With more than 100 years of legacy the automotive industry is entering a new era. Several trends continue to shape the future of the industry. Some of these mega trends that would determine the future in the long run are emergence of new markets, a distinct focus on green technology and also increased use of electronics in automobiles. Automakers are constantly redefining their business strategies and are also deploying new technologies to address these challenges and leverage opportunities.
Dwelling into the specifics of each of these mega trends, emergence of new market seems to the biggest trend which is redefining the automotive market paradigms. The population growth with some sound economy indicators in India & China seems to be positively impacting the well-established traditional markets like North America & Western Europe in automotive sector. The performance indicators of GM is a good case in point which has recorded flat growth rate for the traditional markets and is growing northwards for China(18 %) and India(74 %). The definition is emerging in true sense for these so called emerging markets. Stretched delivery schedules for most of the cars & automobiles is good news that the economy and the buyers’ mood is indeed positive.
Affordability, urban population growth and macro-economic indicators are leading factors for the growth in emerging markets. The dip in traditionally stable markets can be attributed to over-capacity in developed markets, globalization, technology advances, regulation, environmental consideration, market fragmentation and product proliferation.
These positive developments are reinforced by the Global surveys which depicts that within the next ten years, these emerging auto markets will account for nearly 90 percent of global auto sales growth. As a result of this, leading auto manufacturers of world are setting up factories in emerging markets, in order to reduce manufacturing and shipping costs and also enable faster time to market. In addition, these arrangements are enabling leading global auto manufacturers to compete with local auto manufacturers who are till now flourishing in the absence of quality competition.
Growing concerns of climate change is another trend that has highly impacted the Automotive Industry. While the debate by green brigade on reduced emissions, fuel efficiency is reaching high pitch, at the same time this has raised concerns for the government with regard to energy security. Legislations are being introduced with a growing frequency. Oil price fluctuation has compounded the rapid shifts in consumer demand as well as vehicle usage. All these and consumers resonating to the change have become the key leverage points for Automotive design beyond the traditional design parameters such as comfort and luxury. To add to this Obama’s Climate Change Policy would be one of the key factors which would drive innovations in Fuel Efficient technologies.
Vehicle Safety and Entertainment are increasingly becoming a high priority for consumers. This again has presented a new opportunity for Automakers. Automobiles today resemble “computers on wheels” because of the increasing number of digital systems under the hood and inside the passenger cabin. In many ways automotive industry has become a leader in the use of advanced electronics. The ongoing efforts towards energy efficiency has created a need for automotive electronics. The costs associated with these sophisticated systems are also rising. Automotive electronics now account for 22 percent of a vehicle’s cost and are projected to increase to up to 40 percent by 2010.
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