Optimizing Long-term Incumbent Performance During and After Industry Disruption: A Multi-case Study to Optimize Industry Disruption Response Strategies in the European Passenger Car Industry

Abstract

Through an explorative multi-case study building on existing literature and utilizing interviews with industry practitioners, this thesis provides strategic recommendations for incumbent European passenger car manufacturers to optimize their strategic responses to industry disruption caused by new market entrants. The thesis investigates the characteristics of the European passenger car industry to understand the external factors influencing it, its internal dynamics, and how it is being disrupted. This facilitates the evaluation of the strategic responses and business model adaptations employed by incumbents. Three incumbent manufacturers' strategic plans and business model adaptations are analyzed. The incumbents’ responses to industry disruption are evaluated, discussed, and optimized for three customer income levels: low, medium, and high. The case companies are compared to other incumbents to identify similarities and differences, improving the recommendations’ usefulness for non-analyzed incumbents. The incumbents employ highly similar strategic responses to industry disruption to ensure their short-term survivability but likely hurt their long-term profitability. Responses have been significantly delayed, forcing them to accelerate their transition to battery-electric vehicle (BEV) production. They are adjusting their production methodologies and facilities while establishing long-term partnerships with key suppliers of critical raw materials and technology to improve economies of scale and cost-sharing. To optimize their responses, incumbents must improve sensing and seizing capabilities utilizing scenario planning. Low-income segment brands should focus on BEV affordability, improve economies of scale, and flexible production facilities but invest less than brands in other segments in R&D to reduce costs. Medium-income segment brands should increase R&D investments, engage in charging infrastructure development, decentralize non-core innovation initiatives, increase strategic experimentation, and proactively consider M&A opportunities, anticipating a market consolidation. High-income segment brands should avoid M&A opportunities, focusing on premium features through increased experimentation, software development, cybersecurity, and R&D.