Implementing “scale” in essential facets of enterprise is the important thing to “automotive survival”, based on Owen Edwards, Head of Downstream Automotive at Grant Thornton.

Writing in Cox Automotive’s newest quarterly perception, AutoFocus, he stated that OEMs should significantly put money into areas together with provide chain, automobile distribution and technological evolution to attain sought-after economies of scale.

He added that because the market continues to evolve with new drivetrain applied sciences, batteries and so-called e-fuels (geared toward serving to ICE autos meet new laws), there was a corresponding funding improve in autonomous autos and mobility providers, that means OEMs compelled to spend even larger sums of their provide, distribution and retail chains.

Cox Automotive’s perception and technique director Philip Nothard stated: “Much activity in automotive at the moment has involved OEMs protecting their businesses through mergers and acquisitions. Scaling up is the logical extension of this.”

Edwards asserted that rising scale within the upstream and downstream automotive sectors has turn out to be much more vital.

He added: “The scaling up of the provision chain can’t be remoted to new drivetrain know-how as conventional OEMs nonetheless goal to make earnings from ICE autos and legacy components. ICE autos scale back their market share on a worldwide foundation, and producing such autos will inevitably turn out to be much less worthwhile. Automotive manufacturing crops depend upon volumes and excessive ranges of throughput to make earnings.

“Some OEMs are reported to not be making enough earnings from BEV gross sales and have continued to undertake elevated funding in new battery and automobile know-how. Therefore, with declining gross sales of ICE autos and inadequate earnings from BEVs, OEMs are planning for the longer term, particularly when contemplating the way forward for ICE autos. Owen says Geely and Renault’s joint-venture energy plant firm is a main instance. Partnerships like these are massively vital to realize economies of scale and keep earnings when the gross sales of ICE are slowly declining.

“Renault has predicted that the partnership could produce up to 80% of ICE-vehicle power plants global requirements, although no timescale has been outlined for that ambitious target.”