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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.

Overview

  • 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.

Oracle

  • Notably, this lifecycle map is corroborated by slightly dated research from Cognizant, which is outlined as follows.

Cognizant

  • 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.

2. Design

  • 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

4. Supply Chain Management

5. Manufacturing

  • 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.

7. Marketing

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.
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