Shaping the Automotive Industry: 5 Trends to Look Out For

Prior to the pandemic that unexpectedly swept through the world, the automotive industry was already impacted by other factors and the industry was already on the brink of transformation. But the pandemic has pushed the timeline forward and we will be seeing certain trends being widely adopted sooner than we thought. We also see a shift in consumer behaviour more so than before, which is quickly driving towards the digital front.

1. Increase in Car Ownership

A big factor that was pushing us to take public transportation and share rides was climate change. Governments were encouraging its citizens to take more public transportation to reduce traffic and pollution. Nowadays you will find a significant decrease in the use of public transport and ride sharing. And you are seeing a shift towards private cars. In China, the trend is evident. After March, the use of public transport reduced by more than half. And the use of personal cars nearly doubled. Moreover, the people that Google surveyed in China who do not have a car said that most of them have the intention of owning a car due to health and safety reasons. According to Google’s US survey, 93% of the people said that they are using personal cars rather than public transport.

2. Buy a Car Online

Usually you might go to a car dealership to purchase a car. But the vehicle buying journey will increasingly move online as car buyers will demand a contactless experience. Car dealerships will have to adapt and create virtual tours to view a car. There will be a click and collect system or a home delivery system once you purchase the car. And car dealerships will not act as a showroom any longer, but instead will act more as a fulfilment center. The evolution of the car buying journey was already being felt, but in light of the pandemic, car dealerships will be required to adapt faster to align with the change in consumer behaviour.

3. Auto Shows and Launches Become Digital Events

This year launches have been delayed or auto shows have been cancelled. But launches can also happen online. Take Hyundai for example. They unveiled their 2021 Elantra in a live-stream digital event. The entire campaign with teasers and the event itself received over 800,000 views. OEMs are adapting and we will see many more digital events in the near future.

4. Supply Chain

Although factories have re-opened and manufacturing sectors are slowly growing to pre Covid-19 capacity levels, transport and logistics bottlenecks could still lead to shipment delays.

Automation has been a growing trend. But with the onset of the pandemic, OEMs feel the urgency to transition further into digitalization and automation faster to reduce the lead times. We will see a rise in robotics and AI in order to mitigate against the disruptive impact of the supply chain.

Automation will also play an important role in saving time as factories have to implement new protocols to ensure that their environments meet the safety requirements in light of the pandemic. And related to this, we have to consider whether the term “full capacity” would mean to some extent reduced capacity?

5. Growth in Aftermarket

In the time of the 2008 recession, depending on government incentives, the sales of passenger cars either increased or decreased. For example, in the USA sales decreased. But in Germany, sales increased due to government incentive for trading in your old car. Since people were not purchasing as many cars in the USA, the aftermarket sector saw a significant increase in the US market.

But today, in the unprecedent time of the pandemic, we see an overall decrease of demand and sales for purchasing a new car. People were planning to perhaps trade in their old car for a new one. But with the pandemic, many car owners are going to hold on to their old cars longer. Hence, there will be an increase in the global aftermarket to maintain the car one already owns.

Committed to Providing the Best Solutions

As VANGEST caters to the automotive industry, we are observing developing trends and adapting to the changes. The broader trends effect every level of the supply chain and we are committed to providing the best solutions to our customers.