Being one of the largest industries in the world, the global automotive industry is going through a major transition of its time. 81.6 million vehicles are produced all around the globe. Due to all these Industry is facing the highest prices of vehicles of all time majorly because of the auto chip crisis and shortage of raw material delaying production worldwide. High carbon emission and pollution is also concerning the industry. Currently Automotive industry is at the stage where it requires big innovation and revolution to improve the quality of the products at economical prices. One segment of the automotive industry which is most affected by the transitions is the passenger car market because of high demand and changing technologies.
Automotive Industry- Passenger Car Market- Present and Future
The development of the global economy is much dependent on the automotive industry since it contributes around 3% of the total world's GDP. After recording a huge drop during the pandemic, global sales of all vehicles were recorded at 81.6 million in 2022 in which passenger cars recorded a sale of 57.4 million units globally in 2022 (OICA.org, 2023).
Moving towards EVs (Electric Vehicles)
One of the biggest shifts in the automotive industry is the introduction of EV vehicles. EV cars are more sustainable, eco-friendly and cost-effective which is why every big car manufacturing company is moving towards the same. Research by OMR suggests that the electric car market is estimated to grow at a CAGR of 19.0% during 2022-28.
Some key highlights from recent years-
• Tesla Model Y became highest selling EV car in 2022 with 7.47 million cars globally.
• Renault India in partnership with Nissan is investing $6.4B to launch six new EVs by 2025.
• In the beginning of 2023, Tesla reduced the cost up to a fifth of its EV cars to capture bigger market across US and UK.
• Ford backed up the support of UK export finance (UKEF) by $761.82 million to expand its EV vehicle production line by 2035.
Testing Autonomous Cars
The autonomous car market is growing and many companies are investing in research and consult for the testing and launching of new-age autonomous cars. Research says that the autonomous car market could generate $300-400 billion in revenue by 2035. Starting from Tesla, now many big car franchises are moving towards autonomous cars. Though for safety reasons various steps backs have been taken regarding autonomous cars on the road.
• Microsoft Corp is in the final phase to invest over $10 million in Gatik, a California-based autonomous driving startup where they will use Azure, Microsoft’s cloud and edge computing platform for self-driving trucks.
• Suzuki is to invest $35 billion in electrification and autonomous driving features in its car by 2030.
• UK government is to launch a new plan for self-driving vehicles to ensure safety and to boost the economy which will include a new policy with safety consult norms.
Effects of Global Political and Economic Crisis
A report by ILO.org shows that automakers posted a decline in sales by double digits due to various global economic crises. Whereas the war between Russia and Ukraine raise the issue of material shortage and increased the cost of oil and car manufacturing supplies.
• Research suggested that the Russo-Ukrainian war will continue to affect the production of passenger cars globally and will reduce the production by 1 million vehicles.
• An article by The Guardian suggests that demand for passenger vehicles will go down in the UK due to economic recession and high inflation.
• US to introduce new tax credit policy to reduce the dependency on China for the supply of cars and car manufacturing raw materials.
Said that the global automotive industry is going through major changes and will lead towards innovation and revolution to remove current issues and challenges that lie in front of the industry which is why it is important for the companies to conduct more market research and consult with the industry experts.