Servitization in the automotive industry: How car manufacturers become mobility service providers

• Published date: 01 March 2020
• Author: Felix Genzlinger,Oscar F. Bustinza,Leid Zejnilovic
• Date: 01 March 2020
• DOI: http://doi.org/10.1002/jsc.2322

RESEARCH ARTICLE

Servitization in the automotive industry: How car

manufacturers become mobility service providers

Felix Genzlinger

1

| Leid Zejnilovic

1

| Oscar F. Bustinza

2

1

Nova School of Business and Economics,

Universidade NOVA de Lisboa, Carcavelos,

Portugal

2

Management Department, University of

Granada, Granada, Spain

Correspondence

Leid Zejnilovic, Nova School of Business and

Economics, Carcavelos Campus, Rua da

Holanda, no. 1, 2775-405 Carcavelos,

Portugal.

Email: leid.zejnilovic@novasbe.pt

Funding information

FEDER/Ministerio de Ciencia, Innovación y

Universidades—Agencia Estatal de

Investigación, Grant/Award Number:

PGC2018-101022-A-100; Fundaç~

ao para a

Ciência e Tecnologia, Grant/Award Number:

UID/ECO/00124/2013

Abstract

The automotive industry, as other manufacturing industries, has evolved from com-

peting on discrete transactions to relational agreements with customers. While previ-

ous literature calls for further analysis of the observed heterogeneity found across

servitized manufacturing industries, this article contextualizes the analysis in the

automotive industry. Servitization follows a sequence of stages, from offering basic

and intermediate services, to new business models based on the provision of

advanced services to customers. As the advanced services are related to core compe-

tencies of the car manufacturers, complex collaborative arrangements are the primary

market strategy choice. This article demonstrates the challenges and opportunities

related to such choices, over a set of internal and external categories and along the

servitization journey.

1|INTRODUCTION

The shift of manufacturing industries downstream the value chain, the

servitization, started by the end of the 1990s as the manufacturers

realized that services are more lucrative than products (Wise &

Baumgartner, 2000). The transition toward services has changed tra-

ditional manufacturers' strategy that was traditionally based on verti-

cal integration, superior products, and economies of scale to establish

a market-dominant position. The traditional manufacturing strategy

provided a sustainable competitive advantage and generated scale

barriers that deterred competitors. The new strategy for manufac-

turers, service competition, is based on different competitive dynam-

ics (Cusumano, Kahl, & Suarez, 2015). It rests upon the evolving

nature of the relationship between manufacturer and buyer, which is

increasingly notable over the last decades (Kamp, 2019). In the past,

the sale also meant the end of the conversation between the two.

Today, not the exchange of tangible goods, but intangible services like

specialized skills, knowledge, and processes are central to customers'

value creation (Coreynen, Matthyssens, & Van Bockhaven, 2017). This

is a strategic change in how firms create value, requiring them to con-

tinuously learn from and with consumers, and remain adaptive to their

fast-changing needs to provide not only products but valuable

solutions.

New technologies enabled progressive digitalization throughout

all industries, facilitating new services and innovative business models

(Gallouj, Weber, Stare, & Rubalcaba, 2015). This transformation,

named servitization, requires developing technology-enabled business

models that facilitate the provision of customer knowledge-based ser-

vices during the entire life-cycle of manufacturing products (Bustinza

et al., 2018). Therefore, it imposed the need for manufacturers to re-

think their competitive advantages and differentiation strategies

(Lafuente, Vaillant, & Vendrell-Herrero, 2017; Vendrell-Herrero et al.,

2018). This is a highly relevant exercise for different manufacturing

industries as servitization strategy has proved to have mixed results

according to the industry where these technology-based strategies

have been implemented. For instance, Bustinza, Lafuente, Rabetino,

Vaillant, and Vendrell-Herrero (2019) found that successful

servitization strategies have different outcomes according to the col-

laborative method for developing service innovation selected, and the

industry analyzed. In order to fill the research gap in the analysis of

the industry heterogeneities founded in the servitization literature,

our research aims to understand better the different stages of the

servitization journey followed by a leading automotive manufacturer

in developing servitization business models. Our analysis contributes

JEL Classification codes: L22, O33.

DOI: 10.1002/jsc.2322

Strategic Change. 2020;29:215–226. wileyonlinelibrary.com/journal/jsc © 2020 John Wiley & Sons, Ltd. 215