NAME: Abdul Haq

Reg No: 1811309

Class: BBA 6-F

Date: 28-03-21

The road to 2020 and beyond: What’s driving the

global automotive industry?

The automobile industry has seen considerable change over the years, enough
that the legends of automobile industry such as Henry Ford will be surprised by the
overwhelming progress of technology as well as the increasing demand of vehicles.
This research looks at the future of Automobile industry after discussing the matter with
the top 17 original equipment manufacturers (OEM) of the industry, which comprises
80% of the global sales. The research is segmented according the geographical
location as well as the type of car, luxury based, middle price range, and entry level low
price cars.
Overall the automobile industry has seen a continuous growth in the last five
years. This progress is expected to continue beyond 2020. According to the research
there are 4 main challenges that automobile industry faces going forward.

1: Complexity and Cost Pressure

2: Diverging Markets
3: Digital Demands
4: Shifting Industry Landscape
There needs to be new strategies to tackle the changing needs of the market.

The global automobile industry has increased sales compared to how it was in
2007. Sales growth went from 41Billion Euro in 2007 to 54 Billion Euro in 2012, to an
even further 79 Billion Euro in 2020. In the Asian region the growth was explosive over
the years. However, in Europe the growth halted and even turned to loss as interest in
purchasing new vehicles was not appealing to the general public. In North America, the
sales were also stable due to cost restructuring and increased attention to SUVs, the
value vehicles. China is expected to be the major driver of profits as the majority of the
profits, up to 13 Billion Euro will be derived from China alone. All of North America
however, will be the lowest contributor to the profit, up to 2 Billion Euro.
As above mentioned, the challenges that the industry faces can be exceptional,
however they can also be turned into opportunities for various organizations. The
increased complexity adds to the shortening of the gap of profit and cost, which makes
it difficult to have any margin of error. This forces the companies to make derivatives for
the basic products in order to create a brand based niche to charge extra premium.
Those that do not charge premium, produce in bulk to reduce the overall cost.
Increased regulation over CO2 and environmental related regulations can
immediately decrease any profits. This will push the companies to invest more into
Electricity based vehicles in order to stay in market, however the costs to R&D will be
great. However, those that are able to transition to Electric Vehicles will have an
astounding advantage towards those that do not in the future.
Due to the internet connectivity has become an even important tool that the
customers want to have in the gadgets and vehicles are no exception. The companies
are looking to digitize the customers experience through various services that will
secure the driving experience as well as make it more entertaining.
There is growth in the entry segment of automobiles, as it is expected to grow by
4.5% each year mostly in China. Thus there is a real opportunity for current companies
to tap into this emerging market.