The global automotive industry is undergoing a transformation as vehicles increasingly rely on software, advanced electronics and connected technologies, forcing manufacturers to rethink how they source components, manage suppliers and organize production, according to a new report by FedEx and Reuters Events.
The report, released last month, found that 73% of surveyed automotive industry professionals expect software-defined vehicles (SDVs) to have a high or extremely high impact on their business operations over the next five years.
The global automotive industry is undergoing a transformation as vehicles increasingly rely on software, advanced electronics and connected technologies, according to a new report by FedEx and Reuters Events
(Photo: Courtesy of FedEx)
The findings are based on a global survey of 81 industry professionals, offering a snapshot of how companies are preparing for technological changes rather than a comprehensive assessment of the entire industry.
Software-defined vehicles rely heavily on computer systems and software to control and update their functions, allowing manufacturers to introduce new features and capabilities without necessarily making physical changes to the vehicle.
Alongside autonomous driving technologies, electric powertrains and advanced materials, this shift is creating new demands for semiconductors, sensors and specialized components, while increasing the importance of cybersecurity, data integrity and software updates.
Automakers rethink their supply chains
The growing role of technology is already changing how automotive companies manage their logistics operations.
According to the survey, approximately eight in 10 respondents said the increasing use of technology in vehicles had led to changes in their logistics models. Some 37% reported changing their transportation methods for incoming or outgoing shipments over the past year to better respond to supply chain requirements.
The shift reflects the growing complexity of vehicle manufacturing, with automakers increasingly dependent on components that require specialized sourcing and coordination across multiple suppliers.
"As vehicles become increasingly software-defined, automotive supply chains are becoming more dynamic and data-driven," said Rakesh Puri, vice president of global industry marketing at FedEx. "Manufacturers are building supplier ecosystems, sourcing more sophisticated components and responding to rapidly changing production needs."
The report also found that manufacturers are preparing for increased use of advanced materials.
Some 45% of respondents expect their organizations to expand their use of such materials over the next five years, citing sustainability, regulatory compliance, cost reduction and vehicle weight reduction as leading considerations. However, the transition presents additional challenges, including a limited number of suppliers, lengthy certification and validation processes, and higher procurement costs.
Reducing dependence on global supply chains
As vehicles become more technologically complex, manufacturers are also reassessing where they produce and source components.
Among respondents, 46% identified moving production and procurement closer to home or adopting more regional operations as a leading investment priority over the next three years. Another 44% cited supplier diversification, while 37% identified improved end-to-end supply chain visibility and tracking as priorities.
These findings suggest that manufacturers are placing increasing emphasis on flexibility, monitoring and the ability to respond to disruptions as they adapt to the next generation of vehicles.
The report also points to a changing role for logistics providers. As automotive manufacturing becomes more dependent on software, semiconductors and specialized materials, companies are seeking greater visibility into shipments and more flexible transportation arrangements.
FedEx, which commissioned the research with Reuters Events, is positioning its global logistics network, data capabilities and supply chain services to address those requirements.
The findings highlight a broader shift in automotive manufacturing: As vehicles become increasingly defined by their software and electronic systems, the ability to manage complex component networks and adapt to technological change is becoming an important consideration alongside traditional manufacturing capabilities.