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Major Trends Shaping the Automotive Industry

Stakeholders across the industry are being impacted by fast changing events across the automotive ecosystem — be it in the operating environment, customer preferences, competition or supply chain. Here are the Latest and Major Trends in Automotive Industry –

1.     Governments push for safer, cleaner transportation

Governments are focusing on three areas to secure individual mobility: preservation of resources, environmental compatibility and safety. In response, OEMs will begin to build cleaner, safer and more diverse range of cars, including a variety of zero-emission vehicles. From the customer’s perspective, penalties and incentives will influence their decision to own a vehicle and how it will be used. Penalties may include congestion and road user charging, and incentives, such as rebates, will be used to reduce the cost of ownership for zero-emission vehicles.

2.     Social media redefines automotive marketing

The traditional means of marketing a vehicle with a 30-second spot displaying a gleaming car on a mountain road has shifted dramatically. In recent years, consumers have had a great deal of information available when they decided to buy a vehicle. The social media phenomenon has brought access to uncensored feedback including other consumers’ opinions and perceptions. Buyers’ decisions are being influenced by other consumers, influential websites/blogs and news articles — sources that automotive companies cannot control or restrict. At the same time, the new social media platforms make it possible for OEMs to create much closer bonds with customers. Automotive companies, especially OEMs, are gradually recognizing this paradigm shift and using this to their advantage in marketing their products.

3.     Collaboration among industry stakeholders

Technology innovations are triggering business changes. OEMs and Tier 1 suppliers are looking to collaborate more than before, not only within the industry, but also with technology companies and telecoms. In particular, they will likely work together to draft standards for emerging technologies, such as common protocols for in-vehicle connectivity and a common battery charging infrastructure for electric cars. Additionally, OEMs are more willing to share platforms with competitors and focusing on flexible production in order to decrease R&D cost, reduce risk and decrease time to market.

4.     New players take the lead in the mobility market

New players will enter the market because of advances in technology and unmet consumer needs. Non-automotive companies are providing services, such as car-sharing, mobility integration, usage-based “black-box” insurance that sets premiums based on real-time monitoring of driving performance, electric vehicle integration and advanced car entertainment systems. The evolution of these new business models brings new entrants into the traditional automotive value chain, adding additional areas of risk and opportunity for OEMs in redefining their business focus.

5.     Recession and OEMs press Tier 2 and 3 suppliers toward new strategies

The dramatic tightening of belts at the OEMs and Tier 1 suppliers exposed the vulnerability of Tier 2 and 3 suppliers, in particular their relatively weak financial health and the absence of product, market and customer diversity. However, rather than simply try to cope with increasing demands to do more with less, Tier 2 and 3 suppliers will need to become increasingly strategic. The winners are likely to jettison non-core businesses for greater profitability and diversify their risks by creating relationships with a range of OEMs, and developing products that can serve customers, even outside the automotive ecosystem.

Source Reference – EY Publication

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