Rising expectations around  sustainability, new definitions of luxury  and digitally-enhanced vehicles are  set to change the way people think  about cars forever. Now is the time for  the automotive industry to reimagine  products, services and experiences that  deliver against customers’ new values,  wants and needs.

Connectivity, autonomous vehicles  and electric and shared driving are four  megatrends that had been disrupting  the automotive industry—causing  unprecedented technology and business  model transformation—for a while.1  Then a  global pandemic magnified these pressures,  forcing organizations to rethink many  aspects of how they do business.

COVID-19 quickly devastated industry  growth by almost instantly stalling consumer  demand. In the U.K., sales of new cars were  down 50% year-over-year by the end of the  first national lockdown, in June 2020.2  And by  February 2021, British new-car registrations  for that month had slumped to the lowest for  a February since 1959.3 On top of this, there was widespread  disruption to supply chains in an industry  all about “just in time” production, global  networks and lean inventory. 

Within weeks of the pandemic’s start,  three of Japan’s largest carmakers—Nissan  Motor Co., Mitsubishi Motors Corp. and  Mazda Motor Corp.—had put 20,000  of their workers on temporary leave.4 In  Germany, meanwhile, COVID-19 compelled  an estimated 95% of automotive-related  companies to put their workforces on parttime schedules during the shutdown— and people who were temporarily laid off  recieved a substantial amount of their pay  government-subsidized.5 Lockdowns and social distancing measures  used to stem the spread of COVID-19 also  sped up important shifts in consumer  behavior that were already set to have a  significant impact on original equipment  manufacturers’ (OEMs’) futures. 

Conscious consumption, shopping local and  e-commerce have all grown significantly  over the past year and the acceleration  of these trends are set to continue.6 While  just a year or two ago attentions were fixed  on convenience and simplicity, now it’s all  about rapidly evolving priorities around  sustainability and redefining notions of  “ownership.”

A year from the start of the first lockdown,  automotive sales were starting to rally. 

The global passenger car market—valued at  $1,321.74 billion in 2020—was being tipped to  increase at a compound annual growth rate  (CAGR) of 9.3% this year and at a CAGR of 8%  to $1,988.72 billion by 2025, according to one  survey of the global passenger car market  published in February 2021.7 Now, as OEMs look ahead to a future beyond  the pandemic, the time is right to reimagine  the role of cars in our daily lives for good— reestablishing their value and rebuilding the  emotional infrastructure and relationships  humans have with them. 

It’s a shift that can be likened to the humble  horse evolving beyond simply being viewed  and used as a functional “beast of burden.”  In the same way, people will expect more  of their cars in the future—more safety,  more experience, more flexibility and more  integration into our daily lives beyond simply  being a mode of transportation. 

Moving forward, OEMs need to organize  the whole business around the delivery of  exceptional experiences, which is what we  call the Business of Experience. It means  rewiring the customer-facing functions of the  organization: marketing, commerce, sales  and service. The Business of Experience is  an approach that allows organizations to  become customer-obsessed and reignite  their growth.