European Automotive Industry at a Turning Point Towards a 'New Era'
McKinsey & Company has released a whitepaper analyzing the structural challenges and future strategic directions of the European automotive industry. Amidst eroding competitive advantages due to electrification, software integration, and new players, it advocates for fundamental transformation, offering insights for Japanese companies as well.
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- 📰 Published: May 11, 2026 at 18:30
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May 11, 2026
McKinsey & Company
McKinsey & Company (Japan Representative: Naoyuki Iwaya) has announced its latest whitepaper, "A Rejuvenation Plan for the European Automotive Industry Facing Headwinds," which analyzes the structural challenges facing the European automotive industry and its future strategic directions.
The European automotive industry is currently at a historical turning point. Accelerating electrification, the shift to software-driven development, and the emergence of new players are rapidly eroding traditional competitive advantages. In particular, as structural delays in cost competitiveness and development speed become apparent, the ability to adapt to this transformation will largely determine future competitiveness.
■ Hints for Japanese Companies Expanding Globally
These structural changes are not limited to Europe but also hold important implications for Japanese automotive-related companies operating globally. Issues such as optimizing investment in electrification, strengthening software development capabilities, redesigning supply chains, and accelerating decision-making are common challenges that will influence the competitive advantage of Japanese companies as well. This whitepaper presents concrete actions that the European automotive industry should take, considering both these crises and opportunities.
This whitepaper was prepared by Takehito Sumikawa, Senior Partner and Asia Leader of the McKinsey Center for Future Mobility, Takuya Yamashina, Partner, and Seigo Koizumi, Associate Partner.
▼Whitepaper
https://www.mckinsey.com/jp/~/media/mckinsey/locations/asia/japan/our%20insights/jp_a-new-era-an-action-plan-for-the-european-automotive-industry%20(1).pdf
The European automotive industry is currently facing a complex wave of transformations, including electrification, software integration, and geopolitical shifts. As the competitive advantages that once led the world are now wavering, a fundamental transformation that goes beyond traditional extensions is required. This whitepaper captures the essence of these environmental changes and presents a concrete action plan for restoring competitiveness.
■ Ongoing Structural Changes and Redefinition of the Competitive Environment
In the global market, in addition to the rise of new players in China and the United States, competition in the EV and software domains is rapidly intensifying.
As the competitive structure shifts from being hardware-centric to one centered on software, data, and ecosystems, European companies face significant challenges in terms of profitability, speed, and innovation.
■ Required Strategic Transformation
This whitepaper points out that transformation in the following key areas is indispensable for the European automotive industry to establish sustainable competitiveness:
・Accelerating the transition to electrification and strengthening cost competitiveness
・Drastically strengthening software and digital capabilities
・Rebuilding global supply chains and improving resilience
・Leveraging strategic partnerships and ecosystems
・Accelerating operating models and decision-making
■ From "Incremental Improvement" to "Structural Reform"
Traditional incremental improvements are insufficient to respond to the rapidly evolving competitive environment. Moving forward, comprehensive transformation across business models, organizations, and technological foundations is required.
This whitepaper not only presents a concrete path for the European automotive industry to regain its competitive edge but also offers crucial insights for Japanese companies to reconsider their future strategies.
McKinsey & Company
McKinsey & Company is a global management consulting firm that supports companies and public institutions in solving their critical challenges. With cross-industry expertise and advanced analytical capabilities, we contribute to our clients' sustainable growth and transformation.
McKinsey & Company
McKinsey & Company (Japan Representative: Naoyuki Iwaya) has announced its latest whitepaper, "A Rejuvenation Plan for the European Automotive Industry Facing Headwinds," which analyzes the structural challenges facing the European automotive industry and its future strategic directions.
The European automotive industry is currently at a historical turning point. Accelerating electrification, the shift to software-driven development, and the emergence of new players are rapidly eroding traditional competitive advantages. In particular, as structural delays in cost competitiveness and development speed become apparent, the ability to adapt to this transformation will largely determine future competitiveness.
■ Hints for Japanese Companies Expanding Globally
These structural changes are not limited to Europe but also hold important implications for Japanese automotive-related companies operating globally. Issues such as optimizing investment in electrification, strengthening software development capabilities, redesigning supply chains, and accelerating decision-making are common challenges that will influence the competitive advantage of Japanese companies as well. This whitepaper presents concrete actions that the European automotive industry should take, considering both these crises and opportunities.
This whitepaper was prepared by Takehito Sumikawa, Senior Partner and Asia Leader of the McKinsey Center for Future Mobility, Takuya Yamashina, Partner, and Seigo Koizumi, Associate Partner.
▼Whitepaper
https://www.mckinsey.com/jp/~/media/mckinsey/locations/asia/japan/our%20insights/jp_a-new-era-an-action-plan-for-the-european-automotive-industry%20(1).pdf
The European automotive industry is currently facing a complex wave of transformations, including electrification, software integration, and geopolitical shifts. As the competitive advantages that once led the world are now wavering, a fundamental transformation that goes beyond traditional extensions is required. This whitepaper captures the essence of these environmental changes and presents a concrete action plan for restoring competitiveness.
■ Ongoing Structural Changes and Redefinition of the Competitive Environment
In the global market, in addition to the rise of new players in China and the United States, competition in the EV and software domains is rapidly intensifying.
As the competitive structure shifts from being hardware-centric to one centered on software, data, and ecosystems, European companies face significant challenges in terms of profitability, speed, and innovation.
■ Required Strategic Transformation
This whitepaper points out that transformation in the following key areas is indispensable for the European automotive industry to establish sustainable competitiveness:
・Accelerating the transition to electrification and strengthening cost competitiveness
・Drastically strengthening software and digital capabilities
・Rebuilding global supply chains and improving resilience
・Leveraging strategic partnerships and ecosystems
・Accelerating operating models and decision-making
■ From "Incremental Improvement" to "Structural Reform"
Traditional incremental improvements are insufficient to respond to the rapidly evolving competitive environment. Moving forward, comprehensive transformation across business models, organizations, and technological foundations is required.
This whitepaper not only presents a concrete path for the European automotive industry to regain its competitive edge but also offers crucial insights for Japanese companies to reconsider their future strategies.
McKinsey & Company
McKinsey & Company is a global management consulting firm that supports companies and public institutions in solving their critical challenges. With cross-industry expertise and advanced analytical capabilities, we contribute to our clients' sustainable growth and transformation.