The automotive industry is changing fast. In order to keep up with the constantly changing trends, companies have to develop new technologies to keep up. But what trends are threatening the way cars are sold these days? Check out this list to get a full sense of where the industry is going:
The technology boom has changed the way vehicles are made for the last two decades, and this year is no different. Connectivity services and upgrades have allowed business models to change in a way that would increase profit margins by 30% (that is about 1.5 trillion dollars). Using data and information sharing has increased the efficiency of the market in such a way that the industry has been able to take advantage of and hope to do so in the next 12 years.
Decreased Unit Sale Growth
Despite this, the rate at which vehicle sales are growing is expected to decrease. It is still on an upward trajectory but is expect to go down from its current 3.6% to 2% within the next 12 years. An increase in mobility services is the cause of this expected decrease in growth as ride-sharing starts to take off.
The Rise of Fit-for-Purpose Marketing
As a result of this rise in shared vehicle use, the market is attempting to adapt accordingly, as it is starting to do. Traditional vehicles must be equipped with mobility solutions, specifically those that are set up for urban environments with a lot of traffic. These places especially have lower private car use due to the inconvenience. As a result, the industry continues to try and find ways to make vehicles that can serve multiple uses whether for work, commute, or personal vacation/family time. Private car ownership is on the decline, with millennials as the leading group of individuals in the decrease of driver’s license ownership (from 76% to 71% between 2000 and 2013). It is estimated that by 2013, a third of new cars sold could be a shared vehicle.
The Rise of City-Type Vehicle Sales
With the rise of urbanization, city type vehicles are likely to take over as the most important demographic of vehicle to market to. This difference in rural vs. urban demographic can create a large divergence over time. In large cities, private ownership is likely to go down due to traffic congestion and parking inconvenience. In rural areas, though, demand is about the same as it was a couple of years ago, given it is the preferred method of transport. Therefore, even if marketing by country and region used to make sense, it makes sense to replace it with an urban v. rural demographic over time.
Fully Autonomous Vehicles
The biggest challenge to self-driving vehicles is the regulations that have not been in place. Once countries figure out how to regulate these new vehicles, it becomes much easier to understand the trend of the industry. Currently, it is expected that by 2030, 15% of cars sold in the market will have fully autonomous capability. Much of this has to do with advanced driver0assistance systems (ADAS) becoming more popular. As a prototype, they are allowing regulators to envision what sort of issues may arise with fully autonomous cars.
The use of hybrid and electric cars is increasing steadily, with many cities adopting charging stations and tax incentives for the use of electric vehicles. However, this development still depends on local and regional politics and the advances which cities make. Consumer demand and regulatory environments will determine how this trend develops further. But battery technology continues to improve; therefore it becomes more likely that developments can continue.
Cooperating with Competitors
With the integration of technology into the market, new competitors are forced to develop multiple facets of their business model in order to properly integrate into the industry. Even existing companies must start partnerships with companies outside of the industry, such as Apple and Google, in order to provide the services needed to have an edge. As shared mobility and connectivity becomes more important, the industry becomes more complex.
Barriers for New Competitors
New players will begin to enter the market, as it changes. The technological giants are just the beginning of a changing automotive atmosphere. Start-ups and fast cash tech companies are on the rise, and will begin to target segments of the market. However, in order to succeed, they will have to partner with already existing members in the market. Because of the complexity of the industry, it will be difficult for newer members to get a leg up without these sorts of relationships.
In order to survive this change in industry, automotive companies will have to be ready for the uncertainty of the market. With new changes, it’s important to be at the forefront of the change, rather than react to it. This can be done by strategically entering into cross-industry partnerships. The important thing for companies right now is to put money into researching and developing their companies so that they may drive the next disruptive trends.