THOUGHTS

On the Road to Success: What’s Driving Change in the Global Automotive Sector?

Nov 7, 2019

Disruptions in the automotive industry are fast-changing and the sector is now largely dominated by changing customer expectations, accelerated adoption of modern technologies, and shifts in competitive power. The advancements in the automotive industry have not only brought about convenience to customers but the sector now majorly fuels growth in both developing and developed economies by offering better job opportunities. However, amidst the rapid changes in the sector, players in the automotive industry will have to make tough decisions to stay ahead of the curve.

automotive industry

In this blog, we offer perspectives on some key questions that are a top priority, especially for the C-suite.

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How is the automotive industry evolving?

Over the past couple of years, the automotive industry has recovered from the economic crisis. By the end of the next year, our automotive industry experts expect the global automotive sector’s profits to increase exponentially. Although that is good news, the benefits will not be distributed equally across all geographies or segments. Instead, some regions and segments will perform better than others. Interestingly, the growth of the automotive sector in BRIC nations has outperformed that of regions including Europe, North America, and Japan over the past decade. Not only did emerging markets including BRIC and RoW account for a good majority of the global automotive profits last year, but these regions are poised to outpace growth in established markets over the next decade as well.

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What are some of the key challenges that can be expected in the future of the automotive industry?

Experts at Infiniti predict three challenges to shape the near and medium-term future of automotive companies. These challenges will be more crucial for established markets when compared to emerging ones.

Complexity cost pressure

Due to the increase in regulations in environmental and safety standards, not only will the costs increase but will also result in rising complexity. This is especially true in the case of non-domestic markets. OEMs’ will have to identify ways to address this issue while extracting economic value.

Digital demands

Research shows that currently, digital channels form the number one source for customers to source primary information before buying a car. This may soon result in online sales channels to purchase a vehicle, posing threat to the existing dealership model.  

Changing industry landscape

With the changing landscape in the automotive industry, OEMs must ensure that their suppliers’ production footprints especially in emerging markets are in line with their future market demands and their own production plans.

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