14. Braced for a New Model of Creating Value

In the mid-1990s, in Western markets, the evolution of industries and technologies was accompanied by an emerging shift in competitive advantages from “upstream” activities towards “downstream” ones. Info-intermediaries emerged, such as Autobytel.com, which took power away from carmakers (OEMs) in distribution and granted more power to consumers. The centre of gravity shifted towards the “downstream” area, and therefore also towards marketing, requiring many principles to be revised. This also paved the way for the entry of new competitors onto the market. The car industry resisted these threats. It was more resilient to the value migration than expected, but for the management of major carmakers it was clear that the change called for a response to important strategic questions such as: “Where will profits emerge in the new digital infrastructure?” and “How can we reshape our business to take advantage of the new opportunities better and faster than competitors?”. The responses to these questions all involved the incorporation and assimilation of new digital technologies. On the threshold of the early years of the new millennium, the advances towards a transformation in the automotive industry were already clear. Information technology had begun to be deeply integrated as a tool in marketing research, and in the other main functions: from sourcing to product design, from logistics to manufacturing, and from marketing to after-sales services. Products could be better designed and manufactured. Customers’ reactions and expectations could be quickly understood and analysed. Cars became more reliable, maintenance less frequent, and repairs rarer.