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Top Seven Challenges Likely to Affect Automotive Sector in 2020

The Automotive Industry, an intrinsic fixture and a burgeoning behemoth in the worldwide economy have been plagued with several challenges in recent times. Though automakers have been at their wits’ ends trying their best to adapt to the changing industrial landscape, some brainstorming and rationalizing the situation, encouraged them to ascertain the threatening challenges now being faced by the automotive industry and are likely to take the industry by storm. Though it would be safe to say that there is no immediate concern about any kind of economic meltdown in the forthcoming years, cost-efficiency is one of the impending threats likely to loom large before the automotive industry. Let us look at the top seven challenges likely to loom before the automotive industry in 2020:

In this context, the pointers below encompass a brief synopsis of the current scenario of the automotive manufacturing domain and the numerous challenges in the automotive industry that automakers need to understand and evaluate.

1)    Regulations

Automotive makers are familiar with the fact that China has the largest automotive market in the world, thereby posing that one intimidating question? China market is poised for a major facelift in the next decade facing issues such as:

  • Extreme market bifurcation
  • Stringent governmental regulations on pollution

The emergence of Self Driving cars

The paramount transition to self-driving comes on the heels of the increasing rate of road accidents leading to the growing demand for advanced driver assistance systems. This regular occurrence has led the analysts to opine firmly that technological advancements are the way forward for combating challenges existing in the automotive industry shortly.

3.     Building Brand Loyalty

There is huge competition existing within the automotive industry. Japan and European markets are immediate threats to automotive sales expansion. Japan is plagued by an exceedingly aging society, and Europe is combating serious environmental concerns. Europe has implemented some of the most restrictive regulations ever seen. Automotive manufacturers are channeling their focus on building programs that revolve around brand loyalty. 

4.     Implementing the Correct Powertrain Technology

Regulations and powertrain technology development must find the right balance between themselves. Europe has transformed the entire landscape of the automotive industry with its adoption of unparalleled emission regulations. The premise for auto manufacturers is complex. Choosing the appropriate powertrain technology choices is expected to predefine the impending future of the automotive industry. Manufacturers need to identify what combinations of technology is best for their business. 

5.     Global Consolidation

Global automotive manufacturers are now looking at global consolidation. One of the main factors rendering hindrance to automotive manufacturers is the unrelated platforms leading them to switch from one manufacturer to the next. Silicone is replacing steel in bulk, and technology advancements are superseding basic automotive structures. Studies reveal that in 2005 an estimated 277 individual platforms were emerging from the leading producers. It is believed by 2020, the approximate number will drop to 195. In theory, the concept is overshadowed by major drawbacks such as increased upfront costs and individual component failure procedures. In hindsight, though the automotive manufacturers are not naïve to overlook the scope of the project.

6.     The Automotive Supply Chain

The biggest challenge for automotive manufacturers is the existence of supply chain which are in reality the most complex process in the world. Disruptive trends tend to affect the supply chain, from build to delivery. Cost is invariably a major parameter for any business. Automotive manufacturers need to keep costs from spiraling out of control as they might end up incurring more loss than profit. Global expansion continues to cause pressure on the overall working of the chain. The automotive supply chain is quite dated and automotive manufacturers need to adapt to the 21st century by minimizing failures. 

7.     Reconnecting With Shoppers

The burgeoning online industry has not exempted global automotive sales from falling prey to the ills of digital sales. No other trend has as much of a negative impact on the delivery of cars, trucks, and parts to end-users than digital sales. Americans have a major love relationship with cars, though they detest the car dealership. It has been an uphill task for all car manufacturers to change this dynamic. Amazon has played a crucial role in altering the landscape of car sales and parts. Consumers have the freehand to choose their vehicle, alongside its financing wherein vehicles are brought to the doorstep, possibly indicating a cold end to the dealership? It is up to all carmakers to try and establish connections with the buyers online. They need to formulate an all-pervasive approach that will merge with present technologies rather than pose impending challenges. Online marketing is here to stay and has no business going away soon. Henceforth, Car dealerships should now be taken into serious consideration.

Footnote:

After a dismal showing in 2019, automotive makers have trained their eyes on 2020. Despite the trying times, all hope is not lost in translation. Automobile Manufacturers are expecting a major turnaround of things in 2020-21. It remains to be seen how manufacturers will deal with the changes occurring around them, and if these changes will lead to an exponential reorganizing of the market.

 

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