Disruptive innovation and its implications for the German passenger car market

Abstract

European automotive manufacturers face multiple challenges. Stringent environmental regulations, competitive pressures and technological trends, such as autonomous driving or electric vehicles, look set to disrupt well-established structures and stakeholders. The electrification of powertrain systems and their related technological and market impacts will shake up vehicle production and the supply chain. Electric vehicles also have the potential to change the market for cars in Europe by altering customer requirements. With over 3.6 million passenger car registrations a year, Germany represents one of the largest markets in Europe. In addition, the country hosts major suppliers and OEMs, such as Bosch, Continental, Volkswagen or BMW. These incumbent companies seem to struggle with potential disruptive innovation. Innovation theories point out that the well-established structures and long-term processes often hinder flexible reactions. Junior market entrants, such as the American car manufacturer Tesla Inc., seem best placed to seize new technical opportunities and exploit market-related changes. This research focuses on the gap between consumer demands and product design of electric vehicles. The empirical work considers passenger car attributes and levels (e.g. price or range) and their respective contribution to overall customer utility. Utilities in this context mirror value attachments to certain vehicle criteria. For instance, people who drive frequently and over a longer period of time potentially value a long maximum range. Others, with lower requirements regarding range, may appreciate different properties, such as low emission levels. Some users may have criteria for exclusion (e.g. high charging times for BEV). We use a large survey and statistical methods to identify and evaluate these customer requirements. As the German car market is heterogenous, a second research target is to investigate structures and patterns within the population of passenger car consumers. We try to associate differences in preferences with underlying socio-demographic properties of car users. A combination of utility preferences and segmentation data allow in-depth analysis and simulation of the potential market for future battery electric vehicles. To this end, the research project utilises robust multivariate data analysis methods, such as adaptive choice-based conjoint analysis and cluster analysis. Taken overall, the thesis combines innovation management theories, technological passenger car topologies and a detailed empirical analysis of German consumer preferences to give a clear view of the shape of the future car market. This holistic approach allows managers from different functions - marketing, sales, or engineering - to get a broad view of the likely evolution of the German car market from both a producer and a consumer perspective.

Date of Award	31 Dec 2020
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Nathan Proudlove (Supervisor), Jonathan Aylen (Supervisor) & Hugh Cameron (Supervisor)