The automotive industry is one of the largest markets in the world. Humans have always needed a way to get from point A to point B, and in the modern world, the industry has grown to include several vehicle brands, vendors, dealerships, logistics, data, and more.
Within the past year, we’ve witnessed the explosion of new technologies, artificial intelligence, and the need for more data enhancements as everything becomes even more digital. Now, we’re rounding into the second season of 2024, and it's the perfect time to assess some of the key challenges and trends facing the automotive industry so you can stay ahead of the curve.
Key challenges for the automotive industry in 2024
Will the daily grind for dealerships stay the same? Will customers find new ways to shop for vehicles online? How will automotive brands overcome the challenges coming their way this year? Let’s dive into all of it.
First, it’s important to remember that there comes an opportunity with every challenge. For those in the automotive industry, truer words have never been spoken.
Staying up-to-date with digital innovation:
As tech evolves at lightning-fast speeds, automotive companies must find new ways to learn about and implement new technologies to keep up with their competitors. One key challenge will be using data to anticipate customer needs and map their purchasing journey. Customers seeking a vehicle, related product, or service will increasingly need more digital assistance.
According to Accenture, digital services could generate as much as US$2.5 trillion in additional global revenue for the automotive industry within the next two decades. Yet, only 3% of automakers’ revenue globally accounts for digital services.
Supply-chain issues after chip shortage for manufacturers
During the pandemic, auto manufacturers slowed down when ordering chips, and production slowed. With demand again surging, there’s been a delay, and we’re still experiencing a shortage. Semiconductor chips are found in computers, mobile devices, other electronics, and vehicles.
The shortage was particularly rough as semiconductor chips work to manage battery systems, motor control, and power distribution in electric and hybrid vehicles, and the EV market is set to grow in the coming years.
While we have seen a recovery in the auto sector, there are still lingering supply-chain issues to deal with, as automakers need chips with higher computing power. This will only increase with the adoption of autonomous vehicles.
Car prices due to drop
According to the National Post, vehicle prices are dropping due to an influx of inventory post-pandemic. In the United States, new car prices are expected to drop in 2024, with much of the inventory bouncing back after the chip shortage. Vehicle purchases becoming more affordable for the average buyer may signal a purchasing wave as those who felt locked out during the past few years will be ready to buy.
Nasdaq reported estimates that global car production would exceed sales by 6% in 2024, creating a surplus of 5 million vehicles that will ultimately receive price cuts to sell.
Key trends for the automotive industry in 2024
What will the rest of 2024 bring to the automotive space? How will the latest trends be embraced? While some trends might be the rise of the SUV as a luxury vehicle rivaled by EVs, most trends in the automotive industry are new developments that have been brewing for a while and are now moving into center stage.
Online vehicle sales
According to Forbes, online car sales are set to reach 7.1-7.3 units in 2024. This is largely due to EV manufacturers venturing into online sales and vehicles becoming available in larger markets. As new generations shop online, they’re going all the way with the full digital experience. When online platforms deliver digital customer service, education, convenience, and transparency, consumers feel safer making a full purchase online. Prediction: This will only grow in the years to come.
Aritifical Intelligence assistants
Just as most computers are now set up with Cortana, Copilot, or other AI assistants that can help users answer questions, query the internet, and generate lists of things to do,… generative AI and learning language models are making waves in the automotive industry. Toyota, BMW, Tesla, and Mercedez Benz are adopting AI personal voice assistants and driving assistance systems.
Everybody wants a used car
Used cars are selling online in increasing numbers due to companies like Vroom, CarTrade, and Carvana. For example, Carvana reached a market capitalization of $50 billion in 2021 after launching only nine years earlier, in 2012. In 2021, they sold 425,0000 vehicles online and became one of the fastest-growing technology companies in the world.
Online used car sales address the core issue of accessing the affordable and reliable vehicles customers seek. By tailoring the buying experience to the customer, a personalized approach can be taken. Using accessible data, the customer can shop for a vehicle within their price range and easily find payment options. As we move into the rest of 2024, online used car sales look like they’ll increase and become a viable option for many.
Ultimately, even with some challenges, 2024 will be an exciting year for the automotive industry. Dealerships, manufacturers, and vendors can look forward to new technology, better data assistance, and emerging markets. Customers can look forward to a better buying experience and affordability.
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