Before the Covid-19 crisis, the automotive industry underwent changes that one can only describe as ‘game-changing.’ Technological developments (such as connected, autonomous, and electrified vehicles), new customer habits, and new digital trends are all defying the norm of the once traditional automotive industry. Therefore, automotive businesses that wish to stay in the game must learn all of its new rules and embrace the rapid changes the automobile market will face in the upcoming years.
Current State and Future of the Automotive Industry:
Like all industries in the global marketplace, the automotive industry has encountered a standstill since the start of Covid19. Sales had plunged by 71% in China, by 47% in the United States, and worst in Europe, with a drop of 81% in sales. As a result, many auto-retail stores were closed for months in 2020 and there were more job cuts and layoffs in countries where the market was too slow to recover. The global chip shortage, caused mainly by the Covid-19 pandemic, is expected to cost the global automotive industry $210 billion in revenue in 2021. On the one hand, these past two years have caused significant damage to the industry. However, on the other hand, they had also signified the start of a new modern era for the automotive industry.
Trends that were just introduced before the pandemic had long since become a prominent factor in the world of automotive. Here are some significant trends that you should familiarize yourself with:
- Connected cars– every car that is connected to the Internet is called a connected car. A connected car can easily transmit data from other nearby vehicles, road sensors, infrastructure, and more. This new and advanced technology creates environmental, safety, and connectivity benefits, allowing for a better driving experience. It is no wonder that the connected cars market is predicted to be worth over $215 billion in just about five years from now. 5G-connected vehicles are about to become the new norm, as the demands for safer, more environmentally friendly vehicles are growing every year.
- Digitalization- The Covid-19 pandemic has proved more than anything else the importance of having an online presence in a business. While many people preferred to buy their cars in person in the past, the extended quarantine had created a new habit of buying vehicles online. Automotive players must cater to this new purchasing method and build an advanced digital strategy that includes: an easy-to-use mobile app, online-sales offerings, an organized online shop, contactless test drives, and car home deliveries- all provided for in a click of a button.
- Shared mobility– The long traffic jams, the decrease of available parking spots, and the ongoing expenses of owning a car are only some of the reasons why people (especially the younger generation) are less and less interested in buying private vehicles. In dense, urban environments that proactively discourage private-car use, ride-sharing is on the rise. It is estimated that by 2025, 20% of vehicles in urban centers will be dedicated to shared use. While it seems like ride-hailing and ride-sharing are unfortunate trends for car manufacturers, it might create an advantage for OEMs. They can take this trend into account and create a suitable design for car-sharing use. Instead of falling behind, OEMs can capitalize on this opportunity and reposition their brand as the automotive industry moves to its new era.
- Electric vehicles– Much like connected cars, electric vehicles with their advanced features can create a drastic shift in the automotive industry. Charging spots availability, cost-effectiveness, consumer acceptance, and growing emission regulations are some of the conditions that must be met so that electric vehicles can dominate the market. With that in mind, the share of electrified vehicles could range from 10% to 50% by 2030, thus increasing the competition against conventional vehicles.
- Autonomous vehicles- There are some hurdles that autonomous vehicles must overcome before becoming the ‘car of the future’. Issues like pricing, consumer understanding, security issues, and regulations will be addressed and solved in the future so that AVs will eventually take over the automotive industry. Self-driving cars have an immense potential of becoming a good source of transportation. Of course, its most significant benefit is avoiding car accidents created by human error. 90% of car accidents are caused by human error, meaning that self-driving technology is equal to life-saving technology.
Strategic Approaches to Keep in Mind:
After comprehending the leading future trends of the automobile industry, there is still one question remaining: how should I, as an automotive player, approach this fast-changing industry? To answer that question, we have gathered some valuable tips to help you gain the upper hand in this new, emerging era of automotive.
–Innovation and flexibility: keeping an innovative and flexible mindset will help you react fast to changing customer demands and market opportunities. Now that new technology is predicted to change the automotive industry as we know it, innovation becomes an integral part of every step of the way.
–Connecting with your customers: As mentioned before, building an approachable online presence has become crucial ever since the pandemic hit. However, there is no need to stop there- the more effort you put into your digital strategy, the more connected your customers would feel to your brand.
–Convenience as the leading factor: People would always look for a source of transportation that is most convenient for them. You must always think: ‘how can I make my mobility service more convenient and accessible?’ With that approach in mind, you can attract more and more customers than ever before.
–Strategic partnership: Just as much as strategic partnerships have worked in the smartphone industry, they could work just as well in the automotive industry. With the fast-paced changes that the industry constantly undergoes, forming a business alliance is crucial. Strategic partnerships are an easy way of gaining an advantage and getting ahead of the competition.
After experiencing a rough patch during the Covid-19 pandemic, the automotive industry is approaching its new and emerging era. Technological advancement and new customer needs are only some of the things that are bound to alter the traditional automotive industry for good.
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We at Xinergy Global are always on the lookout for future trends to make sure that our service is always up to date and relevant for our customer’s use. Xinergy Global is here to ensure a smart and strategic approach toward the future of automobility so that your business will continue to thrive long-term. Please feel free to contact us today for a free 30-minute consultation.