Overcoming Complexity and a World of “What Ifs”
Automotive OEMs face unprecedented market complexity—from tariff volatility and regulatory shifts to Chinese competition and evolving consumer preferences. In this environment, traditional planning tools are not just inadequate but harmful to business outcomes at every level.
OEM product and sales planners can no longer rely on static forecasts or single-point assumptions. They need to think in scenarios: testing multiple futures at once, analyzing both strategic and granular insights, and responding to rapid market changes with the agility today's environment demands.
The Spreadsheet Problem
Most automotive OEMs still rely on spreadsheets and legacy software for scenario planning—tools built for a more predictable era. These approaches lack the speed, granularity and multi-variable analysis capabilities required when tariff policies shift overnight, regulations evolve unexpectedly or consumer preferences pivot dramatically.
The result is misallocated capital, missed market opportunities and strategic decisions based on incomplete or outdated assumptions. With capital more precious than ever and the pace of change accelerating, OEMs need scenario planning that can keep up.
The question isn't whether to upgrade planning capabilities, it's how quickly organizations can make the transition before competitors gain an insurmountable advantage.
Converging Market Pressures
Today's OEMs face a web of planning challenges. In the US, tariff volatility has created wild swings in market forecasts, with sales projections ranging from 14 million to 15.6 million units depending on trade deals and government offset programs. Regulatory rollbacks have also fundamentally shifted the electrification landscape, forcing manufacturers to model natural consumer demand rather than compliance-driven adoption.
Europe presents its own complexity, with EV adoption rates varying from over 40% in Scandinavia to under 5% in Southern and Eastern regions. Multiple countries have backed away from aggressive ICE ban timelines, requiring OEMs to plan for extended internal combustion platforms alongside electrified offerings.
Meanwhile, Chinese OEMs have gained dominant market share at home and are aggressively expanding exports globally.
These dynamics aren't isolated variables, rather they interact and compound. A tariff change affects manufacturing footprint decisions. Regulatory shifts impact powertrain mix strategies. Competitive pressures influence pricing power and margin management. And traditional planning tools struggle to model these interconnections effectively.
The Profitability Challenge
Financial realities make sophisticated scenario planning even more critical. Analysis shows that consumer willingness to pay for battery electric vehicles rarely aligns with production costs—particularly in volume segments like compact SUVs. Hybrid vehicles show stronger profitability potential, while range extenders may not reach viability until 2030.
Tariffs add another burden. Some manufacturers face monthly tariff costs exceeding $600 million, with these expenses currently absorbed through margins rather than passed to consumers. Organizations need planning tools that can model how different powertrain strategies, manufacturing locations and sourcing decisions impact profitability under various tariff, regulatory and demand scenarios.
What Modern Planning Requires
Effective scenario planning in today's environment demands several capabilities that legacy tools simply cannot provide.
First, organizations need the ability to analyze multiple assumptions simultaneously rather than sequentially in order to enable evaluating how different tariff scenarios, regulatory pathways and demand patterns interact across their business.
Second, planning must work both top-down and bottom-up. Strategic insights at the portfolio level need to connect seamlessly with granular analysis of specific models, powertrains and manufacturing footprints.
Third, planning control should rest with strategic planners, product managers and volume planners themselves, not bottlenecked through centralized analytics teams. Tools must be intuitive enough for non-data-scientists while maintaining the analytical rigor needed for confident multi-million-dollar commitments.
Finally, scenario planning cannot be a quarterly exercise. It must be an ongoing capability, available whenever major decisions require it—whether evaluating capital investments, responding to policy changes or pivoting product strategies. Solutions like S&P Global Mobility's Forecast Adjustment and Simulation Tool (FAST) address these requirements by enabling OEMs to quickly model market assumptions with both high-level and granular perspectives, putting planners in the driver's seat with intuitive interfaces backed by authoritative forecasting data.
The Path Forward
The automotive industry has reached an inflection point where traditional planning approaches represent competitive liabilities. Organizations continuing to rely on outdated tools risk strategic errors with billion-dollar consequences. The path forward requires investment in modern scenario planning capabilities that match the pace and sophistication of today's challenges.
To learn more about how OEMs can build agile scenario planning capabilities for today's complex market environment, watch "Beyond 2026 Forecasting: Scenario Planning for Resilient OEM Strategy" on demand.
