Automotive & Assembly Practice Roadwork ahead! Commercial vehicles face new go-to-market challenges As shifting customer preferences, innovative business models, and new entrants transform commercial vehicle sales, OEMs must change with the times. This article is a collaborative effort by Niels Dau, Thomas Furcher, Anna Herlt, Philipp Maximilian Lühr, and Matthias Schyma, representing views from McKinsey’s Automotive & Assembly Practice. December 2023 Innovative go-to-market strategies are beginning to transform the commercial vehicle (CV) industry. One early example involves light commercial vehicle (LCV) players moving toward direct-sales models, rather than relying on dealers for their go-tomarket approach, as they have traditionally done. Many more changes are on the horizon across CV segments, driven by five core trends (Exhibit 1): — the growth of omnichannel sales — new value pools and business models — increasing cost pressures — stringent regulations and the shift to zeroemissions vehicles (ZEVs) — the emergence of new entrants These trends raise two questions: Why do OEMs in the CV segment need to change? And why does this change need to happen now? After exploring these issues, this article describes emerging go-tomarket models and guiding principles that can help CV OEMs select the best approach. Why change? Of all the factors promoting change within commercial vehicle go-to-market, three stand out. Omnichannel sales are becoming standard As in the B2C sphere, B2B customers increasingly demand an omnichannel experience that seamlessly integrates offline and online channels. McKinsey’s Global B2B Pulse Survey shows that B2B customers use an evenly divided mix of traditional, digital self-service, and remote human interaction channels,1 with 35 percent of respondents rating e-commerce as most effective. B2B customers also are increasingly willing to engage in large e-commerce transactions, with roughly 70 percent of respondents prepared to spend up to $500,000 on a single purchase. Based on experience in other industries, B2B customers also demand greater individualization during their interactions with companies. More than half of the respondent companies in McKinsey’s Global B2B Pulse Survey stated that they increased their market share by investing in individualization via sophisticated marketing tactics, technology stacks, analytics, and prescriptive insights.2 Exhibit 1 Five core trends are prompting changes to go-to-market models for commercial vehicles. Greater emphasis on omnichannel sales New value pools and business models Increasing cost pressure Stringent regulation and expected shift to ZEV fleet New entrants 2/3 66% <5 15–25% >10 of B2B customers prefer digital or remote channels to interact with suppliers of global medium- and heavy-duty truck profits in 2030 expected to come from recurring life cycle services percentage-pointpotential improvement in return on sales via optimized distribution costs and revenue management expected global zeroemissions vehicle (ZEV) share in 2030 for medium- and heavyduty truck segments new entrants joined the commercial-vehicle industry across segments over the past 24 months McKinsey & Company 1 McKinsey Global B2B Pulse Survey, December 2022, n = 3,862; Australia, Brazil, Chile, China, France, Germany, India, Italy, Japan, South Korea, Spain, United Kingdom, and United States (2022 only). 2 Ibid. Roadwork ahead! Commercial vehicles face new go-to-market challenges 2 Product individualization will become increasingly important, as 85 percent of customers expect vehicle customization options. New value pools and new business models are about to scale up In the future, trucks will no longer be sold solely as base vehicles. Instead, extending offerings to include adjacent and new value pools, such as fleet management, uptime management, and charging infrastructure, will become imperative for OEMs. The new offerings will be more complex, integrated, and expensive. The need for individualization extends to products and services as well. Companies must know their customers and engage with them along the entire life cycle. With 85 percent of customers expecting to see the same or a higher degree of vehicle customization in the future, the need for product individualization will become even more important (Exhibit 2). Web <2023> <Commercial vehicles> Exhibit 2 Exhibit <2> of <4> Customers increasingly expect vehicle customization