The automotive sector in Europe is going through an unprecedented change. Whether it is the digital revolution to the environmental changes and the challenges it has procured which have gone more urgent in recent years. Or the emergence of new rivals in the industry inside and outside the sector, there has never been a time as we are in these days.
That is why we thought of researching on the current trends and changes that the automotive industry is going through. A recent survey of some 400 senior executives and CEOs of brands like BMW, JLR, and Volkswagen has revealed some striking results and facts and we learnt some trends that are likely to have short term as well as long term effects on the automotive industry.
This is what we have found so far
- More than 50 per cent people believe that one of the car manufacturers will eventually go out of business in the coming years.
- More than 50 per cent believe that a new kind of vehicle will be introduced in the market that is likely to disrupt the current automotive market.
- About seventy per cent of the respondents believe that there has been an increasing amount of pressure to bring innovation to the market to stay put.
- More than seventy per cent say that they need to shift to the digital process to survive the next coming years.
- More than fifty-five per cent of people are likely to share their car rather than buying their own.
This research makes it very clear that the automotive industry is not the same anymore and is in for a large scale revolution from the inside abetted by many external forces that influence the market directly and indirectly. The key point to note here is that consumer demand is turning rapidly as much as technology. If we look at the car-sharing or ride-hailing services, they are a very good and convenient alternative to car ownership and that too at a cheap price. The only money the consumer spends is on rent and there is no need to spend on car maintenance.
Furthermore, there have also been speculations that newly emerging competitors emerging from America as well as rising Asia with China as their leader is probably going to be the reason of an all-out collapse of Europe’s automotive industry.
The environmental regulations are also speculated to go stricter than ever owing to the increasing power of the international institutions. It is also believed that more than 70 per cent of people are likely to turn against the car industry at least in its current shape and form and will want to see much better alternatives.
Despite such gloomy facts, there has still been a wide scale of optimism within the sector. For example, Italian manufacturers say that they are well equipped to meet the changing demands of the consumers. We are not sure exactly how, but this is what the majority of the respondents think. In France, they are more confident that they are equipped with the ability to compete with the newly emerging rivals as well.
How about the UK?
The UK seems to be primarily focused on the electrification race and to shift to new resources for their power trains. The trend that is very vivid in the UK is that the manufacturers are increasingly shifting their investments in developing newer technologies as compared to their rivals in Europe. This also entails that a lot of revenue goes to the research sector as well. Almost half of the firms in the UK are diverting their resources to exploring new technologies and possibilities to revolutionize the current hybrid and electric cars which is in strike contrast with the figures in Germany i.e. 34 per cent.
The UK is also innovating new approaches towards making cars more fuel-efficient and recognizing the hidden potential of autonomous parts. The automotive industry has taken prudent steps to minimize carbon emissions to meet the new standards and has committed to reducing carbon emissions by 37.5 per cent in the year 2030.
While everyone is trying their best to win the race, and are optimistic about it, we think that some fault lines can create significant challenges in the future. While it is good to note the optimism that about 7 in 10 think that this sector can withstand large scale changes, it is impertinent to not note that more than 70 per cent of their peers say that they are unrealistic about the disruptions in their markets.
Innovation needs talent, and more than seventy per cent say that talent is hard to acquire these days by current standards. May be twenty years back it was that easy, but now it is a bit unrealistic to think of a readily available talent pool.
What is the way forward?
There are some things that Europe’s automotive industry needs to be aware of. This is a time of uncertainty, as technology and consumer aspirations are changing gradually. Consumers are increasingly seen shifting to electric cars and even driver less cars. Furthermore, there is an increased risk of consumers preferring ride-hailing services than buying cars. Car leasing companies may benefit more from this trend.
Therefore, manufacturers who have put all their assets into this already developed industry should hesitate to pour in some of that in unknown waters.
The scarcity of talent is also a factor to consider so that the creative minds can have a better opportunity to integrate themselves in the sector for its betterment. The success will lie in the promotion of a culture that breeds an innovation-friendly outlook on the sector. Otherwise, one will have to look at suppliers from other regions to fill the talent pool.
The industry is changing at a fast pace and it is speed and consistency that matters in winning the race. It is expected to change at an even faster rate in the coming twenty years which means that keeping up and embracing newer trends is of the utmost importance.