Global Automotive Industry to Progress into 2020

Post by Pat O'Neill, January 28, 2019, Tips

For the last century, the car culture has spread over the entire globe. As a result of a means of transportation and the job opportunities the automotive industry that has created todays car has shaped not only the global economy, but how billions of individuals live.

Overall, the global automotive industry is in better shape than it was five years ago, especially in the US, where profits and sales have recovered following the recent economic crisis, and in China, where growth remains strong. This progress will likely continue assisting global profits for automotive OEMs are expected to rise by almost 50 percent by 2020. The new profits will come mainly from growth in emerging markets and, to a lesser extent, the US. Europe, Japan, and South Korea will be stagnant in terms of profit growth.

There are four key challenges that OEMs need to address to get a piece of future profitability. The analysis of this report projects to 2020, but these challenges will shape the industry until at least 2025.

• Complexity and cost pressure. There will be more platform sharing and more modular systems. At the same time, regulatory pressures will tighten, and prices in established markets are likely to be flat.
• Diverging markets. OEMs need to adapt to changing regional and segment pat- terns of supply and demand with respect to their production and supply base foot- prints, supply chains, and product portfolios; and the emerging Chinese aftersales market offers new growth opportunities.
• Digital demands. Consumers want more connectivity, are focused on active safety and ease of use, and are increasingly using digital sources in making their purchase decisions.
• Shifting industry landscape. Suppliers will add more value in alternative powertrain technologies and in innovative solutions for active safety and infotainment; Europe needs to restructure and adjust its capacity to better match demand; and competition is emerging from China.

To capture future growth and find profit from these challenges – and to mitigate their risks – OEMs cannot simply turn to their traditional toolbox. They need to review and adjust their strategic priorities, deploy the appropriate investments and resources, and develop new skills to execute these strategic objectives.

Full report on “What’s Driving the Global Automotive Industry”.

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