The Automotive Industry in the World
Have you ever dreamed about owning a car?
For many, the answer is yes. We are dreaming about vehicles. Not only cars.
What is the Automotive industry?
A proper combination of Designing, manufacturing, marketing, selling and research and development activities is called the automotive industry. Trucks and buses, light vehicles like cars, and electric and autonomous vehicles are key portions highlighted here.
Leading vehicle OEMs have their factories offshore to achieve cost advantages. The high-end vehicles are generally transported using container shipping to the clients, While the majority of the vehicles are transported using RORO shipping. Main RORO lines have hub ports or transhipment locations to store these vehicles and ship with optimised passages.
A Bit from History
The history of the automotive industry can be extended to the invention of the wheel. Steamed power engines and gasoline engines are some major milestones in the early stage. The industry originated in the European continent based in countries like France and Germany.
Then in the early 20th century, the United States of America dominated the industry with mass production. Western European countries and Japan then became the major players. Especially Japan with the methods of lean management and Just In Time (JIT).
Toyota, Mercedes- Benz and Tesla ranked in the top three places respectively in the Brand Finance automotive industry ranking 2022. Volkswagen, BMW, Porsche, Honda and Audi are some other globally reputed brands in top order.
Automotive Industry Today
The Covid 19 was a hit badly in every industry all over the world. For the automotive industry, the impact was worse as there were travel restrictions. It has been reported That global vehicle production dropped by 15.4% in 2021 compared to the previous year. The impact on passenger cars was higher than the impact on commercial vehicles.
The main reason for that is that slight movements of the economy increased vehicle movements for commercial activities. The decreased amounts are 16.9% and 11.6% respectively for passenger and commercial vehicles in 2020 compared to the previous year.
If we dig deeper into the information, we can identify the drop in vehicle manufacturing also. Western Europe and Latin America which are reputed for vehicle manufacturing had faced a severe drop out of the world. They dropped by 24% and 20.3% respectively.
If we move towards vehicle sales region-wise, we can understand that vehicle sales are reduced in Latin America by 29.3%, NAFTA region countries by 28.9%, Africa by 24.7% and by 21.1% in Western Europe.
The export industry of vehicles had been idled during the peak of the Covid-19 pandemic. It was nearly stopped in areas like Eastern Europe, Latin America and the Middle East where vehicle export was over 97% before 2019.
On the contrary, the electric vehicle sales had shown a highlighting growth. the sales of electric vehicles increased by 39% in 2020 compared to 2019. Total sales of electric vehicles were 3.2 million units leading the total to 11.3 million.
When we consider individual countries, China is at the top level. The wonder is the rise of Germany for 2nd place over the United States of America in 2020. The reason behind this may be the worst situation prevailed in the USA due to Covid. Norway is at the top of electric vehicle usage as 75% of their vehicles are electric vehicles.
The current trend in the automotive industry is for electric vehicles. Tesla has shown the highest growth among the all brands in the industry in 2022 by increasing the brand value by 271% by now compared to 2020.
The way of recovery
It was obvious that during the pandemic the automotive industry collapsed. Amidst the pandemic, some Asian region countries like Korea, Japan and China were able to recover to some extent quicker than other countries in the world. China had pushed for affordable electrical vehicles as a strategy to recover.
Most of the companies had restructured their organizational direction to be more workable and active in dealing with customers and mobility issues. Flexibility was key. For example, PSA, formerly known as Peugeot/ Citroen, had worked on a small car with less maintenance at a low cost for customers who are willing to have private transportation at an affordable cost.
Further the original equipment manufacturers (OEMs) had simplified the processes like registration and most of the time and made such processes online. OEMs were focusing more on projects with less complexity.
The consumer buying behaviour also had been changed in a greater context. For example, remote working which was introduced during the pandemic and therefore transport requirements mainly for working had been reduced to a greater extent. On the contrary, many people avoided public modes, preferring private vehicles or taxis due to health concerns. In short, the automotive industry is in the recovery stage currently.
Future of the Automotive Industry
Now we shall look into how the industry will be changed in the future.
The services will be driven towards data-driven on-demand mobility services. The business model will be changed by connectivity services and shared mobility. It is expected that the industry’s revenue pool will be increased by 30%.
The sales of the global automotive industry will be grown. Thus at a lower speed. It has grown around 3.6 % in the past five years. It will be reduced to 2% by 2030 due to changes in mobility patterns for sharing and ride-hailing.
It is estimated that the sale of private vehicles will be dropped to a greater extent as there will be demand for vehicles with high utilization and low depreciation.
Currently, many organizations engage in the development of autonomous vehicles. Tesla and Cruise are in leading positions. If they were able to come out from regulatory and technological issues, the sales of brand new fully autonomous vehicles would be increased up to 15% by 2030.
In the current situation also, there is a considerable demand for electric vehicles and it is expected to grow by 50% by 2030 with the developed features for efficient battery operations and reduced emissions.
If the future of the automotive industry happened to be explained in a few sentences, it would be like “Definitely the industry will grow. The industry will be more flexible, cost-effective, eco-friendly and advanced in technology. Innovative mindset will be a key attribute in adjusting to future”.
The autonomous industry is a quite different and specified industry that prevails for a long time. It has gone through different amendments and its future is expected to be as discussed above.
Think about the future beyond the future of the automotive industry, Your imagination could bring the best solutions for the survival of the automotive industry!.