Automotive OEMs manage a wide variety of functions and activities, ranging from vehicle design and manufacturing to marketing, retail sales and consumer financing. However, vehicle remarketing and disposal appear to be largely outsourced to third party providers and other industry participants.
- As a key, end-to-end service provider within the automotive industry, Oracle offers one of the most comprehensive overviews of OEM functions and activities, as depicted below.
- Notably, this lifecycle map is corroborated by slightly dated research from Cognizant, which is outlined as follows.
- Although these most essential functions and activities are inherently iterative in nature, their logical sequence alongside brief associated descriptions is provided as follows.
1. Product Planning / Research & Development
- Automotive OEMs are “under unrelenting pressure ” to produce innovative vehicles and bring these new products faster to the market than their competitors.
- Traditionally, OEMs have partnered with their suppliers to help identify new potential technologies and innovations.
- In fielding these new ideas, OEMs must “innovate, balance costs, and deliver the right profitable products that last.”
- This includes vetting “hundreds of conceptual design details,” which must subsequently be evaluated for manufacturability and production readiness.
- The primary components of the product design process include (1) concept, styling and package, (2) construction design, (3) calculation and simulation, (4) testing and (5) industrialization, according to Porsche.
- Autodesk synthesizes these steps into the similar stages of (1) conceptual design, (2) detailed design, (3) technical surfacing and (4) engineering.
3. Business Planning
- Business planning involves the integrated management of financial and operational plans associated with vehicle production.
- By developing a cohesive plan for vehicle production and monitoring associated performance metrics, auto OEMs ensure that that vehicle operations will be “more efficient, more effective, and more profitable,” and will ultimately deliver on the company’s financial goals.
4. Supply Chain Management
- Supply chain functions helps manage the “quality, cost and delivery” schedules of vehicle production.
- A key component of supply chain management is ensuring the on-time access to component material.
- Additionally, auto manufacturers must confirm the quality and appropriate pricing of the goods provided through suppliers.
- Manufacturing involves the production and assembly of vehicles, including the coordination of in-house and outsourced components of this process.
6. Vehicle Distribution & Sales
- Vehicle distribution historically has involved a collaboration between OEMs, National Sales Companies and Dealers, according to Ernst & Young.
- Deloitte adds that automotive OEMs “sell the majority” of vehicles through franchise dealerships, that subsequently sell them to consumers through brick and mortar locations.
- However, OEMs are increasingly involved in the direct sale of cars to end customers.
- Additionally, the rise of electric vehicles, connected cars and mobility services may further upend this traditional distribution model.
- OEMs produce marketing plans at the national, regional and local levels which are informed by vehicle ordering, inventory and sales plans.
- Historically, marketing initiatives by auto OEMs have involved customer incentives and other traditional forms of advertising.
- However, consumers are increasingly expecting OEMs to engage using digital methods to “create unique buying experiences.“
8. Consumer Financing
- Automotive OEMs frequently work with third parties to provide retail customers with lending and leasing programs, insurance, extended warranties and lines of credit.
9. Parts & Service
- The parts and service component of auto OEM operations ranges from providing general support and vehicle service to the management and fulfillment of warranties.
- Notably, this function is increasingly a multi-channel operation that involves “web, email, mobile, social, chat, call center, self-service, field service and partner” coordination.
10. Smart Connected Mobility
- A relatively new function within automotive OEMs, vehicle manufacturers are beginning to function as mobility service providers that monetize the customer data generated from these services.
11. Vehicle Remarketing and/or Disposal
- Auto OEMs appear to generally rely on third party providers and other industry participants to lead vehicle remarking and/or disposal.
- Vehicle remarking processes may include repairs, reconditioning, damage assessments and value appraisals.
- Similarly, the vehicle disposal process has a number of components, including inspections, draining fluids, dismantling parts, crushing and/or shredding.