The Automotive Industry: Heading Towards Servitization in Turbulent Times

The European automotive industry has been fiercely hit by the recent economic downturn, which has further emphasized the structural overcapacity of production plants and price competition in the sales of new vehicles. Services constitute the main means for original equipment manufacturers (OEMs), authorised dealers, and repair shops, as well as the independent actors, to survive and be profitable, thanks to the size and age of the vehicle fleet. Servitization is thus a strategy pursued by manufacturers and their networks. However, the offering is still dominated by transactional, product-oriented services. Moreover, the relevance of services is still not fully recognized by the service network, which is not completely aware of the impact of servitization on profitability and customer loyalty. In addition, end customers are often not aware of the full range of services available. Further, the perceived importance of services by the network and the final customers may differ. At the forefront of servitization are noteworthy experimentations of sustainable mobility solutions that improve environmental impact and quality of life. These are the forerunners of new business models dominated by result-oriented services, where customer get access to vehicles on-demand rather than through direct ownership.