Automotive and industrial companies have a tremendous revenue growth opportunity – in the range of $1 billion per company, according to analysis by Accenture.
The opportunity stems from the need to develop a strategy that focuses equally on growth, profitability and, sustainability and trust.
The forecasts are drawn from an analysis conducted by Accenture Strategy of its Competitive Agility Index, which identifies future corporate leaders across nine industries.
The analysis shows that the companies best positioned for competitiveness have an interdependent strategy focused equally on growth, profitability and sustainability and trust.
Among the top automotive and industrial companies on the Index are:
- BMW, based in Munich, Germany
- Schneider Electric, based in Rueil-Malmaison, France
- Honeywell, based in New Jersey, US
- Daikin, based in Osaka, Japan
“While these leaders each have unique business strategies, they’ve all prioritised the three competitiveness dimensions. They are investing for growth in new digital capabilities, focusing on cost and implementing tighter profitability measures, and exploiting their brands to position themselves as trusted suppliers in the digital age,” said Mark Pearson, senior managing director, Accenture Strategy.
The Competitive Agility Index shows that this interdependent strategy can yield far greater revenue and EBITDA improvement than one that focuses on just one or two of the dimensions. For example, according to analysis of a sample set of 47 automotive/industrial companies, a $30 billion company that adopts this strategy could see revenues rise almost $1 billion and a two percent increase on EBITDA.
Take BMW for example, with a Competitive Agility Index score of 63.8 (compared to the industry average of 34.6). According to Accenture, the company has adopted the interdependent strategy with equal emphasis on sustainability and trust – something that some automotive companies have neglected.
BMW factors in consideration of the environment along the entire value chain, and has a clear commitment to the preservation of resources embedded in its approach.
Interestingly, the leaders identified by the analysis are in stark contrast to the leaders in market cap or total shareholder return – the more traditionally used metrics for success.
“Traditional metrics are backward looking and only shed light on part of a company’s operations, failing to register how strong a company is in areas like sustainability and trust,” said Bill Theofilou, senior managing director, Accenture Strategy.
“Companies that don’t adopt an interdependent strategy that integrates the three competitiveness dimensions are at risk for being over estimated by the market or worse, succumbing to the competition. The good news is every company can start improving their performance immediately – the key is knowing where to start.”
Moreover, the competitiveness dimension that automotive and industrial companies need to put immediate emphasis on is growth.
“The dramatically changing sales channel structures, as well as the emergence of whole new mobility business models like car and ride sharing and electrification of cars, will offer enormous opportunities for the automotive company of the future in terms of growth. And those that do not seize these opportunities on time will be simply left behind,” said Pearson.