Is it time to take a fresh look at sharing in the automotive industry?

Sharing. It’s a natural human instinct.  Because we know that working together makes us all better off. 

Extraordinarily, it’s already been five years since Sergio Marchionne, then chief executive of Fiat Chrysler Automobiles, gave a presentation called “Confessions of a Capital Junkie”. 

He argued that carmakers should come together to help fund the increasing development costs of greener cars, as well as new technologies such as self-driving vehicles.

The industry reaction was mixed at best, possibly due to the recollection of many failed mega mergers and differing market priorities that have continued to prevent the consolidation Marchionne predicted.

But post Covid is it time to take another look at his arguments?

From competition to collaboration 

Marchionne warned that soaring development costs necessitated industry consolidation. He promised huge savings from cross selling opportunities and eliminating waste 

It seems clear enough that the car industry — grappling with stagnating sales and huge technology investments, exacerbated by Covid19 — can no longer afford to duplicate costs. 

Some sources estimate the crisis may cost the industry up to $100 billion[1](source

Companies need scale to survive. They need to learn to share. 

Sharing – it’s an old new idea 

We don’t need to own the music we listen to, or the box sets we watch. And our personal videos and photos are now stored in the cloud. 

The same principles should apply to the supply chain – what we used to think of as products can become services. For example, by sharing and reusing containers – rather than buying, storing, maintaining and backhauling their own – automotive companies could reduce costs, risk, storage space and management time. 

Simply by moving goods through share and reuse containers will make the supply chain more circular, more flexible, more efficient and more sustainable. Reducing the cost to the consumer and the costs (both economic and environmental) to everyone in the supply chain.

This is called pooling, and it’s better for the planet, and for businesses too. 

We can all do more. And there are reasons to engage in the process as soon as possible.Changing consumer expectations combined with the threat of ever-increasing regulation mean we need to move towards a more circular supply chain as soon as possible.  

By working together and trusting each other more, we can help to keep the supply chain moving by sharing on a previously unimaginable scale. 

But the only way to change our business models to achieve that goal is to start by changing the way we think.

Murray Gilder, CHEP Automotive Europe and North America Vice President

About CHEP

CHEP helps move more goods to more people, in more places than any other organisation on earth. Its pallets, crates and containers form the invisible backbone of the global supply chain and the world’s biggest brands trust us to help them transport their goods more efficiently, sustainably and safely. As pioneers of the sharing economy, CHEP created one of the world's most sustainable logistics businesses through the share and reuse of its platforms under a model known as ‘pooling’. CHEP has been at the heart of thousands of automotive and industrial supply chains since 1975, providing our pooling solutions to some of the top OEM and Tier 1 brands all over the world, so we understand what makes them tick. CHEP is part of the Brambles Group and operates in more than 55 countries with its largest operations in North America and Western Europe. For more information on CHEP, visit www.chep.com. For information on the Brambles Group, visit www.brambles.com. 

[1]https://www.theguardian.com/business/2020/apr/06/car-plant-shutdowns-may-cost-auto-industry-more-than-100bn-covid-19)