The threats manufacturers face in the next ten years
It is no secret that the automotive market is facing numerous challenges. The years ahead will see new strategies as carmakers adapt their business models to cope.
With this in mind, Autovista Group’s most recent survey asked what would be the biggest threat to carmakers in the next ten years. The results highlighted three key challenges, for which they need to be prepared.
The consensus among respondents was that the biggest threat over the next ten years would be the financial implications of new technology development, 34% choosing this option. With carmakers needing to develop electric and hybrid drivetrains, while also investing in autonomous vehicles to ensure they remain competitive, the need to shift finances from other developments is eating into profits. Legislation on CO2 levels is forcing such development, with a ‘do or be damned’ approach as a lack of electric vehicle research and a declining diesel market could lead to large financial penalties if EU CO2 targets are not met in 2021 onwards.
In second place, with 23%, was the shifting ownership trend towards car sharing. For many, buying a car is no longer a necessity and the rise of car-sharing schemes, such as Uber and Waymo, are giving younger generations the ability to get around without worrying about fuel costs, insurance and taxes. Therefore, carmakers are having to look at ways to get users back into their vehicles, including offering their own car-sharing schemes. BMW and Daimler launched their partnership in this area recently, while Renault and PSA Group have been vocal on the launch of their Paris schemes. However, car-sharing schemes will ultimately have an impact on sales of vehicles in the coming years.
The next most popular threat to vehicle manufacturers in the next ten years is EU emissions restrictions (15%). Carmakers have to meet an average across their fleet of 95g/km by 2021, with reductions of 15% in 2025 and 37.5% by 2030. With the fall in diesel sales and electric and hybrid technology still in development by many, there are likely to be large fines levied against companies, with penalties for each gram of CO2 over the limit. WLTP has not helped the situation. For example, Daimler recently revealed that CO2 emissions of its Mercedes-Benz Cars division rose 7% in 2018 to an average of 135g/km – 40g over the limit.
Brexit saw 9% of the vote. Although a deal with the EU has not been agreed by the UK Parliament, the UK is still expected to leave the EU at the end of March. This could see import and export tariffs on cars and parts introduced, while customs delays will also affect ‘just-in-time’ deliveries.
Next was rising CO2 emissions from fleets (8%), which is causing carmakers to consider their portfolios as more polluting vehicles and engines are dropped in favour of hybrid technology. Then came the issue of the decline in diesel sales (7%) as a result of continued demonisation of the fuel following the Dieselgate scandal. This is despite research suggesting the technology is the cleanest it has ever been. Overall, challeneges concerning emissions gained 30% of the votes cast, placing it second in the poll behind only new technology development.
Finally, the ‘other’ option gained 4% of the vote. Many felt that digitalisation of the online sales process and the preparation – or even closure – of dealerships would be the biggest challenge for the next decade. Others suggested that industry disruptors – either established Chinese brands or new players such as Apple and Dyson – could cause problems for the industry.
Source: Autovista Group