Transformative Factors Driving the Automotive Industry

Various factors like the availability of skilled labour at low cost, robust R&D centres, and low-cost steel production strengthens the automobile industry. The industry also offers great opportunities for investment and direct and indirect employment for skilled and unskilled workers. This, in turn, creates new trends in the automotive industry that will significantly influence the market.

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Future of Connectivity

As 4G and the Internet of things (IoT) continue to grow, more connected services and features are expected in vehicles. With connected mobility, cars can communicate bidirectionally with other systems outside their local area network to deliver digital data, enabling remote diagnostics, vehicle health reports, data-only telematics, accessing Wi-Fi hotspots, receiving turn-by-turn directions, car health warnings, and directly intervening to prevent breakdowns and avert accidents.

The mobility landscape will be fundamentally transformed in the coming years by automating central excise and service tax (ACES). This will significantly impact autonomous driving, connected cars, electrified vehicles, and shared mobility. The evolving environment presents a perfect opportunity for automakers to take the lead on the disruptive changes occurring across segments and derive competitive advantages. Today, only a few per cent of new vehicles sold globally are electrified. The opportunity, therefore, is much larger and the winners and losers are yet to be decided.

Direct to Consumer sales

Automotive companies have begun to respond to changing consumer behaviour by introducing new online business models. With increased digitalisation, consumers are being used to get goods delivered to their doorstep. This has become mainstream for consumer goods, groceries, etc. However, in the coming years, large ticket purchases like vehicles are likely to experience this trend too. Many mobility companies have already embarked on offering their products through direct-to-customer (D2C) business models.

An enormous spike in online sales and the D2C business model will surge in the near future. This will cause more automobile dealerships to shift to digital media and online sales. Overall, there will be a huge hybrid business model penetration in automobile sales, ultimately reducing the market share for traditional physical dealerships.

Along with these trends, there is also continuous growth in the number of electric vehicles seen in the market, which will radically grow in the coming years. All of these changes necessitate an urgent shift toward digitisation, which will take centre stage in transforming the automotive industry and becoming a critical investment component.