Developing solutions

SAE 100 Future Look: The global automotive industry has faced considerable challenges over the last couple of years, to the extent that industry pundits have labeled the current environment as “The Perfect Storm.”

The entire global mobility industry has faced considerable challenges over the last couple of years, to the extent that industry pundits have labeled the current environment as “The Perfect Storm.” The turmoil is a result of overcapacity, ultra-competitive environments, fluctuating commodity prices, high incentives, pension and health costs, and environmental and regulatory pressures.

To compete in such an environment, the industry must leverage a strategy similar to that of many other industries: increase levels of innovation to provide unique customer features enabling a differentiated product. However, since the ability to extract a price premium for these innovative features is not very high, there is an added constraint of improving productivity to maintain profitability. This squeeze has been labeled as the “dreaded vice.”