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3 trends shaping the future of the automotive industry

Posted by Geoff Haines on 05-May-2016 18:00:00
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Trends shaping the automotive industryCompetition in the automotive industry is fierce, meaning OEMs need to find innovative ways to differentiate their vehicles and stay ahead of competitors. Yet, consumers also have their own demands, making the whole process even trickier. 

Here’s 3 trends automotive OEMs need to be aware of that are shaping the future of the automotive industry and will have an impact on future success.

The demand for customisation

As technology continues to develop at a rapid pace, consumers demand for increasingly complex customization of their vehicles. 

Car buyers around the world are seeking region-specific features, performance and styling emphasising their individuality. For example, most car owners in the UK have cars with an engine size of around 2-3 litres on average. If we cross over to America, you’re more likely to see cars with and engine size of around 4-5+ litres.

The problem for automotive OEMs is that increasing the range of derivatives available is likely to have a negative impact on profitability, especially for value-range car makers. In this market, OEMs are better off by achieving high volumes on fewer platforms. Still, trying to run more derivatives per platform also increases complexity and costs. 

So how can OEMs manage increasing complexity while controlling costs and meeting consumer demand for customisation? It starts with research. OEMs need to analyse which niche markets they should increase their activity in where derivatives will create additional value i.e. in the premium segment. Profit margins may be higher in the premium segment while meeting customer needs.

Environmentally friendly vehicles 

Carbon dioxide regulations are tightening around the world as Governments continue to pass laws pushing organisations to reduce emissions. The problem is that it’s getting more expensive to cut down on carbon emissions. 

For automotive OEMs, moving towards a greener future means investing in electrical/hybrid powertrains including batteries, as well as lightweight technologies. Although, widespread adoption of this technology is still years away. One of the developments OEMs need to work towards is developing new internal combustion engines.

One way OEMs can push towards these innovations is by working with other OEMs to develop the new technology required for a greener future. By working together, OEMs can pool their resources to increase the speed at which greener technologies can be developed for roadcars.

Intelligent vehicles 

Cars are becoming more and more intelligent. You may not necessarily be able to have a conversation with them, but there’s no question that cars are becoming equipped with smarter technologies and applications that improve your driving experience. 

Some of these applications include danger-warning services, traffic information services as well as innovative safety features.

An intriguing new development is the growing number of cars connected to the internet. Entertainment, tourism and driver-assistance services can all be delivered to vehicles through the internet, and will be a huge profit driver in the near future. 

However, to take advantage of the profitable nature of these services, OEMs will need to broaden their range of business relationships. OEMs will need to work with firms that can build tailored apps for cars as well as media organisations to deliver entertainment services in cars.

Given that drivers spend a quite a lot of time in their cars, consumers are likely to welcome any new developments that will make their driving experience more comfortable and entertaining. 

Overall, automotive OEMs need to be aware of trends that will affect the development of cars. As consumers become more demanding, Government’s crack down on carbon emissions and technologies become smarter, automotive OEMs need to be quick to react to these developments to stay ahead of the competition in a rapidly changing industry.

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Topics: Automotive - CATIA