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What are the Forthcoming Challenges to the Automotive Industry?

Posted by Paul on 16. March 2017
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The Automotive Industry Today


In order for any industry to grow there must be evolution and change. This requirement holds for the automotive industry as well. As the global automotive industry grows it must continuously evolve and transform into a new avatar. According to estimates, global manufacture figures will hit “100 million light vehicles per year” by 2019. However, for automotive companies to have a share in this pie they will need to change. It is these changes that pose to be the forthcoming challenges that global automotive companies must overcome.


The Need for Innovation to be Accelerated


As mentioned, innovation will ultimately drive sales figures for the automotive industry. The automotive manufacturing companies will post larger sales figures provided they opt for improved components in the newer models. However, the catch is obvious. Ushering in changes and opting for new components naturally means that the assembly lines will also need to change and this means greater costs. This is one of the major changes facing the automotive industry, one that the industry has to face squarely in order to survive the competitive market.


Meeting Customers’ Demands


Over the years automotive manufacturing companies are forced to offer models with diverse options for customization. For the same model, customers may opt for automatic transmission or manual transmission, different types of seating capacity and hence the types of seats and with or without a sun roof. Given that there are probably around 200 different models and each of these has diverse options for customization, you are talking about “hundreds of trillions of possibilities”. But, the real challenge lies in managing all these options within the same production line.


Reducing Costs and Wastage


While there is a pressing need for offering different methods of customization, the challenge lies in staying ahead in the race by keeping the cost under check. So the need is to innovate, add attractive features and yet ensure that the price remains competitive. The other complexities thrown as additional challenges include the need to achieve the government targets in CO2 emission so that the carbon footprint is kept in check. The problem is made more acute due to the fact that the increase in costs owing to product development cannot be passed onto the customer. One of the preferred options is to cut costs by reducing wastage and innovating production techniques.




Globalization is here to stay. However, this is another challenge since globalization means greater competition. This naturally calls for both the automobile and automotive component manufacturers to increase the efficiency of production.  This increase will hopefully be adequate to offset the decrease in the margin of profit.


Excess Capacity


Excess capacity manifests itself when the automotive manufacturer invests his resources into the production line and builds the planned number and discovers that there was no need to produce so many vehicles to begin with. This causes damage to the cash flow and wastage. Proper planning is the only answer besides leaving a scope for midcourse changes.


The Need to Attract the Right Talent


Since there is a pressing need to grow and innovate there will always be a challenge to hire the best talent, the kind of talent that will enable the automobile manufacturer to change with the times and continue to grow.


What the Urban Customer Wants


If the automotive manufacturer wants to sell his products to the urban customer he will always have to keep in mind what the customer wants. He/she wants a vehicle that is small and compact, one that is more maneuverable and that has a good mileage. This challenge will always drive a growing sales figure.




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