The increasing diffusion of digital technologies throughout industries and aspects of life is transforming businesses even in areas that always have been dependent on physical materiality. In this paper, by conducting an exploratory Delphi study in collaboration with 19 industry experts, we aim to shed light on the specific managerial challenges associated with the impact of digital transformation in the industrial-age, physical product–manufacturing automotive industry. Our results point to three key themes: (1) the radicalization of IT-enabled business transformation going beyond intraorganizational challenges, (2) the transformation of industrial business through digital innovation, and (3) the emergence of physical–digital paradoxes. With our study, we extend the knowledge in IT-enabled business transformation literature by relating it to the emergent topic of digital innovation. We find organizational ambidexterity to be of specific importance when dealing with emergent challenges that arise from the combination of the physical and digital worlds.