The automotive sector is undoubtedly coming out of one of the most challenging periods in history. The industry has faced a massive slowdown for the last couple of years due to the pandemic. Now that the automotive industry trends show it is slowly getting back on its feet, players should brace up for tougher situations, primarily driven by chip shortages, global economic slowdown, price shocks, and so on.
Despite the looming roadblocks, the sector will witness some of the most exciting times with increased adoption of EVs, more car makers introducing Internet of Things (IoT) features in automobiles, the introduction of hydrogen-driven cars, and so on. This calls for a deeper analysis of the automotive industry. So this blog brings you some of the major automotive industry trends in 2023 that you must watch out for. Let’s dig in.
What are the Automotive Trends in 2023?
The future trends in automotive industry predict a roller-coaster ride for players. In 2023, the automotive industry will face global headwinds such as the energy crisis, slower global demand, and ongoing supply-chain issues. Despite these challenges, global new-vehicle sales are projected to remain flat, with new-car sales increasing. Sales of electric vehicles (EVs) are expected to grow, although governments may restructure their incentive programs.
Increased government focus on charging networks will be needed to support the expanding EV fleet. As UN regulators lift their speed limit, the autonomous vehicle sector will take a step forward. Let’s have a sneak peek at car industry trends that will shape 2023.
Increasing production of digital vehicles
Automakers and technology giants like Google and Tesla are incorporating more digital technology into their vehicles. This has created a competition to develop automotive software and digital systems to power and control innovative electric vehicles, resulting in cars produced in 2023 and beyond being full of technology to address digital touchpoints.
Rise in online sales
North American and European automakers offer consumers the option to buy vehicles online without visiting dealerships. With a computer or smartphone, buyers can choose desired features, secure financing, and even take virtual walk-around and test drives. In 2023, more dealerships are expected to offer online sales, vehicle inspection and home delivery.
The rising preference for pre-owned/used cars
The demand is highest for vehicles under four years old, which have the latest technologies but are less expensive than new cars. This includes pre-owned electric and hybrid vehicles, and dealerships now offer certified pre-owned cars that look and function like new ones at a lower cost. Low APR financing options make pre-owned vehicles an attractive choice.
Rise in connected cars
Connected cars are vehicles that use wireless means to connect to the Internet of Things. They offer a safe, comfortable, and convenient multimedia experience with on-demand features that allow users to browse the web while in their vehicle. They provide various features such as remote diagnostics, vehicle health reports, 4G LTE Wi-Fi hotspots, turn-by-turn directions, and warnings of car health issues. The technology has already processed over a billion customer requests and is set to grow rapidly in 2023 with predictive intelligence and maintenance technology.
Rise in autonomous self-driving cars
Self-driving vehicles are becoming increasingly common and will continue to do so in 2023. Research has indicated that autonomous cars are safer, reduce downtime, expand the last-mile delivery scope, and improve fuel efficiency by 10%. Additionally, several trucking companies have tested self-driving technology, and it will soon become commonplace, with fleets of autonomous trucks sharing the road with traditional vehicles.
Launching of fuel cell EVs
Fuel-cell electric vehicles are set to emerge worldwide in 2023 due to their faster recharge, longer range, and zero emissions. Major car, truck, and SUV manufacturers are investing in fuel-cell electric vehicle development, with the support of countries like China, Germany, Japan, South Korea, and the United States. This could be the year when fuel-cell electric vehicles finally break through.
More automakers collaborating with tech companies
Automakers and technology companies are forming partnerships due to the constantly evolving tech requirements in vehicles. This is especially necessary for electric, connected, and autonomous vehicles, which require specialized software and advanced technology to function safely. To avoid massive investments in their technology divisions, manufacturers are partnering with tech companies to design and produce the new operating systems necessary for the next generation of technologically advanced vehicles. More partnerships are expected in 2023.
Top Automotive Marketing Trends in 2023
Now, let’s take a look at the biggest auto industry trends shaping the automotive marketing landscape:
Evolving video marketing
Consumer trends in the automotive industry reveal that short videos are more effective than text in converting leads into customers in the automotive industry. Dealerships can take advantage of various types of videos, such as how-to videos, car highlights, and customer testimonials. Car dealership tours are also gaining a lot of traction. Dealers and sellers can leverage them through videos or virtual reality.
Rise in VR tech adoption
The metaverse is gaining momentum as VR technology improves. Car dealerships are no exception, as recent auto trends reveal that customers prefer to experience a car or dealership before making a purchase. VR allows customers to explore a car in detail without physically visiting a dealership. Top car brands and dealerships are embracing VR as part of their dealership photography strategies to improve the customer experience.
Optimizing mobile experiences
Smartphones are now vital in car purchases. Consumers thoroughly research their preferred car on their mobile phones, searching for the best offers and dealerships in their area. Therefore, websites must be easily readable and accessible on mobile devices, with clear calls to action.
Upgrading built-in messaging apps
Chatbots and messaging solutions are key technology trends in the automotive industry. These tools enable dealerships to handle inquiries efficiently, freeing up time for other tasks. They also facilitate the management of maintenance and repair appointments, streamlining dealership operations.
Increase in digital advertising spending
In 2022, the automotive industry’s digital marketing spending increased to USD $17 billion and is predicted to keep growing in 2023. Experts anticipate a rise in digital advertising spending, driven by the growing mobile and social media usage rates. Dealerships need to have a strategic plan to capture potential buyers at different stages in the car buying process, using social media marketing, click-to-call conversions, and messaging apps to attract online shoppers.
What is CASE auto trend?
CASE is one of the biggest automotive trends that is currently disrupting the auto industry. It stands for Connected, Autonomous, Shared, and Electrified. As per market and industry experts, these four trends represent the future of automotive industry. It won’t take too long for the CASE to accelerate the transition of the automotive industry from the way it has been working for hundreds of years.
Here is the detailed analysis of trends-
Cars Have Become Even More Connected
The automotive trends suggest that 2023 can be the milestone year for connected cars. The expansion will stem from the speedy spread of data that can be capitalized upon to lower expenses, streamline research and development, enhance products and services, and restrict emissions.
In addition, the IoT’s potential in the automotive industry presents a significant chance for manufacturers to revamp their marketing strategies. By utilizing interconnected systems, IoT solutions can offer numerous benefits to end-users, such as better safety, driving assistance, and predictive maintenance. The collection of user data through these sensors creates ample opportunities for marketers to promote upselling.
Moreover, the growth of the automotive IoT market signals a strong trend toward connectivity. IoT creates more opportunities for manufacturers to market to consumers even after they’ve made a purchase. Consistent brand messaging across all channels, including in-car infotainment systems and websites, can help foster long-term relationships with customers, promoting brand loyalty and advocacy.
Autonomous Vehicles are Changing the Face of the Auto Industry
The automotive sector is dealing with numerous transformative factors, presenting a formidable challenge to automakers. As various technological advancements and shifts in the market landscape converge, the industry is navigating one of the most difficult periods of the past hundred years. Are automakers prepared to navigate the upcoming car industry trends, especially in the tech landscape?
A recent survey reveals automotive companies have product development and launch cycles shorter than 18 months. In fact, many car makers, especially those that bring a fresh perspective to the automotive industry, as well as companies that are proactively investing in and acquiring new technological competencies, appear to be effectively managing the ongoing changes.
However, automotive executives face obstacles as they focus on new technology that meets consumer and regulatory demands. This has led to a shift away from traditional automotive infrastructure, which focused on powertrains, interiors, electrical systems, and safety systems. Information technology has become a crucial part of the recent trends in the automobile industry, as priorities change over time.
Shared/Micro Mobility Presents a Potential Shift Among Consumers
Micro mobility or Mobility as a Service (MaaS) is one of the major drivers of automotive industry trends in 2023. MaaS solutions create customized travel options by integrating various transport networks, catering to the shift away from vehicle ownership to service-based transportation. This trend, akin to the ‘Amazon Effect,’ is pressuring the automotive industry to adapt. Shared mobility advocates applaud its potential to lower emissions, traffic congestion, and air pollution while offering cost savings. The EU mobility market is projected to exceed $450 billion by 2030, per Statista.
Electric Vehicle Adoption Increases Worldwide
In 2023, EV sales are expected to increase, providing a bright spot in the automotive industry. Governments are implementing innovative policies to encourage sales without increasing costs or benefiting high-income households.
- The US will offer a $7,500 EV tax credit for eligible vehicles assembled within North America.
- France is working on a subsidized EV leasing plan for low-income households.
- However, Germany will reduce incentives for battery EVs and eliminate subsidies for plug-in hybrid EVs.
- Norway will phase out tax breaks for expensive EVs starting in January 2023.
However, EV sales in the first half of 2023 may see a slight plunge. Battery manufacturers have significantly reduced their production since early December due to the unpromising demand in the upcoming months.
However, although the Chinese EV market may take some time to adapt to the new subsidy-free scenario, the situation is not entirely negative. There may be a deceleration in demand due to the end of Chinese subsidies for EVs, but it should not lead to a decrease. Apart from this, reduced access to EV charging points remains a significant challenge, according to consumer trends in the automotive industry.
How Will Adapting to Evolving Tech Landscape Help Automakers?
Connectivity presents challenges such as security, compliance with regional regulations, and competition from non-automotive companies. Autonomous vehicles face liability, cybersecurity, and safety issues. Electrification requires a charging infrastructure, expensive design and production, grid management, and consumer concerns about battery life.
Despite these challenges, automotive companies are using them as growth opportunities to sell more cars. Research shows that automakers prioritize growth strategies to differentiate themselves in the future. For instance:
- 51% are concentrating on technology to enable affordable, effective transportation.
- A whopping 48% want to dominate the market for totally electric automobiles.
- 37% are spending money on performance upgrades for high-end, luxury vehicles.
- Being the first to bulk-produce autonomous vehicles is something that 36% want.
- For taxi-like services like Uber and Lyft, 28% are evaluating shared mobility options.
Pro Tips To Prepare For The CASE Auto Trends
Staying ahead of time and winning over trends is no cakewalk. You cannot jump onto the bandwagon without proper planning and prioritizing. So here are a few pro tips that will make it easier for you to embrace the disruptions.
1. Invest in technology to drive the autonomous vehicle market
With product values tied to software and operating systems, you need to continuously engineer and re-engineer the capabilities of autonomous vehicles to ensure a frictionless experience. Additionally, you need a dedicated team of professionals who can resolve malfunctioning, security issues, and other tech bottlenecks with ease.
2. Consider collaborating with young start-ups or tech teams
CASE needs continuous evolution, upgrading, and finely-tuned user experiences to make drives and journeys remarkable. Unfortunately, achieving this would need scaling up and huge amounts of capital investments.
To make this process a little easier, try partnering with young start-ups, tech teams, service providers, etc., to speed your innovation process and improve autonomous and electrified infrastructures.
3. Reevaluate your value proposition
While these trends slowly penetrate, conventional car buyers will still occupy a significant portion of the market. You cannot afford to lose them since they are also a part of your target audience.
Your new business should combine core automotive selling, online sales, and new mobility services.
4. Time to move on from the conventional auto business model
In the era of everything becoming digital-first, you cannot afford to stay in a silo anymore. You need to go omnichannel and build your presence on all touchpoints. Leverage social media platforms and online third-party car marketplaces to increase your awareness among buyers.
Also, allow them to escalate between offline and online modes smoothly. Make every phase of the buying journey frictionless.
Speaking of online car sales, one of the core components of successful digital selling is a high-impact video/image. 93 percent of buyers make a purchase decision based on the quality of visuals. Spyne’s AI-led photoshoot features make it a breeze for you. Download the Spyne app on your smartphone, follow the on-screen guide, shoot high-quality images and rotating car views with the right background within seconds, and call it a day.
Autonomous Vehicles are Changing the Face of the Auto Industry
Autonomous vehicles are one of the prime automotive industry trends of 2023. According to McKinsey, by 2035, autonomous driving could create $300 billion to $400 billion in revenue. Companies like Google, Tesla, Ford, and General Motors are advocating for a future without steering wheels, and Google even has its own driverless car division. Self-driving cars are believed to be safer since they can sense their environment and operate safely within it, eliminating factors such as human error and driver fatigue. Additionally, they are more fuel-efficient.
However, the reason why there are not yet more autonomous vehicles on the road is due to the technological and safety challenges that need to be overcome. Driverless cars have struggled at times with unexpected incidents on the road and in poor weather conditions.
Despite these challenges, there have been some success stories. Self-driving taxis are already available in parts of China and in several US cities. As technology continues to be enhanced and refined, more driverless journeys will take place.
Given the opportunity to significantly disrupt private transport and shape the future of automotive industry, companies are expected to continue investing in autonomous vehicles in 2023.
Vehicle Purchases Shift Online
It all started when car buyers had no choice but to look for cars online. Virtual car shopping is the new norm and will remain a major car industry trend for years. The booming e-commerce industry is a major driver of the global online car buying demand. This is further fueled by increasing awareness of its convenience and supported by rising digital literacy, internet accessibility, urbanization, and disposable income levels.
Additionally, innovative car deals via social media networks also contribute to market growth. On the other hand, personal vehicles are on the rise due to improving urban road infrastructure, and the popularity of pre-owned cars among young people is also driving the market growth.
The Automotive Parts Market Continues to Grow
The future of automotive industry trends suggest that the automotive parts market will keep growing aggressively. The segment’s sales will rise in the first six months of fiscal 2023, while the industry’s revenue will rise at the same pace to $33.8 billion. According to Globe News Wire, the entire market will grow at a CAGR of 5.5% from 2023 to 2033, logging USD 984 billion.
The specialty equipment industry recognizes the potential in off-road products and accessories, particularly for pickups and SUVs such as the Jeep Wrangler. More than half of pickup owners purchase off-road parts and engage in outdoor activities with their vehicles. Overlanding, a newer trend, combines off-roading with remote travel and camping, with products like mounted tents falling under this category.
Chip Shortages Continue to Plague Auto Manufacturers
Chip shortages have been causing myriad changes to automotive trends, which are not all positive. The chip lead times appear to be still very long, especially for the car industry.
In October 2022, the delivery lead time for chips decreased by six days to 25.5 weeks, the largest drop since 2016. Approximately 70 percent of industrial companies report faster chip supply, possibly due to weakened consumer spending and demand. These constraints are expected to persist into 2023, as semiconductor production has exceeded full production-rate utilization since 2019, with recent rates surpassing 95%.
Overall, Auto News suggests that analysts expect the chip shortage will result in a loss of 3 million in vehicle production in 2023.
Auto Sales Impacted by Low Inventory and High Prices
New vehicle inventory levels till December 2022 were 52% below December 2019, but 56% above January 2022. In late 2022, new light-vehicle sales slowed due to high costs, increased interest rates, and limited availability, resulting in new inventory surpassing sales by a notable margin for the first time since early 2021. Additionally, production among OEMs declined due to supply chain issues.
Despite growing inventory levels, new vehicle prices continue to rise, reaching a record average transaction price of $49,507 in December 2022. The best-selling vehicle in the US, the Ford F-Series pickup, has an average price of $66,451, placing it in the luxury category. Electric vehicle prices are also high, with an average of $61,448.
The high prices, combined with increasing interest rates, are causing sales to decline for dealers and automakers nationwide. As supply-chain issues improve and sales continue to soften, prices are expected to decrease. However, interest rates may remain high as the Federal Reserve works to lower inflation.
Used car industry trends
Fewer new vehicle purchases mean consumers hold onto their vehicles longer, reducing the available used inventory and increasing prices. Additionally, interest rates for used vehicle loans are higher than those for new vehicles. It is anticipated that used-vehicle sales will not return to pre-pandemic levels of around 40 million units per year until 2025, similar to new-vehicle sales.
However, as per the used car industry trends, prices for used vehicles have dropped overall due to lower sales, but certain segments like pickups and vans have held their value better than others like SUVs and CUVs, which have seen the biggest price drops despite their popularity among new car buyers. The demand for work vehicles has helped pickups and vans hold their value.
Hydrogen May Fuel the Future of Automotive Industry
To address concerns over EV battery availability and longevity, Toyota and other automakers are exploring the potential of hydrogen fuel cell vehicles, which emit only water and offer a more widely available alternative to batteries.
With consumers increasingly prioritizing environmental performance when purchasing vehicles, automakers must focus on reducing emissions and developing more sustainable transportation options. In fact, the majority of car buyers now consider a vehicle’s environmental impact before making a purchase, with many willing to pay a premium of over £2,000 for greener emissions.
Luxury Car Brands See Growth in 2023
The Luxury Cars market had a value of USD 409,263.47 million in 2022, according to Market Watch. The car industry trends project the market to grow at a CAGR of 9.15 percent during the forecast period, with an estimated value of USD 691,878.75 million by 2028.
Luxury car brands are experiencing growth due to the increase in tangible luxury offerings and rising disposable incomes. The demand for sustainable and eco-friendly transportation, like electric luxury vehicles, is also driving the market growth. The adoption of pre-owned luxury cars is increasing due to easy access to financing and lower entry prices. Manufacturers are investing in smart mobility technologies, such as personal voice assistance, autonomous driving, and AI and ML, creating a positive market outlook.
Automotive Sourcing Models are Changing
The car market trends are shifting towards regional suppliers to diversify their supply chains and mitigate risks. This trend is driven by increasing demand and supply chain disruptions. OEMs are looking for alternative sources to improve sourcing flexibility and bring products to market faster. The U.S. and China trade war has also influenced the search for alternative sourcing options. Labor costs are another factor in the rise of local sourcing, with countries such as Taiwan, Cambodia, and Laos providing a lower-cost labor alternative to China.
In addition, assembling a car involves a massive number of parts (30,000 on average), with materials accounting for a significant portion (40-50 percent) of the manufacturing cost. To maintain cost competitiveness, automotive procurement teams must play a critical role in managing supplier networks and supply chains, both for existing and upcoming vehicle models. This includes aligning new technologies and business models with the company’s vision.
Technology Challenges Yield Growth Opportunities
The emergence of CASE (Connected, Autonomous, Shared, and Electrified) technologies are changing the industry like never before. This will not only drive growth opportunities for automakers in the years to come but also shape the automotive industry’s outlook in the future.
By 2035, approximately 16% of all new LV (light vehicle) sales in the US are predicted to consist of advanced automated vehicles (L3, L4, and L5). These estimates are considered conservative in light of the assumption that EVs will attain total cost-of-ownership equivalence with ICE vehicles by 2025, and depend on forecasts regarding the development of EV-charging infrastructure.
In addition, OEMs will build new operating models to support new businesses. To accommodate new business-generating products and services, as well as to draw in the newest workforce skills, auto OEMs and many of their Tier 1 and even Tier 2 suppliers will likely need to reorganize and widen their old operating model. Undoubtedly, auto OEMs will keep concentrating on their core business, which is generally based on product and industrial platforms and consists of automobiles, aftermarket repairs and maintenance, and financial services related to those vehicles.
Hope this blog helps you understand the upcoming automotive industry trends in 2023. The industry trends show a positive perspective for the times to come despite the expected global slowdown and supply chain disruptions. As a car seller, dealer, or manufacturer, all you need is to build flexible yet strong automotive marketing strategies and create a strong sense of trust and loyalty with the customers. Make sure you stand out from your peers by focusing on every intricate detail through marketing and staying at the top of buyers’ minds.