The Mobility Pioneerism depends on Management success

Signium Belgium recently hosted an executive lunch at Belgian Auto & Cycle Federation (FEBIAC) featuring guest speaker Olivier Murguet, former Deputy CEO – COO and Chief Commercial Officer at Renault Group. Speaking about the “Mobility Pioneerism”, Murguet offered the following insights.

The new context of mobility is characterized by 4 dimensions: protect the planet, regulations, reputation (ESG), and digitalization of customer experiences.

Consumer trends 2017-2023 show fragmentation of mobility solutions with the rise of carpooling and microtransit solutions as well as bike and walking to detriment of privately owned vehicles. Autonomous mobility becoming gradually preponderant over traditional driver­ based mobility, the intensity of the change depending upon regulations.

Such fragmentation creates opportunities for new players along with threats to the incumbents (traditional OEMs).

The highest market cap/EBITDA multiples are the ones of NIO and TESLA, while the valuation of GM benefits from its autonomous driving business. The ratios of incumbents, even the most profitable ones, are penalized by their delay in catching new mobility trends.

Transition to the new business models is extremely capital intensive, especially for the traditional OEMs which at the same time need to maintain their legacy (combustion engines) and invest in EVs, battery factories, and hydrogens technologies stillwith low sales volumes.

Their capacity to finance such investments depends on their multiples, which in turn depend on the investors and analysts’ appraisals who appear to recompense players with a clear vision for mobility.

In fact, valuations are very heterogeneous and do not depend only on financial performance as illustrated by new players such as Tesla or NIO, but also on the ability of incumbent players to achieve future and bold visions with clear visible steps rather than generic buzzwords.

Credibility in the eyes of the market relies upon 3 complementary dimensions: profitability based on the optimization of today’s business models, the ability to disrupt the current business models, and a bold vision of the new core business, clearly communicated.

Transforming the core business includes major organizational changes such as spin-offs to reduce complexity, and customer-centricity such as digitalization of the customer experience. While defining the new core is an exercise still in progress for most OEMs.

GM as a clear example of such massive transformations: since optimizing their current business model started several years ago including exiting from several emerging markets and discontinuing sedans from their product line in order to generate cash to invest in new opportunities such as EVs and the 2016 acquisition of Cruise, a San Francisco-based self-driving start-up.

Examples of new mobility product strategies include:

• Reduced environment impacts thru Evs – today and Hydrogen – tomorrow
• Shared mobility solutions including car-sharing and mobility platforms such as Karhoo (Renault)
• Connected and autonomous solutions including connected services and last mile delivery (e.g., Kroger)
• Retaildigitalization from search to maintenance

If the challenges are clearly recognized today, new ways of working are mandatory to execute these transformations including open innovation (e.g., startups incubators), creating strong end-to­ end digital solutions requiring strong digital factories ideally as stand-alone businesses, and management transformation towards agile management as in the case of PSA’s Carlos Tavares.

As a conclusion, THE key success factor will the Management. New ways of working are mandatory such as open innovation, strong ability to deliver end to end digital solutions…all that with a genuine agile mindset!