A study released by the IBM Institute for Business Value (IBV) reveals business model flexibility to be vital to success in today’s automotive industry.  Using profitability as the gauge for success, the report titled, "Changing Lanes for Success:  Flexible Automotive Business Models in Times of Accelerated Change" - researched 100 of the top global automotive manufacturers and suppliers and found that significantly more were financially successful in 2005 than in 2001.  Those companies that have flexibility at the core of their business model continue to grow profitability and market share. 

Globally, the automotive industry is changing more rapidly than ever before.  Lower than expected product sales, high material costs and increased competition are just some of the roadblocks that have led several large companies into bankruptcy, while pushing others close to it.  However, other automotive companies are demonstrating flexibility as they enhance their products and services to take advantage of changing markets and new technologies, and many are increasing market share and profits along the way.

"Like innovation, a flexible business model is achievable but not easily done.  The kind of company-wide flexibility we are talking about can't be achieved by just flipping on the turn signal," says K.S. Raghunandan, Vice President, Industrial Sector - IBM, Asean/SA. "Cost cutting alone will not bring success. Companies need to have flexibility at the core of their business model to enable them to take advantage of situations that in the past were disruptive."

Surprisingly, the study found that many more automotive companies are doing better in 2005 than they were in 2001. According to IBV’s analysis, only seven companies were making 5 percent or greater profit in 2001, but by 2005 that number had increased to 30 companies. And, the number of underperforming companies across all revenue ranges was significantly reduced during this period.

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