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Car-buyer Expectations Building Amid Chip Shortages

Automakers and dealers have made strides in meeting demand, especially by adopting digital technology. But keeping pace with more rapid changes against the backdrop of supply shortages will require a deeper understanding of what consumers expect and value.

As the auto industry enters 2022, seamless digital car-buying experiences, connected and electric vehicles and other mobility options will remain in demand.

But, with the semiconductor-chip and other supply shortages continuing to impact the sector, the question remains: How should automakers and dealers address this issue long-term?

It is a particularly pressing question, as today’s automobile electronic systems can include upwards of 1,000 and as many as 1,400 semiconductor chips.  The technology systems chips enable range from engine management and in-vehicle infotainment to safety-related systems.

So, understandably in the past year automakers have adjusted their supply-chain strategies to mitigate the effects of the shortages.

But, while these efforts have included developing more resilient supply chains for the future, a key part of making them sustainable will also mean accommodating new customer expectations driven by evolving trends.

One such relatively new trend involves auto customers who, encouraged by positive e-commerce interactions with other industries, increasingly expect the same level of personalized products, services and experiences when purchasing a car. This reflects a trend of growing interest in customization and ever-faster advances in technologies that are enabling customer expectations to change more rapidly.

At the same time, the four key megatrends we have been talking about for some time are converging, including connectivity, autonomous driving, shared mobility and electrification (CASE). 

As a result of these new market dynamics, automakers and dealers are having to rethink their products and business models in ways that will meet demand fluctuations as they become more fluid and, to some extent, more daunting.

While facing these challenges, however, the auto industry also is on the verge of realizing great promise as the age of mobility takes hold. A protracted supply shortage could threaten that promise.

Therefore, to sustain growth in these uncertain times, automakers and dealers not only will need to keep pace with accelerating changes in demand but also anticipate such changes as part of their supply-chain strategies.

How to Meet Demand

Automakers and dealers without question have made strides in meeting demand, especially by adopting digital technology for that purpose. But keeping pace with more rapid changes against the backdrop of supply shortages will require a deeper understanding of what today’s consumers expect and value.

Moreover, developing and executing short- and long-term shortage strategies should be an integral part of meeting such demand.  Before 2021 the global just-in-time manufacturing and delivery system had gone largely uninterrupted.  Consequently, creating a new blueprint to deal with the issue will be critical.

Reshaping the right customer experience will require that automakers and dealers, working together, incorporate this new understanding of consumer expectations throughout several strategic pillars that support today’s car-buying.

Key among them will be consistently re-energizing the customer experience that ranges from capturing customer insights on and offline, as well as providing genuine pre-sale and post-sale customer support. This will require using advanced analytics and other new data sources to continually gain new insights.

Executing end-to-end offerings that meet customer demand in each local market also will be essential. This should encompass not only vehicles but also digital and financial services, aftersales service and parts. Moreover, automakers should provide dealers with insights and recommendations that enable them to manage financial risks.

This unprecedented situation has made automakers more aware of the critical role semiconductor chip suppliers must play as strategic partners in the development of today’s vehicles. Companies should look to apply digital-twin technology and continuously assess operational and financial risks created by major market disruptions, including chip shortages. 

Brian Irwin photo.jpgThis could be particularly useful for managing local auto market supply and demand. In addition, it could help predict the recovery time of a disrupted supply chain and how long the supply chain can meet demand after disruption. This could help auto companies and dealers plan next steps.

Be Prepared

Given the unexpected disruption the chip shortage has caused and the increasing shifts in customer demand, merging strategies to address both issues can only be a plus for automakers and dealers. It’s unclear when the supply slowdown will end, but taking these steps will better prepare the auto industry for the future.

Brian Irwin (pictured, above left) is Managing Director at Accenture and leads its Automotive and Mobility Practice in North America.

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