The automobiles sector is going through a paradigm shift. It is moving from a peer-to-peer environment to a more open ecosystem. This is forcing traditional car manufacturers to re-imagine their products, services, and customer experiences. To remain competitive, traditional car manufacturers need to embrace an ecosystem and collaborate across sectors to achieve the greatest benefits for customers.
New product launches and operating leverage will drive profit growth for automobile OEMs. New models will attract buyers and drive up volumes in the market. In addition, higher vehicle prices will support the earnings performance of the sector. The automotive industry is one of the largest in the world, supporting nearly 10 million jobs. The sector generates more than $650 billion in total annual revenues. By 2035, the industry is expected to generate 40 percent of its profits from emerging profit pools, including electric and battery-powered vehicles, data and connectivity services, and on-demand mobility offerings.
Sales and marketing are critical parts of the automobiles sector value chain. These include the management of the sales force, advertising, and promotions. Sales and marketing are crucial for reaching a targeted consumer segment and creating awareness about a product’s features. These processes may be done through conventional channels such as direct selling or the Internet.
However, volume trends in the automobiles sector can be volatile. The sector can recover from a slowdown or face challenges from macroeconomic headwinds. For example, FY2022 saw a good year for the automobiles sector, but volumes were well below peak levels. Even in three-wheeler categories, factory dispatches in January grew at a slightly slower pace than in prior years. And sales by dealerships to consumers decreased for most categories YoY. The good news is that there is still a lot of pent-up demand in the automobiles sector.
The automobiles sector is undergoing a transformation that will include new technologies, connectivity, autonomous vehicles, and electrification. As the industry changes, mobile information will help predict maintenance and alert consumers to potential problems. Moreover, car manufacturers are changing their structures and designs to meet consumer demands. For example, Maruti Suzuki recently launched a new subscription model that allows customers to lease select models. This makes the automobiles sector even more competitive.
China is also poised to be a significant player in the automobiles sector. Chinese car manufacturers have seen impressive sales growth in recent years. With continued disruptions and growth, they may leverage their momentum to become one of the leading global players. But these companies need to continue to innovate to maintain a competitive edge. This is especially true if they have a vision to become an automotive industry giant. If they continue to invest in innovative technology, the world will be a better place for the entire industry.
Another important trend in the automobiles sector is the rise of electric vehicles. By 2040, about half of new cars will be hybrids. While these vehicles are great for the environment, they also take up a lot of space and weight. That is why many auto manufacturers are now working on energy-storing body panels made of polymer fibre and carbon resin. These panels are extremely strong and can reduce car weight by up to 15%.