1. GREEN CAR FUTURE 2020l tePashi le Sa of kor wSCENARIO
IMPLICATIONS FOR THE alEUROPEAN AUTOMOTIVE INDUSTRY in rig OSailesh
Patel MBA Research ProjectCass Business School , LondonCover Image:
Copyright BMW AG, Munich, Germany
2. GREEN CAR FUTURE 2020: lteSCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY Pa shPresented by:i le Sailesh
PatelReg. no. 100019537 SaIn partial fulfilment of the: of Master
of Business Administration (MBA) degree kor Submitted for:Business
Mastery Project walPresented to: in Dr Mohan Sodhi rig Cass
Business SchoolO Date: 30th September 2011Word count: 14,435 2
3. PrefaceThis business research project on Green Car Future
2020: Scenario implications forthe European Automotive Industry has
been conducted in partial fulfilment of thefull-time MBA programme
at Cass Business School, City University, London.The intent of this
project is to provide advanced strategic foresight for the
Europeanautomotive industry, by exploring critical mid to long-term
forces likely to affectindustry competitiveness, and developing
plausible 2020 scenario world-views which ltechallenge existing
policy and business strategies to facilitate enhanced strategic
Paoptions within a range of potential green car futures.It is
envisaged that the real test of this researchs value will be its
ability to proveshrelevant to business leaders not only in 2011,
but in each year to 2020, by movingilebeyond historically-based
trends and forecasting to provide robust scenario-basedinsights
that enable valuable strategic planning, thinking, and action for a
globally- Sacompetitive Europe.ofk orwalin rigO GREEN CAR FUTURE
2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY
3
4. ContentsPreface
................................................................................................................................
3Definitions
............................................................................................................................
6Executive
summary.............................................................................................................
71
Introduction................................................................................................................
12 l te2 Research methodology
............................................................................................
14Pa2.1Target stakeholders
............................................................................................
14sh2.2Research objective
............................................................................................
152.3le Research outline
.................................................................................................
16 iSa 2.3.1Research question
.......................................................................................
16of 2.3.2Research method selection
.......................................................................
18 k 2.3.3Research method approach
.....................................................................
22 orw 2.3.4Data collection and analysis
......................................................................
27 al 2.3.5Research limitations
.....................................................................................
31in3 Driving forces analysis
...............................................................................................
33rig3.1Scope
..................................................................................................................
33O3.2Method
................................................................................................................
423.3Trends and uncertainties
....................................................................................
584 Scenario development
.............................................................................................
634.1Mapping uncertainty
.........................................................................................
63GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN
AUTOMOTIVE INDUSTRY4
5. 4.2Scenarios
.............................................................................................................
655 Scenario implications (2020)
.....................................................................................
695.1Opportunities
......................................................................................................
695.2Risks
......................................................................................................................
715.3Opportunity horizon
............................................................................................
74 l te6 Recommendations (2011)
........................................................................................
75Pa6.1CAPIRE stakeholder groups
...............................................................................
756.2European automotive industry
..........................................................................
78 shleAppendix
...........................................................................................................................
80i SaBibliography
......................................................................................................................
82Acknowledgements
.........................................................................................................
86ofAbout the author
..............................................................................................................
87 k orw al inrigOGREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY5
6. DefinitionsACEA European Automobile Manufacturers
AssociationBRIC Brazil, Russia, India, and China: ostensibly
referred to as the Emerging Market economiesCAPIRE Coordination
Action PPP Implementation for Road-transport ElectrificationCARS21
Competitive Automotive Regulatory System for the 21st century
lCORDIS Community Research and Development Information ServiceteEC
European Commission PaEPoSSThe European technology Platform on
Smart Systems integrationERTRAC European Road Transport Research
Advisory CouncilshEU European UnionEU27le The 27 member states of
the European Union, comprising Austria,i Belgium, Bulgaria, Cyprus,
Czech Republic, Denmark, Estonia, Sa Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg,
Malta, the Netherlands, Poland, Portugal,of Romania, Slovakia,
Slovenia, Spain, Sweden and the United Kingdom.kEurope 2020The EUs
growth strategy for the coming decade, aimed at or making the EU a
smart, sustainable and inclusive economy. wICEInternal Combustion
Engine alIntelligent Car Initiative EU programme aimed at
accelerating the deployment ofin intelligent vehicle systems on
European and international markets.rigLCVLight Commercial
VehicleONAFTANorth American Free Trade Agreement: trilateral trade
bloc comprising North America, Canada, and MexicoOEMOriginal
Equipment ManufacturerPPPPublic-Private PartnershipRTD(Programme
for) Research and Technical DevelopmentGREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY6
7. Executive summaryEnergyaccess and mass-adoption of the
automobile have shapedourenvironments and the way we live for much
of the 20th century, creating unforeseenopportunities for a global
automotive industry to prosper and fail in often unforeseenways.In
2011, the European automotive industry stands on the brink of
uncertain andpotentially unprecedented change the purpose of this
report is to explore theseltecomplex global and industry unknowns
and explain possible outcomes in the form of Paplausible, bounded
industry scenarios, which will challenge incumbent and
newbusinesses to test the resilience of planned strategies, and to
develop readiness andrecognise opportunities in alternative
futures. shi leThis report is presented for the interest of the 14
consortium members of CAPIRE, apublic-private research initiative
within the framework of the European Green Cars SaInitiative, one
of the three Public-Private Partnerships (PPP) of the EC
EuropeanEconomic Recovery Plan announced in 2008. ofDue to
time-constraints and limitations on publicly-available information,
this report kpredominantly addresses passenger car scenarios;
however it is envisaged that the oranalysis and implications will
be of value to all members, irrespective of
marketwinterest.alEuropes automotive industry faces paradigm
challenges over the next decade,induring which four certain global
macro forces prevail: imbalanced populationriggrowth, resource
demands, rebalancing of economic power, and universal accessto
information. However, uncertain and dynamic forces political,
social,Otechnological, and many more can have a profound impact on
decision-making,hence strong differences of opinion about the
future prevail and uncertainty is high,relative to business ability
to predict or adjust. These differences arise because trendand
forecasting methods are limited by their bias towards statistical
mapping ofknown relationships, with limited incorporation of new
and unexpected dynamicforces.GREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 7
8. There are therefore clear strategic benefits to moving
beyond short to mid-termmethods, namely by mapping the development
of known trends and the influenceof critical unknowns and
uncertainties, such that the most likely disruptive
industryscenarios are explored, and their resultant implications
used to test and developfuture policy and business strategy.Proven
methods of scenario planning were employed, adapting economic
modelsof national competitiveness and evidence-based research to
identify and relatecritical industry driving forces and their
outcomes. The following four Green Carl teFuture 2020 scenarios
were thus identified as most likely to influence thePainternational
competitiveness of the European automotive industry: Renaissance
2.0: The European personal transport market becomessh the most
sophisticated and demanding in the world, fuelled by effective
wealth generation strategies and innovation through products and
services; by comparison, the rest of the world areile suffering
under the might of shared financial liabilities, whilst their
citizens face high unemployment and provide only undifferentiated,
Sa price-sensitive markets. Global Wealth: In this scenario, the
emerging economies transition toof a near-developed state, and
connectedness between the East and West facilitates effective
wealth generation and redistribution. There is k much homogeneity
between markets, and the concept of nationalor automotive
manufacturers becomes outdated as products and service offerings
merge to be provided by large multinationals. w Advanced Austerity:
Financial shocks hit hard and persist across the al worlds
economies, slowing growth and refocusing governments on their own
liabilities and debts. The international automotive industryin
becomes an uncompetitive environment, except for smallrig
entrepreneurs realising benefits from price-sensitive consumers.
Yin Yang: Wealth from the West is redistributed to the East, as
BRICO nations collaborate to realise liberal and sustainable
business environments, fuelling indigenous wealth generation in
products and services. In contrast, the US and Europe are burdened
by financial shocks, poor access to energy, and a loss of knowledge
workers to opportunities in the East.These scenarios are not
predictions of the most likely automotive future, howeverthey
provide a robust indication of how far the 2020 competitive
landscape may due to critical driving forces - sustainably differ
from that of 2011.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY 8
9. Implications for the competitiveness of the European
automotive industry werederived both from the scenario-building
process, which is a strategic learningprocess in itself, and from
the final scenarios. Three key factors were identified asmost
influential to the relative competitiveness of the industry: 1.
Demand of theEuropean market; 2. Related and supporting industries
(e.g. products and services);3. Factor conditions, such as
infrastructure and advanced conditions such as R&D.Demand was
predominantly influenced by the sophistication and size of
market,and identified to be the single largest determinant of
competitiveness; one whoselterelative development across
international borders is significantly impacted by global
Pauncertainties. The future competitiveness of the European
automotive industry istherefore considered largely unknown. Faced
with increasing competition fromemerging nations supported by
government programmes, consideration must also shbe given to the
mutual reinforcement of international and national
competitiveness.i leFurthermore, as the automotive industry aims to
transition into delivering productsand services, it must recognise
that competitiveness in services may require different Safactors to
manufacturing competitiveness.ofAccordingly, the top three scenario
opportunities for each of the CAPIREstakeholder groups were
identified as:korw Product and service innovationAutomotive
Manufacturers Development of supporting industries and Suppliers al
Manufacturing and delivery innovationin Realisation of integrated
transport model rig City Transport Authorities Sustainable energy
efficiency gains Enhanced quality of lifeO Retail model
innovationElectricity Suppliers Supply chain innovation Lifestyle
market penetration GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY 9
10. Conversely, the top three scenario risks for each of the
CAPIRE stakeholder groupswere identified as: Differentiation and
affordability Automotive Manufacturers Investment costsand
Suppliers Capacity and service quality Transport capacityCity
Transport Authorities Market cannibalisationl Living costs te Pa
Capacity utilisation Electricity Suppliers Supply chain disruption
Retail model resiliencesh leHence, recommendations for immediate
action, with the intent of maximising value iSacapture
opportunities and minimising risk consequences, both now and in the
future,were identified for CAPIRE stakeholders as below:
ofAutomotive Manufacturers and Suppliers k or I.Develop affordable,
integrated personal transport solutions II. Deliver differentiated
products and servicesw III.Share innovation risk in non-core
aspects; design and develop for flexible breakeven volumesalCity
Transport Authoritiesinrig I.Develop indispensable transport
infrastructure and services II. Improve accessibility and
affordability whilst monetising service- delivery capabilitiesO
III.Maximise efficiency through integration, and learn from the
bestElectricity Suppliers I.Develop a sustainable relationship with
consumers lifestyle energy needs II. Provide a differentiated,
integrated energy service through suitable channels III.Develop
capacity and flexibilityGREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY10
11. This report concludes by advising all European automotive
industry stakeholders toconsider the following factors in order to
enable 2020 competitiveness: Future planning Strategy Operations
Competencies Tracking events Overcoming resistancelteThrough deeper
understanding of these scenario implications, and implementation
Paof suggested recommendations, Europes automotive industry will be
betterprepared to innovate and develop agility to compete in the
green car future of sh2020 and beyond. i leSaof kor walin rigO
GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN
AUTOMOTIVE INDUSTRY11
12. 1IntroductionIn an increasingly unpredictable, complex
world, this report aims to answer thestrategic dilemma that is
foremost for the European automotive industry: How tocompete in the
green car future, 2020?Presented with long-term uncertainty,
industries and businesses tend to adopt one ofthree strategic
postures (Knowledge@Wharton 2009):l te 1.Do nothing (the
zero-future option): caution rules, no attempts are made to
analyse, anticipate, or predict beyond the short-Pa term, and major
decisions are deferred until the fog of uncertainty clears. sh
2.Take a calculated bet on one particular future: a clear message
is presented, and bold action is taken that could play out as le
brilliant, or fail through wishful thinking.i Sa 3.Separate knowns
and unknowns, in order to explore possible futures: scenarios, not
predictions, are developed, focussing on the development of agility
and options.ofThough postures (1) and (2) may prove successful, the
risks for businesses committedkto such approaches are high,
especially if the competitive business environmentorundergoes
irreversible and rapid change.wHence, whilst acknowledging that No
one can definitively map the future, but wealcan explore the
possibilities in ways that are specifically intended to
supportindecision-making (Shell International BV 2008) businesses
that adopt posture (3) arerigmore likely to be competitively
enabled to reduce risks, and expedite effective,informed strategic
decisions in order to maximise potential benefits.OTo provide
maximum business value to the European automotive industry,
thisresearch will be split into four principal sections: Developing
an optimal research method to identify key driving forces
andproduce relevant, applicable scenarios. Understanding the key
trends and driving forces of change in theautomotive industry, and
identifying the impacts and uncertainties.GREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 12
13. Constructing scenarios by mapping uncertainties,
identifying themes, anddescribing significant scenarios.
Determining scenario implicationsand
developingstrategicrecommendations for the European automotive
industry.In doing so, it is hoped to provide a learning process;
one which helps broaden anddeepen the understanding of
stakeholders, and permits improved knowledge of thetrends and
uncertainties which could impact the competitiveness of the
Europeanautomotive industry of 2020. lte Pash i leSaof korwalin
rigO GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN
AUTOMOTIVE INDUSTRY13
14. 2Research methodology2.1Target stakeholdersThis research is
provided for business decision-makers in the European
automotiveindustry, with specific regard for the 14 consortium
members of CAPIRE(Coordination Action PPP Implementation for
Road-transport Electrification), apublic-private research project
within the framework of the European Green CarsInitiative (EGCI),
one of the three Public-Private Partnerships (PPP) of the
ECl(European Commission) European Economic Recovery Plan announced
in 2008.tePaCAPIRE aims to produce a dedicated roadmap based on an
elaborated and deepanalysis of R&D needs, respective milestones
and supporting measures. The project shfocuses on the definition of
potential flagship projects which could foster thecompetitiveness
of the European Automotive Industry in the domain of
TransportleElectrification as well as in the development of
technologies and services to reduce iSathe European CO2 footprint.
(CAPIRE webmaster n.d.)The 14 CAPIRE consortium members, home
countries, and their main business ofactivities are summarised in
Table 1.k orHomeCAPIRE member country Business activities wCar,
light commercial vehicle, and truckRENAULT Francemanufacturer alThe
worlds largest private independentpowertrain and instrumentation
systemsinAVL LISTAustria developerrigCentro Richerche Fiat - Fiat
AutomobileCRF Italy Groups research centreOVolvo Groups main
technology researchVolvo Technology
CorporationSwedencentreProviders of IT innovation and
technologyVDI/VDE-ITGermany services across automotive and other
sectorsSuppliers of technology and services inindustrial,
automotive, construction, andRobert Bosch GmbH Germany consumer
goodsOEM module and systems supplier to theVALEO Franceautomotive
industryNumber 1 Spanish energy company, andIBERDROLA Spain number
1 global wind power providerGREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 14
15. Home CAPIRE member country Business activities Transport
authority and operator for Londons Transport for LondonEngland
public transport network Auto supplier, covering Chassis &
Safety, Continental Teves AGGermany Powertrain and Interior Climate
and automotive components HIDRIA d.d. Sloveniasupplier Household
and personal products Procter & Gamble EurocorBelgium
manufacturer TV Rheinland ConsultingProduct development,
certification, and GmbHGermany approval servicesl te Family-owned
bus and tram manufacturer, SOLARIS Bus & Coach Polandincluding
hybrids (60% export activity) PaSource: Author analysis of member
websitesTable 1: CAPIRE consortium members and business
activitiessh2.2Research objective leThis business-focussed project,
supplementing existing technology R&D programmes, iSaaims to
inform and enable European automotive industry
decision-makersresponsible for implementing the CAPIRE roadmap.
ofThe importance of the European automotive industry to Europes
future cannot be kunderestimated. Following the 2008 financial
crisis, the ECs Responding to the crisisorin the European
automotive industry publication recognised:w With an annual
turnover of 780 billion and a value added of over al 140 billion,
it [the European automotive industry] makes a major contribution to
the EUs GDP. It exports far more than it imports, with ain surplus
of over 60 billion on overall exports of 125 billion. In
addition,rig the sector plays a central part in tackling many of
the key economic, social and environmental challenges faced by
Europe today, such as sustainable mobility and safety. (European
Commission 2009b, p.3)OTherefore, the research objective of this
project is to develop and evaluate thebusiness implications of
plausible mid to long-term global scenarios likely to be ofhighest
sustained impact to the European automotive industry.GREEN CAR
FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY15
16. 2.3Research outlineIn order to distinguish relevant,
sustainable outcomes which challenge andconstructively inform the
future strategies of the European automotive industry, theresearch
process must be designed to efficiently and effectively explore
criticaluncertainties.The primary resources available for this
project include but are not limited to:l Approximately 300 hours of
MBA student time (40 hrs per week)te Academic supervision to direct
research and review drafts Pa City University library resources
Publicly accessible information sourcesshIn this section, a
suitable research outline is determined by evaluating the five
coreresearch elements illustrated in Figure 1.i le Sa
ResearchResearch DataResearch Researchmethodmethod collection
andquestionlimitations selection approach analysis of Source:
Author analysiskFigure 1: Research outline processor w2.3.1Research
question alThe research question for this project has been
formulated in consideration of the ingoals of the CAPIRE programme,
the challenges facing the European automotiverigindustry, and the
value of existing prevailing research.OA comprehensive literature
review was performed, assessing the scope of existingindustry,
academic, and public policy insights, trends, and foresights
(seeBibliography). Although a wealth of near-term insights and
opinions can be readilydiscerned, uncertainty about the future is
commonly discernible as mid to long-termforesights providing
limited strategic direction and comparability, as illustrated bythe
ECs sectoral overview of the European automotive industry:GREEN CAR
FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY 16
17. In the medium-term, the technological competition in this
industry is set to intensify, with different fuel and energy
concepts plus intelligent transport playing a particularly
important role. [] In the long-term, the global market for motor
vehicles is set to grow substantially (European Commission 2009a,
pp.910)From a business perspective, notable anchoring biases were
observed, withresearch tending to assume that a product-based
retail model will prevail in future,while incorporating
thesubstitutionof emergent green technologicaldevelopments and
associated infrastructure to varying degrees. E.g. J.D. Power and
lAssociates 2010, Phil Gott 2008, Housely Carr 2011.J.D. Power and
Associates 2010te PaLimited consideration is evidenced from
published research for the substitution anddisruptive effect of
alternative product, service, and transport models, or the
shcomposite impact of political, economic, and social factors, for
example.Furthermore, consolidated research specifically evaluating
the extent to which thelecompetitive position of the European
automotive industry might be challenged isi Sanotable by its
absence.Nonetheless, literature consensus is achieved on the core
challenge facing the ofglobal, and the European automotive industry
that of competing effectively in afuturein whichsustainability and
green(environmentallyresponsible)k orconsiderations are no longer
consumer preferences, but substantially business andpolicy
requirements. walTherefore, to inform and enable the European
automotive industry, a timescale of 5-10 years is identified as the
strategic domain of critical uncertainty, urgently requiring
inimproved foresight to inform imminent mid to long-term
competitiveness planningrigand action (see Figure 2), hence the
research question for this project is formulatedOas: Green Car
Future 2020: Scenario implications for the European
AutomotiveIndustry.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY17
18. l tePaSource: Jones 2010Figure 2: Domains of strategic
uncertaintysh2.3.2 Research method selectionleTo determine an
appropriate research method, the common nature of thei Sachallenge
facing leaders in the automotive industry must be
understood.Schoemakers research identifies strong parallels with
CAPIRE members interests: ofSenior executives commonly ponder such
questions as "What mightkgive us continued competitive advantage?"
and "What new productor markets should we enter and how?" Both
questions go to the heart orof a firms strategic vision. [] Knowing
the answers constitutes thewdifference between muddling through and
running the business fromday to day with confidence and foresight.
(Schoemaker 1997, p.43)alThus, the dilemma for business is one of
developing an appropriate strategic vision toinenable corporate
planning for action within a range of possible future scenarios.
Toriginform this strategy a variety of research methods may be
utilised to provide futureforesight, including:O Statistical
techniques Decision analysis Standard forecasting Scenario
techniquesSchoemakers 1991 research describes extensively the
limitations of statisticaltechniques based on historically-derived,
albeit complex models, which incorporateGREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 18
19. multiple known variables within a simplified view of the
world, or decision analysisexamining the effect of one variable
whilst holding others constant. His research onstandard forecasting
observed that: forecasts are often wrong (Smyth, 1983; Zarnowitz,
1984, 1985), especially when dealing with the macro environment
(Page, 1982; Leamer, 1983) [] The more stable the game, the more
valuable forecasts are; the more unstable the environment, the more
scenarios may be of help. (Schoemaker 1991, p.551)Pierre Wack
(1922-1997), a successful practitioner of scenario thinking at
Royal DutchlteShell, similarly identified the core risks of relying
on forecasts alone: Pa Forecasts are not always wrong; more often
than not, they can be reasonably accurate. And that is what makes
them so dangerous. sh They are usually constructed on the
assumption that tomorrows world will be much like todays. They
often work because the world does not always change. But sooner or
later forecasts will fail when they arei le needed most: in
anticipating major shifts in the business environment that make
whole strategies obsolete. (Wack 1985) SaPut simply, these
traditional techniques produce outcomes which are to a large
ofextent bounded by the influence of known variables. For example,
Thomas Watson,chairman of IBM, predicted in 1943, "I think there is
a world market for maybe fivekcomputers." informed by his bounding
of the future using existing market models.or wHowever, if
presented with scenarios that identify relevant and critical
uncertainties,it is unlikely that business leaders should fail to
recognise and understand outcomes alin alternative futures. It is
therefore advantageous to develop scenario techniques inthat
recognise and incorporate critical uncertainties and their driving
forces, andrigbounds their potential impacts, opportunities, and
risks in the form of relevantscenarios.OReferring to Figure 3,
mapping differing degrees of uncertainty, businesses can seekto
improve their knowledge of the future by: Firstly, identifying and
developing a better understanding of the impact of known trends
stable driving forces that will affect us and others, which we can
predict quite clearly. e.g. population growth, universal data
access, etc.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY 19
20. Secondly, identifying and developing a better understanding
of the potential impact and driving forces of unknown trends
unstable forces that will affect us, but that we cannot predict
clearly. e.g. the price of oil, recessionary recovery, demand for
raw materials, etc. Thirdly, identifying uncertainties relevant
unknowns that could significantly affect us - and developing an
understanding of their potential impact and driving forces. e.g.
intelligent highways, government subsidies, political succession,
electromobility, etc.l te PaKNOWNsh UNKNOWN ile UNCERTAINSa of
Source: Author analysisFigure 3: Degrees of uncertainty k
orScenario techniques can facilitate exploration of all the above
degrees ofuncertainty, and to a large extent are concerned with the
likely challenges and woutcomes of the unknown and uncertain.
Though in use since the 1960s and 1970s, it almust be recognised
that they are a difficult technique to define and describe. and
inthat their very flexibility and widespread applicability seems to
limit their generalrigacceptance in everyday organisational use.
(Verity 2003, p.186)OFurthermore, some practitioners (such as
Shell) sometimes draw a distinctionbetween scenario thinking, which
is aimed at the exploration of uncertainties, andscenario planning,
which is aimed at applying scenarios to support
decision-making,using probabilities, decision analysis, etc, to
support other strategy methods.Henceforth in this document,
scenario planning will be used interchangeably torefer to both
scenario techniques of thinking and planning, as both elements will
bevaluable in order to derive implications for the European
automotive industry.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS
FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 20
21. Therefore, scenario planning to reduce uncertainty for the
automotive industryappears well-suited as a research method, as
Verity, arguing for greater use ofscenario techniques in business
environments that are increasingly complex,changing, and global,
notes Michael Porters early advocacy of scenariotechniques to
achieve competitive advantage: As Porter (1985) pointed out: Every
plan is based on an industry scenario in one form or another,
though the process is frequently an implicit one. He was an
advocate for practising scenario techniques in strategy
formulation. He recognised that the assumptions managers l used as
background to generating their strategies were rarely madete
explicit or challenged. By acknowledging the uncertainties, he
foresawPa much improved strategy outcomes. (Verity 2003,
p.188)Advancing Porters research, Schoemaker further identifies
industry and corporate- shlevel conditions favouring the use of
scenario planning, as described in Table 2. i leSa ofkorw al in
Source: Schoemaker 1997 p.48Table 2: Business conditions favouring
the use of scenario planningrigOThough these conditions may not
reflect the views of all organisations in theautomotive industry,
the symptoms have historical precedent and reflect theuncertainties
and difficulties increasingly likely to be felt by the European
automotiveindustry. Therefore, scenario planning is determined as
an ideal research method toachieve the objective of this
project.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY 21
22. 2.3.3 Research method approachScenario planning is a
flexible, non-prescriptive technique facilitating many
differentresearch approaches, as its practitioners have noted,
There are different schools ofthought about what scenarios are for,
how scenarios should be built and when theyshould be used. (Verity
2003, p.186)Consequently, there are strong reasons why managers
will resist or reject usingscenario techniques. Verity explains:l
teOne of the reasons why scenarios are not adopted more widely is
thisPadivergent set of methodologies and the different emphases
onquantitative or qualitative input. It is difficult for managers
to siftthrough the different approaches and know, with confidence,
whichone to adopt for which business issue. (Verity 2003,
p.187)shHence, to effectively develop Green Car Future 2020
scenarios and produceleimplications that will be confidently
received and used by leaders and managers in iSathe European
automotive industry, this section will draw upon scenario
practitionerexperience to clearly detail:of What the scenarios will
be for;k How the scenarios will be built;or When the scenarios
should be used.wWhat the scenarios will be for
____________________________________________________alinThe
scenarios produced by this report aim to serve two primary business
needs forCAPIRE members and the wider European automotive
industry:rig1. Strategic thinking: by exploring and highlighting
large-scale forces thatOcould push the competitiveness of the
European automotive industry inmarkedly different directions2.
Strategic planning: by providing scenarios that encourage
decisionsmade today to play out well across several different
scenariosThe scenarios will provide analysis of the driving forces
affecting the competitivenessof the European automotive industry
within a range of critical uncertain futures.GREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 22
23. Company-specific decision scenarios will not be within the
scope of this project. It isimportant to emphasise that the
scenarios will not be a prediction of the mostprobable futures, but
will aim to serve as strategic tools to permit
learning,exploration, and decision-making, best expressed by
Schoemakers analogy: Suppose you are planning to climb a mountain.
Corporate planning of the past would provide you with a detailed
map, describing the predetermined and constant elements of the
terrain. Of course, this traditional planning tool is very valuable
and, indeed, indispensable in this case. Just as geographical
mapping is an honored art and science, so corporate mapping can be
very useful. However, it isl te incomplete. First, the map is not
the territory, but an incomplete and distorted representation (any
two-dimensional map distorts the earths Pa surface). Second, it
ignores the variable elements, such as weather, landslides,
animals, and other hikers. The most important of these
uncertainties is probably the weather, and one option is to gather
sh detailed meteorological data of past seasons, perhaps using
computer simulations. le Scenario planning, however, goes one step
further. It simplifies the iSa avalanche of data into a limited
number of possible states or scenarios. Each scenario tells a story
of how the various elements might interact under certain
conditions. Where relationships between elements can be formalized,
quantitative models can be developed. of Each scenario should be
evaluated for internal consistency and plausibility. For example,
high visibility and heavy snow drifts are an k implausible
combination. Although the boundaries of scenarios might or at times
be fuzzy, a detailed and realistic narrative may direct your
attention to aspects you would otherwise overlook. Thus, a vivid
snow w drift scenario (with low visibility) may highlight the need
for skin protection, goggles, food, supplies, radio, shelter, and
so on. al (Schoemaker 1997)inHow the scenarios will be
built____________________________________________________rigA
typical scenario-building exercise, illustrated in Figure 4,
requires the definition of aOcore issue, scope, and stakeholders
(to provide context and a test of relevance),followed by
identification of trends and uncertainties, which are then
developedinto scenarios by various means, and disseminated to
permit strategic thinking andplanning.GREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY23
24. Define focal issue(test of relevance) Identify trends
anduncertaintiesDevelop scenarios lDisseminate scenarios tote
stakeholdersPaUse scenarios for strategicthinking and
planningshFigure 4: Overview of typical scenario-building process
ile Source: Author analysisSaNumerous sources have been referred
for guidance, however only Schoemakerprovides a comprehensive
ten-step guide to scenario-building and dissemination,ofwhich is
adapted in Table 3 to provide an overview of the scenario
planningkactivities included within this project.or w Scenario
planning activity Implementation within Green Car Future 2020
projectTime frame: 2020 (incorporating changes in
technology,alproducts, services, competition, markets, economies
post-2011) inScope: scenario implications for the European
automotiveindustryrigIssues: how to compete in the green car future
2020 1. Define the issues understanding uncertainty to industry
risks and opportunitiesO 2. Identify the majorstakeholdersSee
Section 3 3. Identify basic trends 4. Identify key uncertainties 5.
Construct initial scenarios 6. Check for consistencyand
plausibilitySee Section 4 7. Construct learningscenarios 8.
Identify research needs See Sections 5 and 6, including scenario
implications andGREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY24
25. Scenario planning activity Implementation within Green Car
Future 2020 projectrecommendations 9. Develop formal models Not in
project scope 10. Create decision scenariosNot in project scope
Source: adapted from Schoemaker 1997Table 3: Scenario planning
activities implemented in the Green Car Future 2020 projectThe main
purpose is to identify dynamics of critical uncertainties and
potential ltebusiness environment states that might affect the
competitiveness - for better, orPaworse - of the European
automotive industry. Table 4, adapted from Schoemakersexperience of
developing and applying scenarios in industry, provides the
criteriathat will be used to direct and evaluate the quality of the
final Green Car Future sh2020 scenarios. i leSaHow can you assess
if your scenarios are good ones?of 1. Objective: The scenarios
should cover a wide range of possibilities and highlight competing
perspectives (within and outside the industry), while focusing on k
interlinkages and the internal logic within each future. or 2.
Relevant: To have impact, your scenarios should connect directly
with the mentalw maps and key concerns of those who will use them
(e.g., senior executives, middle managers, etc.). al 3. Consistent:
The scenarios should be internally consistent (and be perceived as
such) in to be effective.rig 4. Distinctive: The presented
scenarios should be archetypal - that is, they should describe
generically different futures rather than variations on one theme.O
5. Sustainable: Each scenario should ideally describe an
equilibrium or a state in which the business environment might
exist for some length of time, as opposed to being highly
transient. It does an organisation little good to prepare for a
possible future state that will be quite short-lived. Source:
adapted from Schoemaker 1997 p.54Table 4: Essential criteria for
successful scenariosGREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS
FOR THE EUROPEAN AUTOMOTIVE INDUSTRY25
26. When the scenarios should be used
______________________________________________The industry-level
scenarios, themes, and frameworks developed within this
projectshould be used by firm managers for four complementary
purposes:1. To test existing strategy: by applying industry level
scenario planning toexisting firm-level strategy, managers will be
able to test the resilience andflexibility of their strategies
within a range of critical futures. Resilientstrategies are those
which are sustainable across multiple scenarios. l2. To develop
strategy (existing and new): industry level scenario planningtemay
be used to develop understanding of opportunities and risks within
Paexisting strategy, and to identify and test new strategic
opportunities.3. To develop organisational awareness: by
propagating scenario themes shwithin the organisation, managers and
employees can together benefitfrom increased organisational
awareness of risks and opportunities incritical future scenarios. i
leSa4. To develop organisational agility: responsiveness during
uncertainty isoften demanded of modern organisations; by
propagating awareness of offuture critical scenarios an
organisation can begin preparing foruncertainty, and learn to
understand and recognise signals and signpostskof change. or
wUltimately, scenario planning can help an organisation make better
decisions, asillustrated in Figure 5, by encouraging multiple
perspectives, and striving for analintegrated analysis and
understanding of critical future scenarios.in rigO GREEN CAR FUTURE
2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY26
27. l tePa sh i leSaof kSource: adapted from Schoemaker 1991
p.558 orFigure 5: Generic levels of scenario analysisw2.3.4 Data
collection and analysisalinThe data collection methods selected for
this research will be aimed at supportingrigthe production of
scenarios that:O Cover a wide range of possibilities Highlight
competing perspectives (within and outside the industry) Focus on
interlinkages and the internal logic within each future Describe
sustainable futuresAs the Green Car Future 2020 scenarios will, by
definition, aim to exploredevelopmental (change) factors in
relation to context, the data collection andanalysis method most
appropriate to this project is the case study. Thomas (2011)GREEN
CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY27
28. offers the following definition of case study: "Case
studies are analyses of persons,events, decisions, periods,
projects, policies, institutions, or other systems that arestudied
holistically by one or more methods.Yin (2003) further defines a
case study as: an empirical inquiry that: investigates a
contemporary phenomenon within its real-life context; when l te the
boundaries between phenomenon and context are not Pa clearly
evident; and in which multiple sources of evidence are used. shTo
analyse the perspectives, interlinkages, and driving forces
influencing theleautomotive industry in a plausible, cohesive
manner, it will be necessary to obtaini Saand evaluate data from a
variety of sources, in a method appropriate to thesubsequent
scenario-based analysis. Rosenberg and Yates (2007 pp.449-450)
outlinea framework for identifying and analysing data, as shown in
Figure 6. ofkorw al inrigSource: Rosenberg and Yates 2007
p.449OFigure 6: Identifying data collection and selecting analysis
methodsHowever, in contrast to Rosenberg and Yates approach of
selecting data analysisstrategies after collecting data, scenario
planning requires that an analysis strategy(the scenario building
method) is selected before collecting data, after which therequired
data collection methods may be identified. It is evident that
scenariobuilding will require the collection of data supporting
content, thematic, andstatistical analysis, necessitating both
qualitative and quantitative input.GREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY28
29. Due to time constraints, resource limitations, and the
requirement to collect a largerange of unbiased data, only
secondary research will be conducted. As far as isreasonably
possible, attempt will be made to use multiple sources of evidence,
andto aid scenario learning by identifying relevant assumptions and
limitations ofcollected data (in so doing, it may also be more
readily feasible for others todevelop this research beyond the
scope of this project).It is envisaged that the nature and quantity
of data required will inhibit thederivation of purely quantitative
models of relationships by which to determinel tedriving forces;
similarly, the incorporation of qualitative data will necessitate a
more Pastochastic method. It is therefore reasonable to determine
that a heuristic method ofscenario building will be required in
order to efficiently identify and understandsignificant driving
forces and their relationships within the timescale of this
project.shHenceforth, proven qualitative and quantitative models
and frameworks will be leutilised for analysis and scenario
building where possible, and where necessary, iSalogical, bounded
approximations to models will be developed and applied. ofIn order
to capture a full perspective of the driving forces affecting or
capable ofaffecting the European automotive industry, data
collection will encompass thekfield-of-vision proposed by Day and
Schoemaker, illustrated in Figure 7, aimed atorhelping
organisations1 actively capture strategic signals from the
periphery. wal inrigO1 Although Day and Schoemakers original intent
was to help capture signals at the organisationallevel, many of the
areas identified are equivalent at industry level, and therefore
these areas areconsidered advantageous for identifying driving
forces at industry level.GREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY29
30. l te Pa sh Source: Day and Schoemaker 2007 p.22leFigure 7:
Capturing external and internal driving forces at the
organisational leveli SaResearch will therefore be undertaken to
identify the external and internal drivingforces affecting (or
likely to affect) the competitiveness of the European
automotiveofindustry by exploring the following five areas: k or
Political, legal, social, and economic forces Emerging technologies
and scientific developments w Influencers and shapersal Customers
and channels in Competitors and complementorsrigTo provide
perspective within each source, appropriate macro-level evidence
fromOeconomic, industry, and consumer perspectives will be sought,
using academic,industry, and available media sources. Where
possible, insights and opinions will bederived from multiple
disciplines and industry thought leaders, thereby developing
arichness of insight that is encouraged and desired when conducting
as Shell havedone workshop-based, global scenario building
processes (Lawrence Wilkinsonn.d.). It is also considered
advantageous to refer to published scenarios at theeconomic,
industry, and consumer foresight level, spanning multiple
timelines, asGREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY 30
31. these research sources, despite their differing methods,
will help identify core datasources and further inform the
application of scenario planning techniques.Together, the above
approaches are intended to reduce bias errors when exploringareas
we dont know (second class see Figure 3), and areas which are
unknown tous (third class), as observed by Schoemaker:Various
biases - overconfidence, narrow framing, the tendency tolook for
confirming evidence-plague all three classes, but by far
thegreatest havoc is caused by errors of the third kind (Russo
&lSchoemaker 1992). Although no fail-proof techniques exist to
avoid tethem, much improvement can be garnered by focusing our
attentionPaon classes two and three. (Schoemaker 1997, p.68)By
reducing systemic errors when collecting data in the realm of
uncertainty,shscenario planning is more likely to achieve effective
understanding and learningsince, as Schoemaker (1997 p.68)
described it is essentially a study of our collectiveignorance.i le
Sa2.3.5 Research limitationsofTo achieve the aim of this research
project using available resources, the researchkscope is
intentionally limited to focus on the driving forces affecting the
passenger orcar market only; LCVs (Light Commercial Vehicles) and
buses will not be explicitlywanalysed. This decision is considered
appropriate because, during 2009:al 14 million passenger cars were
produced in the EU by 17 countries, inincomparison with only 1
million LCVs produced by 10 EU countries.rig Truck production
accounted for 0.25 million units, whilst buses representedonly
0.035 million units of production.OSource: ACEA 2009 p.70Although
EU production figures alone do not reflect the full interest of the
Europeanautomotive industry, the above data illustrates the greater
significance of its carproduction activities. Furthermore, as the
market for LCVs and trucks is primarilyconcerned with demand for
transport of goods and not people, it is desirable toseparate this
element from analysis of the market for cars and mobility,
unlessdetermined as a key driving force. Nonetheless, it is
envisaged that the analysis andGREEN CAR FUTURE 2020: SCENARIO
IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 31
32. implications presented in this report will be of value to
all members, irrespective ofmarket interest.Implicit research
limitations likely to influence this project will arise due to
behaviouralbias; namely, the author of this report will, by
definition, incorporate individual biasesinto data collection,
scenario development, and analysis, hence every attempt ismade to
identify assumptions and minimise errors by seeking a broad range
ofrelevant perspectives. To mitigate against researcher bias and
inexperience, thefinal report will incorporate comments and changes
advised by an experiencedl teacademic professor.PaFollowing the
preliminary completion of this report, it may be desirable to
solicit andincorporate feedback from CAPIRE members, however to
achieve these activitiesshwithin the project timescale is
unfeasible, therefore this intention may instead beconsidered as
the scope of a follow-on research project.ile Saof kor w
alinrigOGREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY32
33. 3Driving forces analysis3.1ScopeThis section details the
scope and method used to identify the competitiveenvironment, major
stakeholders, basic trends, and key uncertainties.Focal issue
______________________________________________________________________The
focal issue is to identify the significant drivers of change that
could result inl tecritical scenarios likely to strategically
impact the competitiveness of the EuropeanPaautomotive industry in
2020. An overview of the approach to developing scenarios isshown
in Figure 8.shi le Saof k or w alinrigSource: adapted from
Schoemaker 1991 p.558Figure 8: Building blocks for
scenariosODrivers of change will include basic trends and key
uncertainties, the significance ofwhich will be evaluated based on
their likelihood of change and the sustainedimpact this might have
on the competitiveness of the European automotive
industry.Competitive environment
________________________________________________________GREEN CAR
FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY 33
34. As the Green Car Future 2020 project addresses the
competitiveness of theEuropean automotive industry within a global
environment, an understanding of thescope and nature of the
competitive context is warranted:In 2005, the global automotive
industry made over 66 million cars, vans, trucks andbuses. If
vehicle manufacturing (only) was a country, it would have equated
to bethe sixth largest economy in the world. (OICA 2006)In 2011,
the six major competing global automotive industry suppliers,
defined byleconomic interest and development are: tePa The European
automotive industry (EU) The North American automotive industry,
including Mexico (NAFTA)sh The Japanese automotive industry The
South Korean automotive industry i le The Emerging Markets
automotive industries (BRIC)SaThe global market share by volume of
each competitor is illustrated in Table 5,describing relative 2009
passenger car production. Note that these figures do not re-
ofdomicile overseas production by national car manufacturers,
either through joint kventure production or wholly-owned overseas
factories. Furthermore, there may be ora surplus between passenger
car production and actual sales. w al inrigOSource: OICATable 5:
Passenger car production worldwide - 2009GREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY34
35. The relative share of total global sales is shown in Figure
9, describing total worldwidemotor vehicle registrations for 2010,
and illustrating how the EU represents a marketfor one in four
vehicles sold in the world.l tePaSource: ACEA 2010 p.77 shFigure 9:
Motor vehicle registrations worldwide - 2010 i leSaTrade between
economic blocs provides an important global import and exportmarket
for each competitors business activities. The European automotive
industry is ofa net exporter of business activities, generating net
value for the EU as highlightedby the EC:k or With an annual
turnover of 780 billion and a value added of over 140 billion, it
[the European automotive industry] makes a majorw contribution to
the EUs GDP. It exports far more than it imports, with a surplus of
over 60 billion on overall exports of 125 billion. (Europeanal
Commission 2009b, p.3) inThe importance of the industry to Europes
prosperity is underscored by the scope ofrigits network of business
and economic activities, acknowledged by the EC:O The European
automotive industry is one of Europes flagship industries. It is a
key driver of growth, exports, innovation and jobs. Its impact
filters down across a wide variety of other sectors. And it has a
particularly important cross border reach, with suppliers,
manufacturers and sales and servicing downstream creating a web of
mutual interest that touches every one of the EUs Member
States.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE
EUROPEAN AUTOMOTIVE INDUSTRY35
36. As a consequence, the value of intra-Community trade in
automotive products is substantial with around 360 billion in 2008.
Any downturn in the automotive sector therefore strongly affects
other sectors and all EU Member States. (European Commission 2009b,
pp.23)Highlighting the importance of exports, Figure 10 illustrates
the relative contributionby value of EU passenger car exports,
whereby North America, Asia, and EasternEurope represent
approximately 80% of total export value of 40 billion (down from60
billion in 2008).l te Pa sh ileSa ofkorw Source: EurostatFigure 10:
Relative value of EU passenger car exports 2009al inOverall, the
domestic European market (illustrated as EU in Figure 9)
representedrigthe largest market for the European automotive
industry, registering 16.6 millionpassenger cars in 2009, of which
2.3 million cars were imported from non-EuropeanOautomotive
industries, primarily Japan and South Korea, as shown by units of
sales inTable 6.GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR
THE EUROPEAN AUTOMOTIVE INDUSTRY 36
37. l tePa Source: EurostatshTable 6: Origin of EU passenger
car imports 2009 leHowever, when compared by value received (see
Table 7), Japan (8 billion) and iSathe Unites States (3 billion)
were the largest non-European industry competitors,differences
attributable to a higher average cost of cars sold. ofkorw al
inrigO Source: EurostatTable 7: Value of EU passenger car imports
2009Nevertheless, the European automotive industry remains a net
exporter for the EU,representing a trade balance of nearly 26
billion in 2009 (down from 40 billion inGREEN CAR FUTURE 2020:
SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 37
38. 2008), as shown in Table 8. Note that these figures
classify geographically European,non-EU countries within the
European Free Trade Agreement (EFTA) - Turkey,Switzerland, etc - as
export markets.Source: EurostatlTable 8: Trade balance of EU
automotive industry passenger car sales 2009 tePaGreen context
_________________________________________________________________The
US, Japan, China, Korea and the EU have given priority to reducing
the climateshimpact of automobile production and use by developing
programmes which targettwo outcomes: ile Sa 1.Reducing primary
energy requirements: Growing dependency on primary (naturally
sourced. i.e. non-fusion) energy sources suggest thisof factor is
very likely the most motivating one. In the EU, 73% of all oil (and
about 30% of all primary energy) is consumed by the transport
sector. k (EGCI Ad-hoc Industrial Advisory Group 2008)or 2.Reducing
greenhouse gas effect on climate change: Vehicle emissions w are
contributing to the increased concentration of gases that lead to
al climate change; Figure 11 illustrates the global contribution of
roadin transport to total man-made CO2 emissions in 2007.rigOGREEN
CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY38
39. Source: OICA 2007Figure 11: Global contribution of Road
Transport to man-made CO2 emissionsThese electromobility and green
car programmes primarily focus on developingintegrated transport
methods to reduce the energy and climate cost of personalmobility,
and the production of commercially-viable electric vehicles, which
can bepowered from clean energy sources and are estimated to reduce
energy demandbeyond that achievable by internal combustion engine
(ICE) cars: l A comparison with the situation ten years ago shows
that in the lastte decade the technological evolutions have
radically changed the impact of the electrical vehicle on primary
energy consumption: from Pa about 30% higher primary energy
consumption as compared to the ICE in 1998 to about 25% energy
savings in 2008. These figures do not yet take into account the
potential for energy harvesting e.g. by sh modern low cost on-board
photovoltaic technology. (EGCI Ad-hoc Industrial Advisory Group
2008)leNonetheless, traditional fuelled vehicles are widely
expected to prevail by 2020. iSaFigure 12 illustrates the relative
proportion of climate impact during the productionand use of a
typical vehicle in use for 8 to 10 years. ofk or w alinrigO Source:
WWF-UK 2006Figure 11: Distribution of energy demand/carbon
consumption throughout the life cycle of atypical carMajor
stakeholders
______________________________________________________________GREEN
CAR FUTURE 2020: SCENARIO IMPLICATIONS FOR THE EUROPEAN AUTOMOTIVE
INDUSTRY 39
40. Scenario stakeholders will be international or national
groups or individuals whohave, or potentially will have, an
interest in the drivers of change and theirimplications for the
European automotive industry, including those who
couldsignificantly influence change.Figure 12, adapted from
Schoemaker (1991), provides an overview of the macroand
industry-level forces likely to affect industry, which will be
utilised as a taxonomyto identify influential stakeholders, with
direct interest on driving forces inferred forindustry stakeholders
and indirect interest for world and country stakeholders. lte
Pashile Sa ofkSource: adapted from Schoemaker 1991 p.558 orFigure
12: Typical industry-level driving forceswInterested and
influential industry stakeholders include: alinrig
SuppliersEuropean automotive manufacturers2 CustomersPrivate
transportation buyersO Business transportation buyers2 The vehicle
manufacturing business is highly complex. It is not limited to the
assembly of vehicles andproduction of engines. The same
manufacturers engage in testing, sales/marketing and
distribution,maintenance, recycling and disposal. Most also make
components although the degree of verticalintegration varies. They
also have separate finance arms. These finance companies can
providefinance to their dealer network, leasing activities and to
final customers (captive finance). In recentyears these
non-automotive parts of a vehicle manufacturers business have
tended to generate moreprofits than their core manufacturing
assembly operations and in some years may have been the onlysource
of profits, thereby supporting the loss making automotive arm.(IHS
Global Insight 2009)GREEN CAR FUTURE 2020: SCENARIO IMPLICATIONS
FOR THE EUROPEAN AUTOMOTIVE INDUSTRY 40