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Top 5 Trends For The 202x Decade In Automobile Industry: Disrupt Or Die...
Though the COVID-19 pandemic has impacted the sector hard, it is still likely to grow around a whopping $9 trillion by 2030 whereas the world GDP at PPP (Purchasing Power Parity) would be $274.291 trillion by 2031.
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The automobile is a highly capital intensive sector and has enormous impacts on a nation’s as well as overall global economic activities. As per a report, the estimated global GDP (Gross Domestic Product) share of the automotive industry is around 4 percent. Though the COVID-19 pandemic has impacted the sector hard, it is still likely to grow around a whopping $9 trillion by 2030 whereas the world GDP at PPP (Purchasing Power Parity) would be $274.291 trillion by 2031.
A lot of changes have been seen during this year like digitalization in the auto sector, Tesla stocks skyrocketing, an increase in the usage of sustainable and eco-friendly vehicles, etc., and a lot more innovations are yet to be experienced in this new decade as penned below.
Disruption of internal combustion by Electricity powered Vehicles
As per a study conducted by McKinsey & Company, the Automotive Electronic Control Unit (ECU) Market is likely to grow from the $92 billion at present to $156 billion in the future, having a Compound Annual Growth Rate (CAGR) of 5 percent. In using electric vehicles, China tops the list with 2.3 million electric vehicles in use actively, followed by Europe and the U.S with 1.2 and 1.1 million respectively.
Talking about the leading EV manufacturers, Tesla tops the list followed by Renault–Nissan–Mitsubishi Alliance, Volkswagen, and BYD. As per [email protected], a new initiative named by the Clean Energy Ministerial (CEM) - jointly developed by various nations predicts that by 2030, 30% of all vehicles except two-wheelers will be electric. Also, the overall electric vehicle market is estimated to sell 31.1 million units by the year 2030 compared to an estimated 2.5 million units in 2020.
Disruption of human driving by Self driven
The human tendency is to be over-optimistic and well that’s what has happened with our vision of riding in a self-driven car. Many leading publications like the Guardian and the Business Insider had predicted that 2020 would be the year of the electric car taking the lead with people being highly acclimatized with using it. But we know the future we had in 2020. We have made great progress without a doubt, but the predictions were nowhere to be matched, but that’s alright as with leaders like Tesla, Google’s Waymo, General Motors, Toyota, etc. the future is bright!
As per the Society of Automotive Engineers, there are five levels of automation requiring less human interference with each stage, and the good news is that Tesla is almost at level 5 automation. Though the self-driven or the automation market does not only consist of cars, there are various segments like Robo-taxi, rideshare, ride-hail, self-driving truck, and bus.
The expectation for this market is to have a valuation of $2,044.93 billion in 2030 from $54.21 billion in 2019. That is a CAGR of 39.1 percent. But along with the latest automation technologies, the need for road developments and infrastructure would also have to be looked after to enjoy the back-seat permanently.
Disruption of physical contact by Phygital
Digitalization would be the new realm for the auto sector. It has already been adopted by large automobile institutions for serving their customers and giving them a superior car buying and selling experience. But the penetration of digitalization would not limit only to providing a good online vehicle purchasing experience, it would also include the usage of IoT (Internet of Things,) VR (Virtual Reality,) and AR (Augmented Reality) for reducing the physical visits to the store and increase the quality of vehicles by implementing the latest technologies including the use of multi-hybrid cloud network architectures, and DevOps (Development and Operations) at a deeper level in the future.
As per an IBM report, half of the surveyed automotive executives believed that in the coming 10 years, to succeed or even to survive, they will need to reinvent their organizations with digital technologies, supported by data.
Disruption of vehicle ownership by Subscription
A car subscription model lets the users have a car without actually having the burden to pay for a car in full. The user doesn't have to pay the downpayment, in exchange for a monthly fixed fees payment. There are service tenure options of 24, 36, and 48 months, but it can be prolonged or renewed as well. Many leading car manufacturing companies have started building for this new generation car model like Book by Cadillac, Canvas by Ford, Access by BMW, Porsche Passport, Mercedes-Benz Flexperience, etc.
As per a report by Global Market Insights, Inc., the global market valuation for vehicle subscription services would surpass US$ 40 billion by 2026. This gives more options to car buyers at a very lower cost compared to owning a car, along with a choice of changing it easily and early.
Disruption of Developed country markets by Developing country markets
At present China tops the automobile sector, followed by the U.S. and Japan. But with changing time and factors like a nation’s average age and demand for auto sector outputs, the scenario is changing. In 2019, India achieved the fourth rank for being the largest automobile market surpassing Germany and is also set to become the third-largest auto market overtaking Japan soon. India is one of the youngest nations with more than 54 percent population under the age of 25. That also means that in the coming years, Gen Z of this nation would demand auto market outputs as well, adding to the overall demand. With this, the dominance of the Asia-pacific region would hike as China already dominates the auto sector and with India reaching the new milestones, it will definitely be a great factor.
The prediction is that by the year 2030, the auto sector dominance would be led by China, followed by the U.S. and India. These three big countries would have 50 percent of the total vehicle registrations and would account for 60 percent of the auto sales. In addition to that, China’s annual car sales are likely to be 39 million for the forecasted period, which would be 28 percent of the total global sales. While India is estimated to have 215 million vehicles filling up roads. Along with this, the developing nations would take a front seat with Brazil becoming the fourth-largest auto market with 6.50 million vehicle sales, which is 50 percent more compared to Japan.
Conclusion: Those who recognize that the past is irrelevant and the whole industry needs to disrupt itself will only be able to see the light of 2030.
The automobile sector is very vital as it requires a variety of materials including steel, aluminum, iron, glass, plastic, computer chips, textiles, rubber, etc. As per a research paper, about 50 percent of the global oil and rubber consumption, around 25 percent of the glass output, and 17% of the steel production is utilized by the auto sector. Also, a 1 percent increase in the growth of this sector results in a GDP growth of 1.5 percent for the developed nations.
This states the importance of the new trends that would transform the sector further and the rest we have to do is to sit and see the new history being created!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.