Traditional B2B and B2C companies are increasingly working together and are increasingly building a new B2B2C business (Business to Business to Customer). “Affinity” is the buzzword of the hour.

The transformation of the automotive industry and global mobility is in full swing. Here are four current megatrends.

Supply chain problems

The worldwide pandemic has left its mark on the automotive industry. Besides a drastic drop in sales supply chains, their worldwide networks became the focus of public attention this year. Recently VW, BMW and Daimler registered their staff for short- time work given the lack of computer chips. The dependency on global supply chains is not a new phenomenon. Whether trade disputes like the ones between USA and China or the threat of punitive tariffs on European cars by the USA, issues related to global export are ever-present. Back in 2019, Thomas Zernechel, who had been in charge of corporate logistics at VW for more than 16 years until 1 January 2021, stated that supply chains must and will be shortened. Reasons include globally limited transport capacities as well as new and expected regulations regarding CO2 emissions. He proposed a simple solution: Delivery routes will become shorter because suppliers will position themselves closer to car manufacturers. Not so long ago we still spoke of Global Sourcing or China Sourcing. This will change.
It remains to be seen whether a greater environmental awareness, a pandemic- related shifting tendency to more local production facilities or the latest incident when Ever Given ran aground in the Suez Canal will change our mindset about globalisation. From a pure European point of view these effects could be seen positive as German manufacturers continue to register more than 50% of all automotive patents.
Do these changes affect the risk landscape? Whether a new business location in a foreign country or investments are made to expand production sites, decisions like these should be given proper thought. Additional investments can easily be the result of inadequate planning, rapidly changing legal conditions or changes in the company’s supply chain. In times of global changes and increasing actions against company managers, major changes affecting a company’s orientation should be treated with due caution.

Digitisation in the automotive industry

From automatic distance control to lane-keeping assistance, everybody is already familiar with electronic assistance systems in cars. Not surprisingly, developments like these have not yet been exhausted because their main goal is not an increase in comfort for the driver but the avoidance of human errors.

Therefore, electronic systems that detect driver tiredness or an automatic emergency brake assistance will become compulsory for
all new car models in the European Union as from 6 July 2022.
The automation levels 4-5 which describe fully autonomous driving should become part of our reality by 2030 latest. The new mobile radio standard 5G further speeds up these developments. Vehicle-to-vehicle communication or even vehicle-to- everything communication are only a question of time. For example, traffic jams can then be avoided if vehicles are able to communicate with each other or if a vehicle could manage traffic lights upon approach.
According to a recent study conducted by Bayern Innovative GmbH, four development scenarios have been identified for the automotive industry until 2030. Only one scenario assumes hardly any changes for today’s players who will also remain at the helm in the future. Digitisation and electrification will, however, play a significant role. It might even be possible that software companies will define the automotive industry’s way forward, typical Original Equipment Manufacturers (OEM) might become hardware manufacturers, and possibly tier-1 suppliers as well as future devel- opment partners, working in tandem with software companies. We may also see more payments being made at filling stations via digital dashboards, new solutions that enable grocery orders being made from one’s car as well as new pay-per-use and subscription-based business models. To some extent, the latter are already part of today’s data economy, showing us the direction that will be taken in the future.
Which questions and risks arise from such technical innovations? Data protection is one aspect that accompanies us daily, at least since the GDPR was introduced: Who receives information about the routes we took? What about information about speeding or a microsleep that almost caused an accident? Even worse, what if criminals manage to hack my car while I am driving and a ransom note comes with the threat of an accident?

Drive systems

In April 2021 the EU stepped up its climate targets. There is no doubt that e-mobility will play an important role in achieving this goal. According to the German Association of the Automotive Industry, car manufacturers in Germany will invest about 50 billion EUR in e-mobility until 2024.5 However, where there is light, there is also shadow: extracting lithium requires plenty of water that
is already very scarce in the resource- rich countries of South America.

Cobalt, needed for the cathodes of batteries, is mostly found in South Congo. Besides a significant pollution of ground water, labour-law issues as well as political concerns were raised in this formerly stable region.

Finally, there is the question about battery recycling. New solutions must be developed as every battery contains highly inflammable fluids which can hardly be separated from the other materials contained in its cell. That is why the focus of development is not only on e-mobility but also on other clean fuels and drive systems, such as hydrogen or synthetic natural gas.

Changing behaviour and new types of use

Increased environmental awareness, changes in our daily routine through remote ways of working as well as the question whether a car can still be considered a status symbol. Car manufacturers as well as entire industry sectors must tackle these questions to find out how citizens will change their user behaviour in the next couple of years.
In the 1970s, people informed drivers with a thumb up gesture that they were hitchhiking. Nowadays, online platforms promote a more modern way of “ride sharing”, especially for longer distances. In urban areas and smaller communities, the number of car-sharing service providers increased significantly in recent years. This implies a change in user behaviour. The heightened awareness of the costs of car sharing avoids, for example, spontaneous trips. In Germany, a VCÖ study conducted in 2018 showed that car-sharing users take a car 40% less frequently and rather choose public transport (19% more often) or a bicycle (plus 14%).
These megatrends include connectivity, autonomous driving, sharing, electrification, and digitisation. Another topic is “vehicle-to-grid” or “vehicle-to-home”. According to “The Mobility House AG” an electronic car remains unused for an average of 23 hours a day. In the future, electronic car batteries could be utilised as a temporary storage for surplus household electricity, which is then re-used if more electricity is needed or even used to stabilize the power grid by feeding the surplus into the public network. To make this happen, special bidirectional chargeable vehicles are needed which not only draw power like most electronic cars but can also feed electricity back into the grid. The Renault Zoe is a prime example which has gained recognition beyond the Portuguese island Madeira through the Smart Fossil Free Island Porto Santo project. Instead of burning 500,000 litres of diesel and two million kilograms of oil each year, the battery storage capacities of e-cars should be used as from 2022 to continuously supply the island with electricity obtained from the sun, even in bad weather. Who will be held responsible if the lights on Porto Santo go out due to a power outage? This has not yet been reported.

Oliver Jug

Strategic Sales Manager GrECo International AG

T +43 664 822 27 44

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Alma Ribanovic

Group Practice Leader Affinity

T +43 664 962 40 17