In this automotive industry overview, we’ll take a look at the key drivers of sales. In the U.S., light-duty motor vehicles and other models are driving growth, while the demand for compact cars is falling in Western Europe. In Asia, replacement of old cars and the recovery in small car sales are helping to boost the industry. However, a number of factors could impact the overall sales in the near future, including tighter regulations for safety and emissions.
The automotive industry has undergone a significant transformation in recent years. It has transitioned from a competition among peers to a competition between ecosystems. OEMs have begun forming alliances and participating in new business models in order to keep up with the changes in the market. For example, the growth in autonomous driving and electric vehicles is transforming the industry. The shift is affecting both the cost-effectiveness of the industry as well as the quality of products and services.
While the automotive industry is a global industry, regional differences affect each region. For example, the United States re-negotiates NAFTA, which may limit the market access of its suppliers in Mexico. The UK might also implement higher duties on vehicles imported from the European Union. With a dispersed supply chain, automakers can service their markets and avoid supply shocks. For example, the auto industry’s growth in China has shifted to the North American market, while in India, the industry has been boosted by newcomers.
Global changes are forcing global leaders to move quickly. The US’s re-negotiation of NAFTA could restrict its access to Mexico’s auto market and Brexit may force the country to increase vehicle duty rates. In these situations, automakers should look for a way to lower costs and improve after-sales service. For example, it may be advantageous to open factories in developing nations to reduce the cost of production, save on shipping charges, and improve the delivery of auto units. Major companies in the automotive industry include Toyota, GM, Honda, Nissan, Hyundai Motors, Mazda, PSA, Chrysler, and VW.
The automotive industry is highly competitive. The auto industry is divided into regions. Each region will have its own set of challenges. Some regions are more competitive than others. For example, the US re-negotiation of NAFTA may mean a decrease in the availability of some raw materials. In such cases, companies need to find alternatives that can ensure sustainability and availability. This includes dispersed supply chains. Moreover, many OEMs focus on developing alternative energy sources.
Final Touch
There are several challenges in the automotive industry. First, the industry is highly competitive. In the global market, manufacturers will compete with each other to provide high-quality products. This will drive the demand for the automotive industry. Its economic center of gravity will continue to shift from the developed world to emerging countries. As a result, the auto industry will become more fragmented geographically and in terms of car type. Further, the competition will make it more difficult for premium OEMs to differentiate themselves.
