Tesla SWOT Analysis : What’s Next

For Tesla?
SWOT / By John Hughes
Tesla is a famous brand known for spearheading the transition to electric and
autonomous cars. It is a strong brand in its niche, but it is nowhere close to
perfect as it is with all businesses.

This piece will break down Tesla’s SWOT analysis and bring out the good
and bad sides that combine to make the giant the company is today. Read on;

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Overview of Tesla
Tesla Inc is an American innovative automotive and energy solutions-based
company established in 2003. Its mission is “to accelerate the world’s
transition to sustainable energy” and its vision of “creating the most
compelling car company by driving the world’s transition to electric
vehicles.”

This company was first formed as Tesla Motors, Inc but changed to Tesla Inc
as the scope of operations extended to multiple fields, most notably those
related to energy generation. Today, the company has investments in
different areas, such as motor vehicle production, auto service, financial
services, solar panels, lifestyle products, and retail merchandise. It is a classic
example of a diversification strategy in play. It has subsidiary companies that
help run all these niches, such as SolarCity, Maxwell Technologies,
DeepScale, and Hibar Systems.

Tesla Inc is Fortune 500 company, and it garnered $31.5 billion in sales in
the 2020 fiscal year, a 28% increase over the previous year. Out of this, it
reported a profit of $721 million, most of which was driven by regulatory
credits. It remains the most valuable automaker globally, with a market cap
of about $600 million, as reported in May 2020.
Tesla’s Strengths
1. Highly Innovative Processes

Tesla is big on innovation, as seen from its products. It is no stranger to

hitting the global headlines by releasing cars and other products that threaten
to redefine the norms we are used to. This culture, greatly fostered by the
CEO, Elon Musk, continues to drive the company to come up with
competitive and profitable products.

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It is also prominent in developing renewable energy solutions, which is big in
this age. The Tesla Model S and Cyber truck rocked the automotive industry
and have changed this landscape, thanks to the innovative mindset of the
people working there. It also leads the way in research and development,
which keeps on increasing year on year.
2. Strong Brand
Tesla’s brand is strong due to the ways its processes are shaped to improve
customer experience. In addition, it is also a pioneer in the electric car niche,
which makes it the go-to brand for anyone interested in products within this
space. While other companies have tried to manufacturer electric cars over
the years, Tesla Inc is fully dedicated and went mainstream with this mission.
This has been rewarded by a steady increase in sales of luxury vehicles, long-
range electric vehicles, and related products.

3. Great Employer

Tesla is a good employer, according to reviews of previous workers and the

initiatives the company is engaged in to improve employer NPS. To feed its
highly innovative processes, Tesla hires the best talent but goes a long way to
ensure that they have the right environment to thrive and give the best for the
company and themselves. It is strong on diversity and continues to encourage
all genders to apply to work at the company. Its Human Resources game sets
it as an outlier in the tech space, but servers as a great place for employees to
thrive and get a break from all the traditional and boring policies and rules.

4. Vertical Diversification
Tesla controls most of the steps in its value chain. This makes it self-reliant
and improves the robustness of its production processes since it is quite
resistant to external forces to an extent.

The company manufactures most of the components used to make its cars, a
reason why it offers technical support to customers itself as opposed to
outsourcing third parties to do it. This diversification policy allows it to cut
costs and maintain the high quality of its cars, things that set it apart from the
competition.

5. Leadership

Elon Musk is a phenomenal leader who stands for what Tesla is all about. His
charisma, decisiveness, and courage to take on challenges that have been
declared impossible ooze throughout Tesla and shapes the company as a
whole.

He is often on the headlines, leading ambitious projects, for

instance, SpaceX, his other company. This kind of desire to go over and
above while establishing himself as a global business leader says a lot about
how he leads the company. Outstanding leadership is a vital ingredient of any
successful company, and Elon Musk is a strength that continues to shape
Tesla.

6. Top Car Brand

Tesla is the top car brand globally, surpassing giants like Toyota and
Mercedes-Benz. As of 2021, it leads to number two, Toyota, by almost
doubling its brand value, indicating how far ahead it is. This is a meteoric rise
to the top, looking at how its competitors like Toyota, Mercedes, BMW, and
Honda have been mainstays in this niche, only for Tesla to overtake them this
year.

This can be credited to the futuristic mission that Tesla commits to, as some
car brands continue to manufacture legacy gasoline-powered cars. It
continues to dominate despite its lagging in production volumes. It produced
just shy of 500,000 vehicles in 2020, whereas Volkswagen made 11 million
cars in 2019.

Tesla’s Weaknesses
1. Limits on Manufacturing
To cement its place as the leading car manufacturer, Tesla will have to boost
its manufacturing capacity. It only has one plant in California, which limits
the number of cars it can produce. Companies like Toyota have multiple
manufacturing plants globally, which is essential to increase vehicles’
volume. The single plant delays the distribution of older models, and this
remains a massive bottleneck in Tesla’s business model.

2. Market Limitations

Tesla is dominant in the United States and needs to expand globally. It is

respected globally as a top brand, but people in these other areas do not
consume its products. Its core market is the US, as seen in 2018, where the
US accounted for 70% of its total revenue. While this can be attributed to
several factors, such as the limits on manufacturing, there is a need to expand
globally and access markets other car giants have.

3. Niche Target Audience

Tesla’s products are considered expensive for the average consumers, and
thus the target market is wealthy individuals and households. This is a niche
group that forms a significant minority of the global car market.

Many other companies offer luxury cars to this audience, and with
competition being high, it can quickly be saturated, leaving Tesla at a
standstill. While it has released Model 3, which is a bit cheaper, it still
appeals to wealthy individuals. The company should consider fast-tracking
the plan to diversify to target ordinary people, who form the majority and can
set Tesla on its way to success.

4. Limited Supply Chain

The limited supply chain is a significant weakness that prevents Tesla from
expanding its market share. It prides itself in delivering cars on its own,
which is a good strategy but can be highly limiting. It is challenging to set up
an in-house supply chain and expect to get global reach, as managing such
would need a lot of resources. Tesla can consider reworking its supply chain
to expand its reach and get to customers across the globe.

Tesla’s Opportunities
1. Demand for Sustainable Solutions

The globe is moving towards sustainable solutions, and Tesla is positioned as

one of the industry leaders in this space. There is an opportunity to leverage
these trends and make further inroads in the sustainable energy space. The
foundation is already in place, and with the considerable demand, Tesla can
find solutions that will elevate it to a whole new level.

2. Global Sales and Market Share

Tesla is the most valuable car brand, while its revenue is predominantly from
the United States and China. If it expands in Europe, Asia, and African
markets, it can quickly expand its sales and benefit from the economies of
scale that other automotive giants continue to enjoy. To do this, it has to
strengthen the core by expanding its manufacturing plants and supply chain.

3. Autonomous Driving

Tesla is the leading force behind autonomous driving that is the future. While
this concept continues to face numerous challenges, cementing its name as
the leader can be a great opportunity. Change is always met with uncertainty,
but Tesla can be a force to reckon with once people embrace autonomous
driving.

Tesla’s Threats
1. Increased Competition

Tesla’s meteoric rise to the top can be partly attributed to how it pioneered
things in the electric vehicle and autonomous driving space. Other companies
had tried these concepts, but only as side projects. Tesla took this as its main
project and invested time and resources to make it work for consumers.

However, people are accepting fully electric vehicles, and all the other
automotive companies are investing more in this space. In the coming years,
we will see more electric cars from BMW, Mercedes, and Toyota, which can
quickly eat into Tesla’s market share and give them a run for their money.
Some of these companies, for instance, Toyota, can easily leverage its low-
end market segment to produce electric cars and put Tesla in a contentious
place.

2. Cumulative Liability

In recent years, Tesla has been forced to recall some of its cars because
of faulty parts. Some of these issues can result in huge liability lawsuits. The
problem is that Tesla controls a significant percentage of their production
process, and these liabilities cannot be spread out to other entities. As a
result, cumulative liability can be a big problem for Tesla in the long run. It is
no easy to keep on investing more in the production process if everything is
done in-house.

3. Long Term Sustainability

Tesla faces a significant hurdle to ensure long-term sustainability, primarily if
it extends its supply chain and sells to customers worldwide. While this is the
unavoidable path, it is full of challenges when compared to competitors.

Automotive giants like Mercedes Benz and Toyota have approved outlets,
and people can get support and technical assistance from any corner of the
globe. This makes it easy for them to cascade any support to these outlets if
they venture into electric cars. Tesla faces challenges to set up these support
centers, which are vital to long-term sustainability if they want to take on the
global market.

Frequently Asked Questions

Question: Is a Tesla Model S a good car?

Answer: The 2021 Tesla Model S ranks near the top of the luxury hybrid and
electric cars. Its interior is spacious, has strong acceleration, composed
handling, and a good driving range while still being fully electric.

Question: What are the disadvantages of a Tesla?

Answer: Tesla’s are luxury cars and cost more than average. They cost more
to repair, take longer to access repair centers and have low towing
capabilities.

Question: How much does it cost to insure a Tesla?

Answer: The annual average amount required to ensure a Tesla Model 3 is

about $2,215, which is almost 40% more than the national average cost of car
insurance. Tesla has insurance policies and claims customers can save
between 20% and 30%, but they are limited to California only.

Bottomline
Tesla Inc. has several strengths that keep it on top of the car-making industry,
but competition is not asleep and will catch up soon. Some of the players it
competes with have been around for a long time and have made suitable
investments to help them catch up. As seen from the SWOT analysis, the
company has serious issues that should be addressed to help maintain
competitive advantage and improve profitability. The lack of global presence
is a huge concern that can hold the company back in the long run. However,
Tesla has what it takes to remain on top of the automotive industry, despite
the aggressive competition.

 About

 Latest Posts
John Hughes
John Hughes is a seasoned expert in digital marketing strategy, business
model analysis, and financial insights. Possessing a robust background in
finance, his expertise extends into deciphering complex business models,
conducting comprehensive SWOT analyses, and staying attuned to the latest
market trends.

https://businesschronicler.com/swot/tesla-swot-analysis/

https://www.scribd.com/document/291392781/Skoda-Auto-Ratio-Analysis-Case-Study - Scoda

The automotive sector is undoubtedly coming out of one of the most

challenging periods in history. The industry has faced a massive slowdown for
the last couple of years due to the pandemic. Now that the automotive industry
trends show it is slowly getting back on its feet, players should brace up for more
challenging situations, primarily driven by chip shortages, global economic
slowdowns, price shocks, and so on.

Despite the looming roadblocks, the sector will witness some of the most exciting
times with increased adoption of EVs, more car makers introducing Internet of
Things (IoT) features in automobiles, the introduction of hydrogen-driven cars,
and so on. This calls for a deeper analysis of the automotive industry. So this
blog brings you some of the significant car market trends in 2023 that you must
watch out for. Let’s dig in.
What do You Mean by Automotive Industry Trends?
Automotive industry trends refer to the prevailing developments, changes, and
patterns within the automotive sector that significantly influence the design,
production, marketing, and usage of vehicles. A combination of factors, including
technological advancements, shifting consumer preferences, regulatory changes,
and global economic conditions, drives these trends. The automotive industry is
highly dynamic, and trends are subject to change over time. Monitoring and
understanding these trends is crucial for automakers, suppliers, and other
stakeholders to stay competitive.

Some common areas of focus for automotive industry trends include electric
vehicles, autonomous driving, connectivity, sustainability, mobility solutions,
manufacturing advancements, and sales and distribution models. Following
these trends helps greater penetration in the emerging market, like the growing
adoption of electric vehicles in China and India.

What are 7 Automotive Trends in 2023?

The future trends in the automobile industry predict a roller-coaster ride for
players. In 2023, the automotive industry will face global headwinds such as the
energy crisis, slower global demand, and ongoing supply-chain issues. Despite
these challenges, global new-vehicle sales are projected to remain flat, with new-
car sales increasing. Sales of electric vehicles (EVs) are expected to grow,
although governments may restructure their incentive programs.
In 2023, global car sales are expected to top 69 million. Greater market access in
developing countries and emerging markets fuel it. This has led to the growing
adoption of electronic vehicles in China and India.

Increased government focus on charging networks will be needed to support the

expanding EV fleet. The autonomous vehicle sector will advance as UN
regulators lift their speed limit. Let’s have a sneak peek at car industry trends that
will shape 2023.

1. Increasing production of digital vehicles

Automakers and technology giants like Google and Tesla are incorporating more
digital technology into their cars. This has created a competition to
develop automotive software and digital systems to power and control innovative
electric vehicles, resulting in cars produced in 2023 and beyond being full of
technology to address digital touchpoints.

2. Rise in online sales

North American and European automakers offer consumers the option to buy
vehicles online without visiting dealerships. With a computer or smartphone,
buyers can choose desired features, secure financing, and even take virtual
walk-around and test drives. In 2023, more dealerships are expected to offer
online sales, vehicle inspection, and home delivery.

3. The rising preference for pre-owned/used cars

The demand is highest for vehicles under four years old, which have the latest
technologies but are less expensive than new cars. This includes pre-owned
electric and hybrid vehicles, and dealerships now offer certified pre-owned cars
that look and function like new ones at a lower cost. Low APR financing options
make pre-owned vehicles an attractive choice.

4. Rise in connected cars

Connected cars are vehicles that use wireless means to connect to the Internet
of Things. They offer a safe, comfortable, and convenient multimedia experience
with on-demand features that allow users to browse the web while in their
vehicle. They provide various features such as remote diagnostics, vehicle health
reports, 4G LTE Wi-Fi hotspots, turn-by-turn directions, and warnings of car
health issues. The technology has already processed over a billion customer
requests and is set to overgrow in 2023 with predictive intelligence and
maintenance technology.

5. Rise in autonomous self-driving cars

Self-driving vehicles are becoming increasingly common and will continue to do

so in 2023. Research has indicated that autonomous cars are safer, reduce
downtime, expand the last-mile delivery scope, and improve fuel efficiency by
10%. Additionally, several trucking companies have tested self-driving
technology, and it will soon become commonplace, with fleets of autonomous
trucks sharing the road with traditional vehicles.

6. Launching of fuel cell EVs

Fuel-cell electric vehicles will emerge worldwide in 2023 due to their faster
recharge, extended range, and zero emissions. Major car, truck, and SUV
manufacturers are investing in fuel-cell electric vehicle development, with the
support of countries like China, Germany, Japan, South Korea, and the United
States. This could be the year when fuel-cell electric vehicles finally break
through.

7. More automakers collaborating with tech companies

Automakers and technology companies are forming partnerships due to vehicles’
constantly evolving tech requirements. This is especially necessary for electric,
connected, and autonomous vehicles, which require specialized software and
advanced technology to function safely. To avoid massive investments in their
technology divisions, manufacturers are partnering with tech companies to
design and produce the new operating systems necessary for the next
generation of technologically advanced vehicles. More partnerships are expected
in 2023.

Top 5 Automotive Marketing Trends in 2023

Now, let’s look at the most prominent auto industry trends shaping the
automotive marketing landscape:

1. Evolving video marketing & environmental sustainability

Consumer trends in automotive industry reveal that short videos are more
effective than text in converting leads into customers in the automotive industry.
Dealerships can take advantage of various videos, such as how-to videos, car
highlights, and customer testimonials. Car dealership tours are also gaining a lot
of traction.
Dealers and sellers can leverage them through videos or virtual reality. More and
more customers today are prioritizing environmental sustainability. Therefore,
you should focus on environmentally conscious manufacturing processes and
eco-friendly cars like electric vehicles.

2. Rise in VR tech adoption

The metaverse is gaining momentum as VR technology improves. Car

dealerships are no exception, as recent auto trends reveal that customers prefer
to experience a car or dealership before purchasing. VR allows customers to
explore a car in detail without visiting a dealership. Top car brands and
dealerships are embracing VR as part of their dealership photography strategies
to improve the customer experience.

3. Optimizing mobile experiences & personalization

Smartphones are now vital in car purchases. Consumers thoroughly research

their preferred car on their mobile phones, searching for the best offers and
dealerships in their area. Therefore, websites must be easily readable and
accessible on mobile devices, with clear calls to action. Personalization is an
important part of the mobile experience. Brands provide specific offers by
analyzing your needs, preference, and behavior.

4. Upgrading built-in messaging apps & voice search

Chatbots and messaging solutions are key technology trends in the automotive
industry. These tools enable dealerships to handle inquiries efficiently, freeing
time for other tasks. They also facilitate the management of maintenance and
repair appointments, streamlining dealership operations. Voice search assistants
also optimize their interface for advertisements and voice search queries.

5. Increase in digital advertising spending

In 2022, the automotive industry’s digital marketing spending increased to $17

billion and is predicted to keep growing in 2023. Experts anticipate a rise in digital
advertising spending, driven by the growing mobile and social media usage
rates. Dealerships need a strategic plan to capture potential buyers at different
stages in the car buying process, using social media marketing, click-to-call
conversions, and messaging apps to attract online shoppers.

What is the CASE Auto Trend?

CASE is one of the biggest automotive trends disrupting the auto industry. It
stands for Connected, Autonomous, Shared, and Electrified. As per market and
industry experts, these four trends represent the future of the automotive
industry. It won’t take too long for the CASE to accelerate the transition of the
automotive industry from the way it has been working for hundreds of years.
Here is the detailed analysis of trends-

Cars have become even more connected

The future trends in the automobile industry suggest that 2023 can be the
milestone year for connected cars. The expansion will stem from the speedy
spread of data that can be capitalized upon to lower expenses, streamline
research and development, enhance products and services, and restrict
emissions.

In addition, the IoT’s potential in the automotive industry presents a significant

chance for manufacturers to revamp their marketing strategies. IoT solutions can
offer numerous benefits to end-users by utilizing interconnected systems, such
as better safety, driving assistance, and predictive maintenance. Collecting user
data through these sensors creates ample opportunities for marketers to promote
upselling.
Moreover, the growth of the automotive IoT market signals a strong trend toward
connectivity. IoT creates more opportunities for manufacturers to market to
consumers even after they’ve made a purchase. Consistent brand messaging
across all channels, including in-car infotainment systems and websites, can help
foster long-term customer relationships, promoting brand loyalty and advocacy.

Autonomous vehicles are changing the face of the auto industry

The automotive sector deals with numerous transformative factors, presenting a

formidable challenge to automakers. As various technological advancements and
shifts in the market landscape converge, the industry is navigating one of the
most challenging periods of the past hundred years. Are automakers prepared to
navigate the upcoming car industry trends, especially in the tech landscape?

A recent survey reveals automotive companies have product development and

launch cycles shorter than 18 months. Many car makers, especially those
bringing a fresh perspective to the automotive industry and companies
proactively investing in and acquiring new technological competencies,
effectively manage the ongoing changes.

However, automotive executives need help as they focus on new technology that
meets consumer and regulatory demands. This has led to a shift away from
traditional automotive infrastructure, which focused on powertrains, interiors,
electrical systems, and safety systems. Information technology has become a
crucial part of the recent trends in automobile industry as priorities change over
time.

Shared/micro-mobility presents a potential shift among consumers

Micro mobility or Mobility as a Service (MaaS) is one of the significant drivers of

automotive industry trends in 2023. MaaS solutions create customized travel
options by integrating various transport networks, catering to the shift from
vehicle ownership to service-based transportation. Like the ‘Amazon Effect,’ this
trend pressures the automotive industry to adapt. Shared mobility advocates
applaud its potential to lower emissions, traffic congestion, and air pollution while
offering cost savings. The EU mobility market is projected to exceed $450 billion
by 2030, per Statista.

Electric vehicle adoption increases worldwide

2023 EV sales are expected to increase, providing a bright spot in the automotive
industry. Governments are implementing innovative policies to encourage sales
without increasing costs or benefiting high-income households.

 The US will offer a $7,500 EV tax credit for eligible vehicles assembled
within North America.
 France is working on a subsidized EV leasing plan for low-income
households.
 However, Germany will reduce incentives for battery EVs and eliminate
subsidies for plug-in hybrid EVs.
 Norway will phase out tax breaks for expensive EVs starting in January
2023.
However, EV sales in the first half 2023 may see a slight plunge. Battery
manufacturers have significantly reduced their production since early December
due to the unpromising demand in the upcoming months.

However, although the Chinese EV market may take some time to adapt to the
new subsidy-free scenario, the situation is optimistic. Demand may decelerate
due to the end of Chinese subsidies for EVs, but it should not lead to a decrease.
Apart from this, reduced access to EV charging points remains a significant
challenge, according to consumer trends in automotive industry.

How Will Adapting to Evolving Tech Landscape Help

Automakers?
Connectivity presents challenges such as security, compliance with regional
regulations, and competition from non-automotive companies. Autonomous
vehicles face liability, cybersecurity, and safety issues. Electrification requires a
charging infrastructure, expensive design and production, grid management, and
consumer concerns about battery life.

Despite these challenges, automotive companies use them as growth

opportunities to sell more cars. Research shows that automakers prioritize
growth strategies to differentiate themselves in the future. For instance:

 51% are concentrating on technology to enable affordable, practical

transportation.
 A whopping 48% want to dominate the market for totally electric
automobiles.
 37% are spending money on performance upgrades for high-end, luxury
vehicles.
 Being the first to bulk-produce autonomous vehicles is something that 36%
want.
 For taxi-like services like Uber and Lyft, 28% are evaluating shared
mobility options.

4 Pro Tips To Prepare For The CASE Auto Trends

Staying ahead of time and winning over trends is no cakewalk. You must jump
onto the bandwagon with proper planning and prioritizing.
So here are a few pro tips that will make it easier for you to embrace the
disruptions:

1. Invest in technology to drive the autonomous vehicle market

With product values tied to software and operating systems, you need to
continuously engineer and re-engineer the capabilities of autonomous vehicles to
ensure a frictionless experience. Additionally, you need a dedicated team of
professionals who can quickly resolve malfunctioning, security issues, and other
tech bottlenecks.

2. Consider collaborating with young start-ups or tech teams

CASE needs continuous evolution, upgrading, and finely-tuned user experiences

to make drives and journeys remarkable. Unfortunately, achieving this would
need scaling up and vast amounts of capital investments.
To simplify this process, try partnering with young start-ups, tech teams, service
providers, etc., to speed your innovation process and improve autonomous and
electrified infrastructures.

3. Reevaluate your value proposition

While these trends slowly penetrate, conventional car buyers will still occupy a
significant portion of the market. You must keep them since they are also a part
of your target audience.

Your new business should combine core automotive selling, online sales, and
new mobility services.

4. Time to move on from the conventional auto business model

In the era of everything becoming digital-first, you cannot afford to stay in a silo
anymore. You need to go omnichannel and build your presence on all
touchpoints. Leverage social media platforms and online third-party car
marketplaces to increase your awareness among buyers.

Also, allow them to escalate between offline and online modes smoothly. Make
every phase of the buying journey frictionless.

Bonus Tip

Speaking of online car sales, a high-impact video/image is a core component of

successful digital selling. Ninety-three percent of buyers make a purchase
decision based on the quality of visuals. Spyne’s AI-led photoshoot features
make it a breeze for you. Download the Spyne app on your smartphone, follow
the on-screen guide, shoot high-quality images and rotating car views with the
right background within seconds, and call it a day.

Autonomous Vehicles are Changing the Face of the Auto

Industry
Autonomous vehicles are one of the prime automotive industry trends of 2023.
According to McKinsey, by 2035, autonomous driving could create $300 billion to
$400 billion in revenue. Companies like Google, Tesla, Ford, and General Motors
advocate for a future without steering wheels, and Google even has its driverless
car division. Self-driving cars are considered safer since they can sense their
environment and operate safely within it, eliminating factors such as human error
and driver fatigue. Additionally, they are more fuel-efficient.

However, there are yet to be more autonomous vehicles on the road due to the
technological and safety challenges that must be overcome. Driverless cars have
sometimes struggled with unexpected incidents on the road and in poor weather
conditions.

Despite these challenges, there have been some success stories. Self-driving
taxis are already available in parts of China and several US cities. More
driverless journeys will occur as technology continues to be enhanced and
refined.

Given the opportunity to significantly disrupt private transport and shape

the future of automotive industry, companies are expected to continue investing
in autonomous vehicles in 2023.

Vehicle Purchases Shift Online

It all started when car buyers had no choice but to look for cars online. Virtual car
shopping is the new norm and will remain a significant car industry trend for
years. The booming e-commerce industry is essential to the global online car
buying demand. This is further fueled by increasing awareness of convenience
and supported by rising digital literacy, internet accessibility, urbanization, and
disposable income levels.
Innovative car deals via social media networks also contribute to market growth.
On the other hand, personal vehicles are on the rise due to improving urban road
infrastructure, and the popularity of pre-owned cars among young people is also
driving the market growth.

The Automotive Parts Market Continues to Grow

The future of automotive industry trends suggests that the automotive parts
market will grow aggressively. The segment’s sales will rise in the first six months
of fiscal 2023, while the industry’s revenue will increase at the same pace to
$33.8 billion. According to Globe News Wire, the entire market will grow at a
CAGR of 5.5% from 2023 to 2033, logging USD 984 billion.

The specialty equipment industry recognizes the potential in off-road products

and accessories, mainly for pickups and SUVs such as the Jeep Wrangler. More
than half of pickup owners purchase off-road parts and engage in outdoor
activities with their vehicles. Overlanding, a newer trend, combines off-roading
with remote travel and camping, with products like mounted tents falling under
this category.

Chip Shortages Continue to Plague Auto Manufacturers

Chip shortages have been causing myriad changes totrends that affect the
automotive trends that are not all positive. The chip lead times are still very long,
especially for the car industry.

In October 2022, the delivery lead time for chips decreased by six days to 25.5
weeks, the most significant drop since 2016. Approximately 70 percent of
industrial companies report faster chip supply, possibly due to weakened
consumer spending and demand. These constraints are expected to persist into
2023, as semiconductor production has exceeded full production-rate utilization
since 2019, with recent rates surpassing 95%.

Overall, Auto News suggests that analysts expect the chip shortage will result in
a loss of 3 million in vehicle production in 2023.

Auto Sales Impacted by Low Inventory and High Prices

New vehicle inventory levels till December 2022 were 52% below December
2019 but 56% above January 2022. In late 2022, recent light-vehicle sales
slowed due to high costs, increased interest rates, and limited availability,
resulting in new inventory surpassing sales by a notable margin for the first time
since early 2021. Additionally, production among OEMs declined due to supply
chain issues.
Despite growing inventory levels, new vehicle prices continue to rise, reaching a
record average transaction price of $49,507 in December 2022. The best-selling
vehicle in the US, the Ford F-Series pickup, has an average price of $66,451,
placing it in the luxury category. Electric vehicle prices are also high, with an
average of $61,448.

The high prices and increasing interest rates are causing sales to decline for
dealers and automakers nationwide. Prices are expected to decrease as supply-
chain issues improve, and sales continue to soften. However, interest rates may
remain high as the Federal Reserve works to lower inflation.

Used car industry trends

Fewer new vehicle purchases mean consumers hold onto their vehicles longer,
reducing the available used inventory and increasing prices. Additionally, interest
rates for used vehicle loans are higher than those for new cars. It is anticipated
that used-vehicle sales will not return to pre-pandemic levels of around 40 million
units per year until 2025, similar to new-vehicle sales.

However, as per theused car industry trends, prices for used vehicles have
dropped overall due to lower sales, but specific segments like pickups and vans
have held their value better than others like SUVs and CUVs, which have seen
the most significant price drops despite their popularity among new car buyers.
The demand for work vehicles has helped pickups and vans hold their value.

Hydrogen May Fuel the Future of Automotive Industry

To address concerns over EV battery availability and longevity, Toyota and other
automakers are exploring the potential of hydrogen fuel cell vehicles, which emit
only water and offer a more widely available alternative to batteries.
With consumers increasingly prioritizing environmental performance when
purchasing vehicles, automakers must focus on reducing emissions and
developing more sustainable transportation options. Most car buyers now
consider a vehicle’s environmental impact before purchasing, with many willing to
pay a premium of over £2,000 for greener emissions.

Luxury Car Brands See Growth in 2023

The Luxury Cars market had a value of USD 409,263.47 million in 2022,
according to Market Watch. Recent trends in automobile industry help various
projects grow, they need to grow at a CAGR of 9.15 percent during the forecast
period, with an estimated value of USD 691,878.75 million by 2028.

Luxury car brands are experiencing growth due to increased tangible luxury
offerings and rising disposable incomes. The demand for sustainable and eco-
friendly transportation, like electric luxury vehicles, also drives market growth.
The adoption of pre-owned luxury cars is increasing due to easy access to
financing and lower entry prices. Manufacturers are investing in innovative
mobility technologies, such as personal voice assistance, autonomous driving,
and AI and ML, creating a positive market outlook.

Automotive Sourcing Models are Changing

The car market trends are shifting towards regional suppliers to diversify their
supply chains and mitigate risks. This trend is driven by increasing demand and
supply chain disruptions. OEMs seek alternative sources to improve sourcing
flexibility and bring products to market faster. The U.S. and China trade war has
also influenced the search for alternative sourcing options. Labor costs are
another factor in the rise of local sourcing, with countries such as Taiwan,
Cambodia, and Laos providing a lower-cost labor alternative to China.

In addition, assembling a car involves a massive number of parts (30,000 on

average), with materials accounting for a significant portion (40-50 percent) of the
manufacturing cost. To maintain cost competitiveness, automotive procurement
teams must be critical in managing supplier networks and supply chains for
existing and upcoming vehicle models. This includes aligning new technologies
and business models with the company’s vision.
Technology Challenges Yield Growth Opportunities
The emergence of CASE (Connected, Autonomous, Shared, and Electrified)
technologies are changing the industry like never before. This will drive growth
opportunities for automakers in the years to come and shape the automotive
industry outlook in the future.

By 2035, approximately 16% of all new LV (light vehicle) sales in the US are
predicted to consist of advanced automated vehicles (L3, L4, and L5). These
estimates are considered conservative in light of the assumption that EVs will
attain total cost-of-ownership equivalence with ICE vehicles by 2025 and depend
on forecasts regarding the development of EV-charging infrastructure.
In addition, OEMs will build new operating models to support new businesses.
Auto OEMs and many Tier 1 and even Tier 2 suppliers will likely need to
reorganize and widen their old operating model to accommodate new business-
generating products and services and draw in the latest workforce skills.
Undoubtedly, auto OEMs will keep concentrating on their core business, which is
generally based on development and industrial platforms and consists of
automobiles, aftermarket repairs and maintenance, and financial services related
to those vehicles.

Conclusion
We hope this blog helps you understand the upcoming automotive industry
trends in 2023. The industry trends show a positive perspective for the times to
come despite the expected global slowdown and supply chain disruptions. As a
car seller, dealer, or manufacturer, you must only build flexible yet solid
automotive marketing strategies and create a strong sense of customer trust and
loyalty. Make sure you stand out from your peers by focusing on every intricate
detail through marketing and staying at the top of buyers’ minds.