Business strategy 2021 and beyond

Planning ahead - key dynamics impacting business strategies in 2021 and beyond 

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This section summarises some of the previous market themes, and how they should be considered when developing a business strategy.

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"The market is shifting rapidly."

Owen Edwards, Associate Director, Grant Thornton

Priorities for upstream and downstream

In recent months, attention has rightly been focused on responding to COVID-19. Fundamental changes to the automotive sector have taken place both upstream and downstream. Tier 1-4 suppliers, manufacturers, retailers, finance houses, leasing companies and more have seen a shift in the way in which they operate and serve their customers.  

For some, those changes will be temporary, with a return to the status quo in 2021/22. However, COVID-19 has quickened the paradigm shifts which were already taking place in the industry. The likelihood is that most will see costs, business models, supply chains, routes to market, and consumer demand affected permanently.  

Over the course of this year’s Insight Report, several topics have been brought to the forefront: alternative fuels; the subscription economy; digital retail; and connectivity; as well as market forecasts and trends and what potential impact that these may have on the automotive retail market.

While the emphasis in this section of the report will be on the automotive retail market, we have also analysed other areas of the automotive supply and distribution value chain as changes in these markets will affect how vehicles are supplied and sold in the future.    

"The automotive industry is undergoing significant evolution. Many businesses which were viable before the pandemic may not be today. In order to maintain viability, it is critical to create a business strategy that embraces evolution. In the short term it may be a case of survival as we head through the winter months in the UK. For 2021 and beyond, a longer strategy is required, to evolve and to retain support from key business stakeholders."

Owen Edwards, Associate Director, Grant Thornton

Overcoming market uncertainty

Market uncertainty remains across the complete automotive value chain, with an expected increase of COVID-19 cases in the winter months and potential further national and localised lockdowns. It is difficult for businesses to plan for the unexpected, therefore companies should conserve cash where possible and have a strong focus on their short-term business model; ideally working to a three-month rolling plan. Management and stakeholders should pay attention to the key areas over which they have a level of control, as the potential unknowns which cannot be planned for will distract focus when it is most needed. 

Longer term, looking to 2021 and beyond, it is key that management has a strong strategy which can be easily be implemented and enables the business to evolve with its market. This will ensure the business remains viable and will also help to maintain confidence with, and the support of, the key stakeholders, such as suppliers, finance partners, and so on.

Automotive companies should consider the key changes in the market in both their short term and longer-term strategies.