Automotive Execs See ‘Substantial’ Disruption Ahead, and Prioritizing How to Respond a Key Challenge, According to AlixPartners 2024 Disruption Index

NEW YORK (March 12, 2024) – Senior automotive executives report feeling more disrupted than those in several other industries, and are also finding it difficult to prioritize the disruptions and how to respond to them. That’s according to findings released today contained in the AlixPartners 2024 Disruption Index (ADI).

The ADI, now in its fifth year, surveyed 300 CEOs and other senior-level automotive executives across the globe (along with thousands more executives from 10 industries in total). The auto executives polled included leaders from automakers, suppliers, dealer groups, aftermarket companies and shared-mobility companies. And while the overall 2024 Index score for the auto industry was somewhat improved versus the 2023 ADI—coming in at 72 on a 0-100 scale, with 100 being the maximum level of disruption as measured by both magnitude and frequency—this represents more upset than in several other industries, including the aerospace, consumer products, media and financial industries. For a full breakdown of ADI methodology and definitions, see here.

This year’s ADI finds a third of executives from automakers, four in 10 from suppliers and half of dealers predicting “significant” disruption in the year ahead. Moreover, more than 60% of those in all but one automotive sub-sector (aftermarket) say it is increasingly challenging to know which disruptive forces to prioritize, and nearly a third (31%) across all sectors worry their company is not adapting fast enough. 

Meanwhile, while many auto executives view software-defined vehicles (SDVs) as an opportunity, large numbers also view them, especially their cost and implementation challenges, as a threat. For instance, 86% of those surveyed say they are getting a return on investment (ROI) of just 10% or less.

Auto executives are also worried about potential impacts surrounding this November’s U.S. presidential election—and not just executives in America. For instance, when given 15 answer-options and asked the question, “Considering the upcoming United States presidential election, how concerned are you about the impact of the following on your business?” more than half (52%) of the executives in Europe said “heightened tensions with China.” Meanwhile, in the U.S. and Canada, “economic recession” and “climate-related policies/regulations” led the list, at 50% and 40%, respectively; and in China and Japan, “inflation and interest rates” were among the top concerns.

Many auto execs are also worried about losing their jobs. Though improved at bit from the 2023 ADI, 25% overall internationally say that’s a concern they have, including 25% of those in the U.S. and Canada, 36% of those in Europe and 15% of those in China.

“Although disruptions like the chip shortage may be behind the auto industry, that certainly doesn’t mean life is getting any easier,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners. “From the massive technical and development process changes coming with software-defined vehicles to the recent uncertainty regarding electric-vehicle sales growth, companies need to understand the shifting environment and act decisively. And there’s reason to be optimistic. In fact, perhaps the most interesting change in the automotive results in this year’s ADI is the shift to controllable challenges rather than macro concerns.”  

The AlixPartners survey also found regional differences when it comes to what is most important to consider when making technology investments. While return on technology investment is critical to all three regions, U.S./Canada-based and Asia-based executives are more concerned about costs to implement technology changes, while Europe-based executives cite time to implement as a bigger concern. Executives based in China and Japan are even more concerned about IT (information technology) workload challenges and workforce bandwidth.

Meanwhile, Europe-based and China/Japan-based executives are even more bullish than their North American counterparts when it comes to software-defined vehicles, electrification and autonomous vehicles, according to the ADI. 

“The results of this year’s ADI underscore the need for action in a highly complex and truly global automotive industry,” said Stephen Tapley, a partner the automotive and industrial practice at AlixPartners. “In the near-term, executives must be vigilant in their approach to cost control, cash management and digitization. At the same time, though, being prepared for the future requires investment in smart growth initiatives, operational superiority, a transformed workforce and the pursuit of new business models.”

“Our survey finds that disruptive concerns vary greatly by region and that where one plays within the automotive value chain,” said Shreyas Sirsi, a director in the automotive and industrial practice at AlixPartners. “For instance, executives in Europe and China saw software-defined vehicles and artificial intelligence and automation as bigger disruptive opportunities, versus threats, than did executives in the U.S. These types of variances could mean that some regions and some segments in the automotive value chain are very self-aware, or it could mean just the opposite: that they either unaware of where they actually stand or that they are missing out on opportunities. Either way, that’s not a good position to be in.”

About the 2024 AlixPartners Disruption Index

The 2024 ADI asked CEOs and other senior executives across 10 industries and 11 countries the degree to which their business is being disrupted, the various forces impacting them, the pace at which disruptive forces are accelerating and the strategies they are employing to confront their companies. Using these responses, the ADI provides a measure of disruption, based on both magnitude and frequency, that organizations are facing. 

The bulk of the survey was conducted August 1 through September 28, 2023, utilizing responses from 3,100 business executives ages 25 to 65 years, employed at director level or above and working for a company with at least $100 million in annual revenue. This included 300 automotive executives, 62% of which identified as C-level; 57% of those responses came from executives employed by a company with more than $1 billion in total revenue. 

About AlixPartners

AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private-equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York, and has offices around the world. For more information, visit www.alixpartners.com.

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