As the automotive industry continues to bet on electric vehicles (EVs), established car manufacturers such as General Motors (GM) and Ford are facing challenges in boosting volumes to drive down costs and hit profitability sooner. A slowdown in the growth of EV sales is making it harder for these companies to achieve their targets, while cutthroat competition from Chinese EV makers and Tesla is triggering a price war globally.

To make matters worse, a recent cyberattack on a crucial computer network used by dealerships disrupted sales, causing a major outage at CDK and forcing the retail technology provider to shut down a key software system used at more than 15,000 U.S. car dealerships in June, a major sales month in the industry. Dealers are estimated to collectively lose about $1 billion because of the outage, according to consultancy firm Anderson Economic Group.

As a result, GM is expected to report a 7.7% drop in second-quarter net income, while Ford is expected to post a 10% drop in profit, according to data from LSEG.

To mitigate the impact of these challenges, automakers can turn to parametric insurance, which uses unique real-time data and dynamic risk modeling to enable insurers to build and operate insurance at scale. With Riskwolf, automakers can turn real-time data into insurance and protect themselves against the negative consequences of cyberattacks and cooling EV demand.

Here are five steps automakers can take to develop parametric insurance for their businesses:

1. Identify the risks: Automakers need to identify the risks associated with cyberattacks and cooling EV demand. This includes understanding the potential impact on their business, such as lost sales, reputational damage, and increased costs.

2. Collect real-time data: Automakers need to collect real-time data on their operations, including sales, production, and supply chain data. This data can be used to develop parametric insurance policies that are tailored to their specific needs.

3. Develop risk models: Automakers need to develop risk models that take into account the potential impact of cyberattacks and cooling EV demand on their business. These models should be based on real-time data and should be updated regularly to reflect changing market conditions.

4. Build parametric insurance policies: Automakers need to work with insurers to build parametric insurance policies that are tailored to their specific needs. These policies should be designed to provide coverage for the risks identified in step one and should be based on the risk models developed in step three.

5. Monitor and adjust: Automakers need to monitor their operations and adjust their parametric insurance policies as needed. This includes updating risk models, collecting new data, and working with insurers to ensure that their policies provide adequate coverage.

By following these steps, automakers can protect themselves against the negative consequences of cyberattacks and cooling EV demand. With Riskwolf, automakers can turn real-time data into insurance and ensure that they are prepared for any challenges that come their way.

To learn more about how Riskwolf can help automakers develop parametric insurance policies, visit our website or contact us today.

Source: GM, Ford profit may take a hit from cooling EV demand, US dealer software outage