The automotive industry stands at the crossroads of innovation and transformation, fueled by technology, sustainability and evolving customer expectations. Most companies in this sector are struggling to manage change effectively.
In a constantly shifting landscape, change is not a one-time event, but an ongoing process that automotive organizations must continuously navigate to stay competitive. A customer-centric change approach is crucial for staying ahead in this industry. The shift in customer purchasing behavior is more prominent as of 2023, where 43% of UK individuals now prefer to use online tools to compare and even negotiate deals while purchasing their new vehicle¹. Automotive organizations must anticipate customer needs and respond swiftly to market shifts to drive innovation and keep them at the forefront of the market.
One company that stands out for its innovation and ability to successfully implement change throughout its organization is Toyota. Their record spans from introducing the world’s first mass-produced hybrid car right through to adopting robots in its production lines.
The challenges of change in the automotive industry
Historically, change management in the automotive industry was often reactive, focusing on short-term adjustments during their life cycle in response to market shifts or regulatory changes.
Modern change management in the automotive industry is proactive, integrated into the broader business strategy, and centred on creating value for the customer. Taking a customer-centric change management approach that needs to rapidly discover, design, scale and iterate solutions, can in fact contribute to margin increases and profitability.
Customer-centric change management principles
Today, change management is recognized as a strategic enabler of transformation, essential for driving long-term success and avoiding increased margins during the product life cycle that typically leads to losses.
At Clarasys, we believe that successful change management is driven by placing people at its core. Specifically in the automotive industry, there are three key principles that are essential for implementing a successful customer-centric approach within an organization
Three key principles to implement a successful customer-centric change management approach
1. Shifting gears to customer needs
As the automotive industry evolves, so do customer expectations. Today’s customers are looking for more than just a vehicle—they seek a seamless, personalised experience that integrates digital services, sustainability, and convenience. To meet these demands, change management must prioritize customer-centricity. 2024 has shown to be a difficult year for the automotive industry, with sales prices having fallen around 6% since late 2022/2023 according to CitiGroup.
Shifting gears to focus on customer needs involves continuously gathering and analyzing customer feedback, staying attuned to market trends, and being agile enough to adapt to changing preferences. One car maker is particularly struggling, according to a recent FT article, with US margins down 6.1% points year on year to 11.4%.
This further shows that automotive organizations need to ensure that all aspects of the transformation—whether it’s new product development, service offerings, or marketing strategies—are designed with the customer in mind. By putting customers at the center of change management (by getting direct feedback), automotive companies can make a start at reversing these trends and returning to meet customer demands, driving long-term loyalty and success.
2. Making employee experience (EX) the engine of change with strong leadership
Employee experience (EX) is a critical component of successful change management implementation. This means that employees are involved in the transformation process and understand the need for change. Their behaviors shift to being the driving force behind the change initiative, with increased motivation and commitment. To achieve this, strong leadership is essential.
Leaders, namely the CEO, must be strategic visionaries who can articulate the need for change and help employees navigate the uncertainties of transformation. Those who effectively manage complexities, drive home the need for change and disrupt the traditional status quo are the forerunners in the automotive industry. To help keep customer needs at the heart, many companies have created and appointed a Customer Experience Officer (CXO) to protect the end-to-end customer experience. Volkswagen is one of those renowned organizations that has a customer focus having appointed a CXO and is using ‘the rapid implementation of customers’ requirements’ as a differentiating factor, quoted by Ralf Brandstaatter CEO of Volkswagen in 2021.
3. Revving up change management to align with strategy
For change management to be truly effective, it must be closely aligned with the organization’s overall strategy. This means that change initiatives should not be isolated efforts but integrated into the broader business objectives, whether it’s enhancing operational efficiency, driving innovation, or improving customer satisfaction.
Take BMW as an example. Their 100+ years of strong, deep identity of making gasoline engines needed to pivot with investment in new infrastructure to support electronic and hydrogen-powered vehicles. This shake-up in strategy and the ability to embrace the change is a difficult decision, one that is solely possible with a strong vision and a concrete strategy that is well and truly beyond technology.
In the automotive industry, aligning change management with strategy involves understanding the specific goals of the transformation, which is primarily driven by customers' demands. These demands can be from transitioning to electric vehicles or developing new digital services. This requires a comprehensive approach that includes areas of analysis such as: stakeholder engagement, risk management, and continuous monitoring and adjustment of the change process. By revving up change management to align with the organization’s strategy, automotive companies can ensure that their transformation efforts are cohesive, focused, and effective.
The road ahead: Future-proofing change management in the automotive industry
As the automotive industry continues to navigate a rapidly changing landscape, the importance of effective change management cannot be overstated. The evolution of change management from a reactive, short-term approach to a proactive, strategic enabler that focuses on customers reflects the increasing complexity and interconnectedness of the industry.
To future-proof change management efforts, automotive companies should embrace continuous innovation combined with a customer-centric approach to transformation. This involves putting employee experience at the heart of change, aligning change management with overall company strategy, and always keeping a finger on the pulse of customer needs. Just as a skilled driver navigates adeptly through changing road conditions, automotive companies must be agile, adaptable, and forward-thinking in their approach to change management.
Are you in the automotive industry and need help in driving transformation? With a proven track record in customer-centric change management, we excel in aligning change initiatives with broader business strategies, enhancing operational efficiency, and improving customer satisfaction. Get in touch to find out how we can support your organization to achieve long-term success through effective change management.
