As the nexus of sustainability, electrification, connectivity, and automation redefines the horizons of the automotive industry, it also lays the foundation for its radical restructuring. In 2024, these innovation drivers will gain momentum, shunning a few traditional norms and paving the way to novel consumer and business practices.
Stakeholders planning to expand or preserve their market share must find a balance between mounting regulatory pressures and changing consumer perceptions. Hence, a keen eye on value drivers, market disruptions, challenges, and key trends will aid in strategic execution and swift adaptation to market shifts.
In this outlook, we establish the relevance between our 2023 automotive outlook and this year’s predictions, along with strategic, sustainable, operative recommendations for different value chain participants. We look forward to taking the conversation further with you.
Table: Summary Depicting The Present and Future Areas of Focus In The Global Automotive Industry
Automotive Industry: Key Value Drivers
The global automotive sector is headed to an unprecedented degree of change that will have far-reaching effects across the value chain and end-users. This wave of mammoth changes rides on some underlying drivers that are slowly restructuring mobility’s complexity, capabilities, and future. Here is a summary:
Electrification:
The steep inclination to emission-free vehicles is leading to the development of powertrain electrification. But there is still lingering about charging infrastructure and the availability of sustainable battery options. The ECUs still cost more than ICE, which is a major challenge in the growth of the EV market. Also, the integration of DCUs (Domain Controlled Units) in EVs will open up the market for new players. Therefore, as more and more complex functions are added to ECUs, the stakeholders will need to work hard to balance these against rising manufacturing costs.
Shared Mobility:
As the trend for e-hailing, car sharing, micromobility, and unmanned aerial vehicles is taking a rise, it is expected that OEMs’ share in shared mobility will increase beyond 4 %. Additionally, as more and more urban dwellers are inclining towards micro-mobility, mini-mobility, and shared options, automotive manufacturers need to acknowledge the impending decline in demand for privately owned vehicles.
Autonomy:
Unlike shared mobility, OEMs have no qualms about the value-creation capability of autonomous driving vehicles. It will transform the passenger car space and revolutionize the logistics industry with autonomous trucks. Automakers are already looking into new insurance products, changes in driving behaviors due to autonomous technology, etc, and this trend will rise further as the costs for high-performance computers and sensors go down and safety standards of autonomous driving technologies go up.
Connectivity and Smart Mobility:
As automakers plan to position connectivity and smart mobility as long-term profitability and growth drivers, they need to keep consumers’ concerns about connected smart cars in view. The major focus needs to be on seamless in-car experience and vehicle monitoring. A connected car should be affordable and simple to use, with the least distractions. Thus, in both B2B and B2C domains, companies will need to derive monetization prospects from these basic demands. OEMs will need to make room for these demands.
What’s Ahead For The Value Chain?
Along with all other pushes, the biggest thrust will come from the changing consumer behavior, bringing major changes in the core OEM business model. The signs are already there, and in the coming year, the trend will get stronger. Also, the new mobility concepts and intensifying competition will challenge market shares and profitability index.
Alternative drive and mobility options will gain significant market shares by the end of 2024. The increasing automation will force companies to reduce their workforce. Moreover, the new competition parameters would include technology leadership, OEM collaborations against IT giants, niche markets, and strategic partnerships with emerging IT players.
Every stakeholder has its own set of goals and challenges, which will pave the way to new trends on each front. We have detailed those changes and trends in the adjoining report.