Trends Apparent in the Automotive Industry

The last 7 years have been great in terms of continuous growth in the automotive industry, a reason to bring cheer to all the automotive manufacturing companies both in India and abroad. The sales in automobiles and automobile product still remain strong and there are many reasons for the automotive engineering services companies to be very optimistic for the future ahead. Let us take a look at present and futuristic trends that can tremendously affect global automotive industry.

The Trends in Technology

It is almost as if the automotive industry is at the cross roads. There are several options in terms of fuel. These are optional fuel sources such as biodiesel and electricity as well as hydrogen fuel cells besides autonomous cars. All these options are in varying states of viability and only the public will finally decide where the future lies. Depending upon the way the wind blows the entire automotive industry will also react and this includes the service providers in the automotive aftermarket and the OEM suppliers who will need to get ready for the changes in the forthcoming requirements. The automotive suppliers will also need to implement several technologies and these include the tracking and monitoring of the supply chain as well as the planning of resources and the IoT technologies.

The Global Economy

The automotive manufacturing companies and their suppliers see globalization as the cause of bringing a spurt in the sales market. However, despite the attractiveness due to the expanded global network, there are certain problematic fallouts too. Some of these relate to the fluctuations in global currency, problems in logistics, spurt in demand worldwide, the concerns due to economic reasons, the need for compliance and issues related to both financing and politics. It is perhaps for these reasons that many suppliers put expansion in the domestic sector before considering the mirage of markets offshore.

Cabs on Demand

The Olas and Ubers have changed the way the automotive industry was headed just a few years ago. Then it was certain that the Detroit automotive industry was about to collapse. But, the new found cab on demand industry changed all that. Today’s millennial generation is however less concerned with the need of owning an automobile and would rather make do with the cab on demand. It looks as if the private ownership of automobiles is on the decrease while the automotive industry should switch over to making specialized vehicles. It is possible that the automotive industry may be on the decline due to a combination of weakening of economies, a rise in the interest rates and the tightening of credit besides a change in the demographics of the consumer. A shortage in skilled employees could also be one of the causes of the decline in the automotive industry.

Declining Revenues

There are some suppliers and OEMs that are already complaining of a decline in revenues, profits and employment. The weakening of economies and a rise in the pricing pressures from the OEMs are definitely a strong cause of concern that may signal a decline in the automotive market. This is triggering off another kind of problem, that of employment. Being unsure about the way the market could go; a large number of suppliers for the US automotive industry are now hiring temporary or contract workforce. There is now a determined attempt to bolster technical support as well as several value added services to the OEMs and thereby to the end users. Customer service is also a top priority among majority of the suppliers.

However, in order to hedge themselves against sudden downturns, those OEMs and suppliers that do not have any secondary areas of production, will do better not to rely only on one single industry. Opening another production line in machinery or building materials may be the right option for them.

Those automotive companies that are on the decline will do better to try and cut their cost in the supply chain and operations besides those products that are underperforming. Reducing their inventory costs drastically is a good option too.

The Bright Future

In the interim 2017 will see the automotive manufacturing companies racing to produce more powerful and lighter vehicles that are faster and yet safer than ever before. The effects of such changes will naturally spread to the supply chain while suppliers will also have to be more agile, faster and more innovative. They will need to transform their logistics and their production processes even as smaller and more efficient suppliers challenge the existing order.