apturing the value of data from customer and business processes enables companies to reduce costs and bring more competitive offerings. H owever, reliance on technology presents the challenges of cyber threat, supply chain integration and effective risk management.

The C - suite believe that hiring the right talent is one of the keys to driving innovation. A cq uiring and developing technology and differentiated IP are also critical obj ectives for them. H owever, securing these core resources is a maj or challenge.

feel well- prepared to respond.

feel well- prepared to implement these initiatives.

are confident in their organiz ations’ ability to execute.

are well- prepared.

1 7 %

feel change in demand is supportive.

focused on strategic initiatives to enhance value proposition.

aim to decrease costs, while the rest are focused on increasing revenues.

believe critical resources will help drive operational excellence.

ecut e u a cont nue

e a act t ate e an e a e ne to e ecute

59% 19%

19% 78%

20% 76%

18% 50%

14% 58%

6 | Changing lanes 2016-17: the automotive C- suite’ s ag end a

u te e a n conce ne a out e an un e cta t n e e o e an e e o n a et an o e uctuat on e e u ato an o t ca unce ta nt e a e ta en cente ta e e ee t e

o an at on a e ea to e on e ect e

n t un e cta t

en t e utu e con tant c an n o o ou an a ea

H eight ened d em and u np r ed ic t ab ilit y

2/ 3 of respondents expect increased demand in E uroz one to have a favorable impact ( up from 1 / 3 a year ago and a negative impact from the E uroz one a year ago) .

e a e an t un a o a e t

a c an e n a etec fic ent ent

T he ong oing slow d ow n n an ot e e e o n a et

along w ith lik ely atu at on o o t

A e can a et a e e n a t a o et

b y strong g row th momentum in the

u o one

expect unfavorable impact.

53%

feel well- prepared to deal with it.

J ust 20% of automotive executives feel well-prepared to meet product- related regulations around emissions and safety, while suppliers are relatively well- prepared ( 3 6 % ) .There is a gap between levels of preparedness in H Q s and regional operations. N one of the regional executives are well- prepared ( vs. 2 2 % of H Q executives) .

Doing business in developing markets is becoming more challenging — 83% identify increased difficulty in these territories, with j ust 22% feeling well- prepared to tackle it.

78% expect negative impact from fluctuating foreign currencies — up from 6 7 % a year ago.

55% say there’ s been a positive impact from raw material prices — up from 3 3 % a year ago.

K ey highlight s• e u to co an e ee t e nee to o

t e u ato on c e ecu t an ace ate o c e t a t ona co an e a e o e ocu e on eet n o uct e ate e u at on on a et an e on

• a e o o n u ne a conce n o u to co an e a t e oo to a e on t e oun

a tne an oca co n e to

a et e t ac o t e o e at on to eat e t e on o n o o n n e e n a et cu enc o at t an o t ca unce ta nt e A o uct e ate e u at on eco e a a o conce n t e n u t ou

nee to a a t oce e an o uct o e ce o t o o to eet e o n e u at on an ena e a o t c e u ato ana e ent a oac

B r id ging t he gap — w hat c an t he C-su it e d o ?

19%

P o lit ic al and r egu lat o r y u nc er t aint y — u nst ab le c o nd it io ns ahead

one o t e e t conce n

o t e e ecut e u t e t e ee

und erprepared to co t a e o c e at a e ona

e e

expect unfavorable impact.

feel well- prepared for uncertain political and regulatory environment.

70%

18%

Cost volatility — finding a b alanc e?

Automotive C- suite respond ents are still conce ne a out t e

act o cu enc e c an e ate on co t o at t ut t e e

an u e t e ecto a een enefit n o o ue an a ate a ce

expect unfavorable impact.

feel well- prepared to deal with cost volatility.

56%

20%

7Changing lanes 2016-17: the automotive C- suite’ s ag end a |

o ut on o o t e an een a t e nc a a ue o o t on u to ta t an o n t e a oc et an u ne e o e ate e a t e a ue o o t on e ee u o t e o t e n u t o e e t e o e a e e o e a e ne ee o

eca at n t e a ue o o t on

o u t e ou ace o nno at on

D em and ev o lu t io n — “ ac c ess” o v er “ o w ner ship ”

Digital experience — evolving p ar ad igm s o f c u st o m er engagem ent

I n-v ehic le f eat u r es and f u nc t io ns — w hat ’ s in d em and ?

85% are encouraged by rising demand for app- based transport and mobility access. B ut j ust 1 5 % are well- prepared to handle it.

Automotive finance executives are better prepared than automakers to capitaliz e on the preference for used vehicles. 4 0 % of auto finance executives identify used vehicles as a source of value for their businesses ( vs. 1 8 % of automakers) .

e e o co a o at e econo n a t n o t

e e ence t an e onent a e n e an o ca

a n eet ana e ent

solutions and integ rated mob ility e ce

expect evolution in mobility and vehicle types to support their value propositions.

are well- prepared ( vs. 2 6 % a year ago) .

ta e e e e an o e fi t cu tu e a e n t e automotive C- suite to ocu on e e o n

o n c anne t ate e o

d elivering eng ag ing an e ent ate cu to e e e ence

ut t e e t not eq uipped to meet t e ta nee o t e cu to e

expect demand for digital experiences to support their value propositions.

feel well- prepared.

A ance connect t and autonomous

n ca a t e a e eco n t e new value proposition

e ent ato At t e a e t e auto

u te cont nue to ocu on o e e on an act e a et to co t t n ent an co e e u ato te

expect demand for in- vehicle features and functions to support their value propositions.

are well- prepared to offer these ( down from 3 9 % a year ago) .

88% are in support of using digital to manage trust and complexity. B ut j ust 1 2 % of them are well- prepared to do so.

80% of car manufacturers believe that autonomous and connectivity features are supportive to their value proposition; 3 6 % are well- prepared. It is noteworthy that J apanese companies believe they are better prepared than the others.84% of car manufacturers believe that

engaging customer experience across multiple touch points is supportive to their value proposition; only 8 % are well- prepared.

E xecutives in regional locations are more focused than their counterparts at H Q on the need to provide an engaging digital customer experience.

A utomotive component suppliers are the most focused on meeting demand for fuel efficiency, lower emissions and safety ( 5 4 % of them vs. 3 0 % of car makers) .

Only 5% see fuel prices and total cost of ownership as a source of value for their businesses.

K ey highlight s• e auto ot e nance co an e e ecte

e an o a a e t an o t an o t acce a a to o t an a e ette e a e to cate to t e e e e ca anu actu e c e t

• e t a t ona co an e a e ocu e on en anc n ta e e ence o a ea e cu to e e e ence ac o u t e touc o nt

u to co an e a e o n to a o n t e n e c e e e ence

A o t a cu to e e c c e a oac to ent touc o nt to c o an u e e a o nee to ocu on

acce e at n t an o at on to t ea ne t ut on c anne an e e a ea e cu to e e e ence ac o u t e touc o nt

B r id ging t he gap — w hat c an t he C-su it e d o ?

78% 86% 87%

19% 17% 29%

| Changing lanes 2016-17: the automotive C- suite’ s ag end a

u te a n to e e a e a tne an co a o at on to en ance a ue o o t on o e e e ee e e a e u t e auto n u t cont nue to ocu on e o t n e an o o n e on

M oving into the leadn an n u t e e co a o at on ue nno at on o can ou

acce e ate octane a tne

M ar k et p enet r at io n st r at egies — f o c u s o n o r ganic gr o w t h

Co llab o r at io n f o r d isr u p t io n — ac c ess t o inno v at io n

H o m e-gr o w n p r o d u c t / ser v ic es inno v at io n — t o o lit t le t o o lat e?

Most H Q executives ( 94%) identify value in globaliz ation, with expansion in high- growth markets while only 50% of regional executives feel the same way.

73% believe that integrated mobility solutions will help enhance value proposition while only 1 2 % are well prepared.

A lthough 68% believe that cross- industry partnerships will enhance value proposition, only 9% are well- prepared.

S elf- driving vehicles are high up the agenda as a strategic priority. B ut less than 20% of car manufacturers appear well- prepared to develop products in this area.

u te e ecut e are prioritiz ing an nc ea e e ence n

o t a et c a o e t e e a et

e ate

believe organic growth initiatives will be a source of value.

are well- prepared to implement these strategies ( vs. 2 6 % a year ago) .

Collab orations ( w ithin and outsid e the auto n u t a e e e a a n ficant ou ce o u ne a ue

o n acce to co e tec no o e an enab ling d isruptive innovation and a t c at on n ne o t net o

of industry executives believe inorganic growth strategies will drive value into their businesses.

are well- prepared to execute these strategies.

e on ent und erstand the

o n o tance o ta an o nc anne a e an

a et n ca a t e T hey ’ re also targ eting e e o ent o

integ rated mob ility o ut on

of executives believe organic growth through home- grown products, services and innovation will bring value to their businesses.

are well- prepared to deliver.

65% executives believe that innovative and successful product and technology launch strategies will help enhance value proposition.

82% of H Q executives identify business value from partnerships with other industries. Only 3 8 % of regional executives feel the same.

36% of car manufacturers are considering partnering with other industries to access disruptive innovation. B ut only 1 in 1 0 are well- prepared to make this happen.

K ey highlight s• Auto ot e nance co an e an

co onent u e a e ette e a e n te o t e o an c o t t ate co a e

t e c e anu actu e • e o t e e ecut e e e e t at

nte ate o t o ut on a e a to o t on a e e e a e n t e ot e an o

t e e ecut e c e t a a to o t o c none a e e e a e

eate an nno at on at o to en ance co a o at on t n t e u ne an t e te na a tne e

can u e nee a e an t ate c a ance an ac u t on to a n tec no o an eo a c co e a e and should assess investment opportunities and risk s a oc ate t ne e ent an u ne o e

B r id ging t he gap — w hat c an t he C-su it e d o ?

74% 75% 76%

21% 13% 1/ 3

9Changing lanes 2016-17: the automotive C- suite’ s ag end a |

n u t e ecut e a e t on act o u ne oce o e ent cutt n co t o nc ea n e enue e e a n ocu e on e e a n ata an ana t c o u c a n o t at on an ana e ent o e e e a e confi ent n e ecut n

n on a c n eo can ou u e ata to o e e ect ene o ou anu actu n oce e an cu to e en a e ent

D at a m anagem ent and analy t ic s — d igit al ho r sep o w er

M anu f ac t u r ing and su p p ly c hain m anagem ent — o p t im iz at io n and flexibility

M anaging r isk and q u alit y — b et t er c o m p lianc e and lo w er c o st s

A lthough 50% of automakers identify data analytics as a top priority, j ust 1 3 % are well-prepared to implement these initiatives.

C- suite aim to enab le real- time

ec on a n n their org aniz ation b y accu ate ca tu n and analy z ing d ata

o cu to e an nte na oce e o e e t e u e

confi t e oo n c e ecu t a oc ate t

ata e nno at on

executives feel that data management and analytics initiatives will help increase revenues ( up from 1 6 % a year ago) .

are well- prepared to implement these.

T he ind ustry is ocu e on o t n o a anu actu n

oot nt an implementing

e e o uct on te to ec ea e

o e at n co t

believe improvements in manufacturing and the supply chain will help decrease operating costs.

say they’ re well- prepared to implement these.

T he C- suite b elieve that implementing q uality and risk manag ement and pulling d ow n silos ac o o an at on

acce e ate co ance t reg ulations and meet oc a e on t

e ectat on

believe that q uality and risk management can help them decrease operating costs.

feel well-prepared to make improvements in these processes.

1 in 2 car manufacturers are seeking to decrease operational costs through flexible production systems. But only 1 0 % of them are well- prepared to do this.

Of the H Q executives looking to avoid malpractice through improved q uality and risk management, j ust 27% believe they’ re well- prepared to implement these initiatives.

W hile 1 in 4 auto component suppliers are well- prepared in optimiz ing their global manufacturing footprint, none of the car manufacturers are well- prepared to do so.

It is noteworthy that only 6% of respondents selected IP protection as a top priority.

K ey highlight s• e e ecut e a e uc o e e t an t e

an e ecut e to attac e o t to eat e ec on a n a e on ata ana t c

an e ect eu ana t c ca a t e to o t e act u

c a n e c enc e an ot e e a ue c a n oce e e ou con e oact e on to n o nte na

ata to e ea co ance ue an nte ate ata an a ance o en c ana t c to e uce c e t eat

au an co u t on

B r id ging t he gap — w hat c an t he C-su it e d o ?

55% 67% 79%

20% 19% 13%

1 0 | Changing lanes 2016-17: the automotive C- suite’ s ag end a

e ou ce uc a ta ent tec no o n a t uctu e an ca ta a e e to n o e at ona e ce ence ut ecu n t e e e ou ce e ent a a o c a en e o uc o t e n u t

ecu n c t ca e ou cea ent an tec no o e nno at on ut a e ou ucce u n n t e

W ar f o r T alent — d r iv ing t ec hno lo gy inno v at io n

T ec hno lo gy and I P — d isr u p t o r b e d isr u p t ed

I nf r ast r u c t u r e and c ap it al — t he framework for excellence

While automotive finance companies (72%) believe that disruptive technology is essential for business continuity, car manufacturers ( 57%) believe it is important to achieve operational excellence.

O ng oing d isruption in t e auto ot e ecto has spark ed a g lob al

att e o ecu n and retaining talent o e c e nno at on

ana t c o ot c an c e ecu t

o e e e ee their org aniz ations are w ell- prepared to co ete n t a ena

believe that securing talent is essential for achieving operational excellence.

are well- prepared to secure this talent.

n t e ace to e e o autonomous and connecte e c e the C- suite b elieve t at ac u n an d eveloping new tec no o e an

e e to en u e u ne cont nu t

an con ont t e t eat o u t e co et t on

believe that securing technology and IP is essential for achieving operational excellence.

are well- prepared to secure technology resources.

ee n to e an mark et share and

e nno at on t e a o t o u te

e ecut e e ect t at c o o e a e e ce cente an

acce to financ n d istrib ution and supplier netw ork s w ill

a a c t ca o e

of executives believe that securing infrastructure and capital will help them achieve operational excellence.

feel well- prepared to secure these resources.

52% respondents believe talent is a critical resource for innovation. Only 1 4 % of them are well- prepared to attract talent.

tier 1 executives feel they’ re well- prepared to execute innovative H R strategies, while only 1 0 % of the Tier 2 executives feel well- prepared in this area.

55% of automotive component suppliers selected financing for R&D and capex investments as a prereq uisite for achieving operational excellence. Only 9 % of them are well- prepared.

52% of the C - suite executives believe that financing for R&D and capex investments is essential for operational excellence. Of them, j ust 1 0 % are well-prepared to secure these resources.

W hile tier 1 executives ( 60%) believe they are well- prepared in acq uiring, developing and tackling disruptive technology, only 8% of the tier 2 executives feel well- prepared.

K ey highlight s• e t e e ecut e e e e t e a e e

e a e n ac u n e e o n an tac n u t e tec no o on o t e t e

e ecut e ee e e a eA n u ne an ta ent t ate e e a e on nno at e t ate e to en a e e a an e o e t e o o ce e nee to oo to e ten t e a ue c a n to ne n u t e o tec no o an n a t uctu e an nte ate o e n ent ncent e ect oan an

ua antee n ca ta a n t ate e

B r id ging t he gap — w hat c an t he C-su it e d o ?

58% 56% 61%

14% 11% 17%

1 in 3

1 1Changing lanes 2016-17: the automotive C- suite’ s ag end a |

e con e at on o u te

S t r at egic im p lic at io ns• Design new operating models to

compete in the new mobility industry• Increase adoption of global platforms

to drive supply chain simplification and consolidation

• A dopt customer life cycle approach to identify touch points to cross- and up- sell

• C reate an innovation platform to enhance collaboration within the business and with external partners

• Improve their ability to interact with customers by gathering, understanding and acting on consumer intelligence

O p er at io nal im p lic at io ns• A ssess readiness to the risk of cyber

attacks as digitaliz ation of the supply chain gains prominence

• E mbed program risk management into product development and launch processes

• Integrate big data and advanced data analytics to reduce fraud and corruption risks

• Develop a compliance program to guide the organiz ation’ s decisions and meet regulatory req uirements

• Develop sophisticated supply chain monitoring and transparency capabilities to manage the new technology suppliers entering the automotive industry

I nf r ast r u c t u r e and r eso u r c es• N eed to attract new talent within

each function and invest in protecting intellectual property to successfully transform

• L everage the industrial cloud infrastructure to adopt smart manufacturing and capitaliz e on M2 M connectivity, mobile technologies and robotics to build flexibility across manufacturing and support functions

• Invest in developing strong supply chains for disruptive innovations centered on mobility, connected and self- driving vehicles.

• E valuate effectiveness of currency hedging strategies

F inanc ial c ap it al and r esu lt s• Integrate government incentives, direct

loans and guarantees in capital raising strategies

• N eed to strengthen their reporting processes to demonstrate economic value added

• N eed to identify new metrics for measuring success/ performance — fleet utiliz ation, share of customers’ miles traveled, revenues per mile, revenues from connected vehicle services

• Initiate “ buy, build or cooperate” discussions with non- traditional suppliers offering new technologies and services

ant o eontact one o ou o a

automotive and transportation o e ona

an a eE Y G lobal A utomotive and Transportation L eader + 1 3 1 3 6 2 8 8 6 4 2 randall. miller@ ey. com

a an eE Y G lobal A utomotive and Transportation A dvisory L eader + 1 3 1 3 6 2 8 7 2 0 1 david. sanders@ ey. com

a o tE Y G lobal A utomotive and Transportation Transactions A dvisory L eader + 1 3 1 3 6 2 8 8 7 6 0 mark. short@ ey. com

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