THOUGHTS

Top Challenges Facing American Automobile Companies in 2019

Jun 25, 2019

The past couple of years have been increasingly fraught for American automobile companies due to wrenching changes in the global economies, government regulations, technological innovations, and relative price and market dynamics. Planners in the automotive industry must now prepare and plan for some of the most fundamental transformations that American automobile companies have ever witnessed. In order to overcome some of the critical automotive industry challenges this year, strategic planners in American automobile companies must transcend from traditional issues and address much bigger and basic concerns including:

  • Given the rise of autonomous vehicles, will the prevalence of car ownership eventually decline?
  • With the government giving more emphasis to fuel efficiency, will there be a change in the technology mix of new powertrains?
  • What are the key strategies to thrive and grow amidst a slowdown in the pace of growth in unit sales in mature markets and the shifting consumer demands?

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Key challenges facing American automobile companies

New ideas about car ownership

Monthly subscriptions are an increasingly familiar business model that is a breath of fresh air from traditional buying and leasing models for consumers. As a greater number of customers are becoming more comfortable with paying for services that they want and then canceling when they are done, eventually this may extend to the automobile sector. By paying a monthly fee for car gives consumers access to vehicles, insurance, maintenance, and roadside assistance. Furthermore, consumers could become less inclined to the concept of owning a car, due to difficulties associated with ownership such as parking costs, maintenance costs, and environmental impact.

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Rising market competition

The entire automotive industry in the US is moving closer to peak demand and increasingly tough competition. Several mature markets such as Japan and Europe are already facing the heat from flattening sales, and automotive industry challenges such as slow demand conditions are expected to affect the North American markets over the next couple of years. The dwindling growth opportunities mean that there will be a rise in competition for a bigger chunk of the market share.

New regulations and technological demands

American automobile companies are at the risk of facing pressure from stringent regulations that focus on reducing harmful gases and emissions from vehicles and thereby improving fuel economy. This is one of the key automotive industry challenges faced by players in the sector. Automakers are now required to make the right choices relating to technology that is in line with the changing regulatory and societal preferences.

Workforce challenge

American automobile companies are facing immense pressure due to the shortage of capable and prepared workers to meet the industry’s manufacturing expertise. Over the next decade, many jobs in the US automotive industry is expected to go unfilled due to the skill gap. American automobile companies will be threatened by the lack of skilled labor especially because nearly 20% of the current workforce in the country’s automotive sector would retire by 2030. The next task for automakers is to identify how to shape the future workforce.

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