1. Prepare yourself for a world of “software-defined” cars
Huawei is not an automotive brand, yet its presence was felt at Shanghai as much as any international OEM. Their products and those of other tech firms are becoming key differentiators, with some OEMs even advertising their vehicles as “Huawei cars.”
This is all to say that smart and connected features, demonstrated by a wide range of brands from around the world, were front and center at Auto Shanghai. Some of the most impressive innovations included:
- AI-equipped vehicles used for autonomous driving, voice recognition and personalized user interfaces
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5G technology enabling seamless real-time communication between vehicles, infrastructure and digital ecosystems
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Smart cockpits — augmented reality dashboards, interactive infotainment systems and immersive in-car experiences
- Advanced battery management and charting systems
Leadership implications
This emerging trend raises a few key questions for leaders. What’s the sustainable software development strategy for your company? How does your value proposition as a carmaker change as software becomes more important? How will you manage partnerships with software giants? If the key to survival is scale, and small volumes won’t cut it, then are you prepared to use M&A to drive volume growth?
2. Global strategies will be more regionalized and polarized
As global strategies are being turned on their head, successful companies in the automotive world are taking a bottom-up approach. They are being guided by leaders who are not just strong communicators, but who truly understand how individual markets work. A range of other factors is driving this evolution to regional differentiation: geopolitical developments, differences in regulation on sustainability and sensitive technologies like autonomous driving, technological differences, and customer preferences.
We saw this in Shanghai, where international brands demonstrated new offerings that specifically targeted China’s unique market. Several global carmakers showcased models tailored to Chinese consumer preferences, such as extended wheelbases, advanced infotainment systems and smart features. Others highlighted their increased R&D operations to better compete in China’s EV market. And, in response to global supply chain disruptions, many companies announced plans to localize production and sourcing within China, leveraging the country's advanced EV supply chain.
Leadership implications
A strategic perspective has never been greater for leadership. The best leaders are those who can bring complex, global thinking to a complicated environment where operations are increasingly splintered regionally. They are also building teams with an appropriate balance of global perspective and strong regional capabilities. Over time, these enhanced regional perspectives will need to be represented on your board, and your global governance model must be adjusted to reflect this reality.
3. Courage is a front-and-center leadership trait
As noted at the beginning of this article, optimism was an interesting undercurrent shaping the mood at Auto Shanghai. All of today’s uncertainty just means that leaders need to find more creative ways to operate, innovate and grow. If you’re fixated on what worked in the past, then you’re at risk of falling behind today and in the future.
For instance, despite global supply chain disruptions caused by higher tariffs, some global OEMs have chosen to increase their investment in R&D and sourcing capabilities in China. They are planning to design and manufacture cars for home and global markets by leveraging the advanced and cost-effective electrification and “smart”-ification value chain in the country.
Leadership implications
As much as you will want leaders with the right backgrounds and experiences, it’s the “under-the-surface” character traits that may be key to success. Are your leaders flexible and open to change? Do they have a problem-solving mindset? Are they capable of influencing change within their organizations?
Leaders who can quickly diagnose the business situation and align resources to address the business challenges will have a leg up in this volatile environment.
4. Cross-sector and cross-brand partnerships are gaining momentum
Beyond the software-driven innovations we mentioned in the first section above, a wide range of fascinating collaborations are being developed with an eye toward disrupting the business. There was BMW’s collaboration with Alibaba to bring a bespoke AI system to its cars, a Mercedes-Benz partnership with Hesai on lidar components, and several joint ventures by Volkswagen to create China-specific electric vehicles.
More than a dozen new EV models from foreign giants including Audi, BMW, VW, GM, Toyota and Nissan feature the latest Chinese technologies in batteries, digital cockpits and self-driving. These international carmakers are banking on Chinese EV technology to make their products “more electric and intelligent” so they can ramp up deliveries and catch up with indigenous brands.
Collaboration offers several benefits, especially for carmakers expanding into new markets, as it can increase cost efficiency and speed to market while also providing assistance in regulatory compliance. But at a deeper level, it’s a time-tested pathway to tap into outside skills and capabilities that can enhance your own standing.
Leadership implications
In a world where cross-sector and cross-brand collaboration is becoming more prominent, the traditional power dynamics between automotive OEMs and tiered suppliers might evolve differently. Is your company well-positioned to leverage this dynamic change?
Strong leadership in this environment requires an organization that is firing on all cylinders — one equipped with the right processes, capabilities and support to effectively execute strategy, culture and change by interpreting a strategic vision into concrete plans in a speed much faster than before.
Collaboration, in particular, also requires the agility to manage a complex array of stakeholders while also building strong teams and empowering them to pursue new and innovative solutions.
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Is your board and executive team ready to adapt?
EVs, software-enhanced cockpits, autonomous cars: Sooner or later, every company in the automotive ecosystem will be impacted by these trends. Couple that with a complex and volatile global environment, and it is more important than ever that the auto industry is led by boards and C-suites equipped not just with the right skills and capabilities, but the leadership fortitude needed to rise to the occasion.