From the very beginning, the automotive industry has been operating on a singular business model - designing, producing, and selling vehicles. However, the automotive sales market is on the cusp of a massive change. With the introduction of new product lines, enforcement of strategic alliances, and investments in electric vehicle IPOs, the automotive sales market has seen an increase in competition recently. The driving force for this shift seems to come from passengers, as they neglect the use of public transportation in favour of privately owned vehicles as reported by the Auto Insurance Price Index Report 2020. So, what does this mean for the auto market? A spike in sales and unexpected demand for insurance coverage.
Technology And The Ever-Changing Nature of Consumer Expectations
The trends that have an elevated potential for disruption are connectivity, varied drivetrains, ride-sharing mobility, and the levels of autonomous driving, which are prone to changing the future of the automotive sales market by the year 2035. Due to the effects of the pandemic, there has been a radical shift in the automotive sales market. While automotive dealerships have been affected, in turn, they have also progressed their focus towards fully utilizing the digital age of retailing.
This refers to the modern term of buyers owning mobile phones to help them gain access to unobtainable data, leveraging them during a sales transaction. Simultaneously, modern analytical tools and big data methods help original equipment manufacturers and automobile dealerships to have deep insights about the target consumers and their purchase behaviours.
As innumerable dealerships move their automotive sales process online, support mechanisms such as artificial intelligence chatbots are adequately able to provide assistance to the buyer, thereby saving the need for human interaction to ever occur. Combining Internet of Things (IoT) is expected to create new opportunities in the market because the demand for connected vehicles and safety updates are rising at a high pace. Along with technology, the automotive sales market is also determined by the advanced driver-assistance systems that mainly consist of safety features present in the vehicle at the time of purchase.
Automotive Sales For EVs On The Rise
As governments continue to enforce strict regulations on vehicle emissions, the automotive sales market saw a rise in demand for electric vehicles. BloombergNEF’s Electric Vehicle Outlook Report 2019 indicates that EVs will form 57% of the global passenger car sales by the year 2040, with electric buses ruling the automotive sales market during that period.
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For keeping up with the rising demand and boosting their automotive sales, automakers are trying to incorporate electrification in vehicles. Integrating connectivity and autonomous driving assists the buyer in knowing the current status of their EV, and where the nearest charging station can easily be found. Economists believe that the buying patterns of consumers are changing to an extent which can be advantageous for the automotive sales market.
Automakers are extensively focusing on integrating solar power with EVs, as this initiative can highly influence who is going to be the next leader of the automotive sales market for the next decade. Governments in some countries have taken a positive approach by offering exciting offers to EV buyers that can strategically boost the automotive sales market in those specific regions.
Controlling the power in the automotive industry hugely relies on which automaker or technology company can come up with efficient energy density. Batteries with a higher energy density are cheaper to produce, thus saving high operational costs for the automaker. Therefore, using less raw materials to create the best battery can help increase the automotive sales market.
The Road Ahead for Gas, Diesel, and Hybrid Automotive Sales
The universal movement of planning to disallow the sales of internal combustion vehicles started in India, in 2017, followed by Japan and Taiwan. Furthermore, the United Kingdom has also finalized its plans for the green industrial revolution, which states that the sale of gasoline and diesel automobiles will completely be banned from 2030.
As long as the hybrid vehicles are totally carbon-free, their sales will continue until 2035. After being an integral part of selling internal combustion vehicles for 150 years, the European Union has also decided to be a part of this movement. In North America, California has been the first state to be a part of this movement.
After the California Air Resources Board passed the Advanced Clean Trucks (ACT) Regulation, automakers are now required by law to sell zero-emission trucks, as a majority of their automotive sales from the year 2024 to 2035. In Canada, Quebec is the first province to impose this ban, industry experts and economists have started accepting the fact that there will be further bans and restrictions towards gas-guzzling vehicles. Many governments globally have vouched towards banning the sales of internal combustion vehicles by the end of the decade.
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Advancements In Automobile Safety
With the advancements in technology and the pace of modernization, consumers have become more conscious of the technology and safety features, they are demonstrating interest in improving the security frameworks of their vehicles. The US National Highway Traffic Safety Administration (NHTSA) states that 88% of the rear-end collisions occur due to driver negligence and unknowingly tailgating other vehicles.
Automakers have taken the risks into consideration and have started incorporating blind spot detection and forward-collision warning (FCW) systems. Moreover, these safety features are also being implemented in commercial vehicles, such as large trucks.
The Lane Departure Warning System (LDWS) is a collection of safety advancements that have fundamentally been designed for preventing high-speed accidents that occur mainly on highways and roads. The LDWS tends to warn the driver beforehand so that corrective actions are taken, preventing the risk of any collision from happening. As drivers abruptly change lanes, this led to many accidents. Therefore, automakers went ahead and designed another system known as Advanced Driver Assistance Systems (ADAS), that can help prevent these types of accidents from occurring.
Conclusion
Although automakers are consistently prioritizing their efforts to meet regional and global emission regulations, there is a constant rigor for ensuring that consumer demand levels are being met. By offering technological and safety offerings in their vehicles, automakers are able to meet consumer demands and positively influence consumer purchase decisions that drive the automotive sales market.
Electrification of vehicles and producing a greater number of connected vehicles can be key takeaways for enhancing the automotive sales market. With many governments taking the ban on internal combustion vehicles positively, it is yet to find out whether the automotive sales market will be completely green in the coming years.