The automotive industry is a Fast-Growing Sector in the U.S.

Dr. Leen Alhoussan

August 24, 2022

automotive industry

The automotive industry is a vast industry that includes motor vehicle design, development, manufacturing, and marketing. It is one of the largest industries in the world in terms of revenue, and it is also the most research-intensive, spending more money per firm on R&D than any other industry. While it is a complex field, there are many opportunities within the industry. The automotive industry is an exciting career choice and one of the fastest-growing sectors in the U.S.

Retailing

The history of the automobile industry dates back to the late nineteenth century. While it began in Europe, the development of mass production techniques led to its growth in the United States during the early twentieth century. By the mid-twentieth century, the automobile had become a primary industry worldwide, with western European countries and Japan became the largest producers and exporters. Today, the car is one of the most important forms of transportation worldwide.

The automotive retail industry has experienced unprecedented disruption and change in recent years. The shift towards digital channels and customer access to third-party online sales platforms has disrupted traditional retail models, but the industry is also thriving in other ways. For example, a recent study shows that 63 percent of consumers would buy a car directly from the OEM if the price were lower than the online prices. However, these results don’t mean that dealerships should give up on the brick-and-mortar experience.

Technology

The automotive industry has long partnered with technology companies to create better cars. From electric motors to a more fuel-efficient drive, vehicles now have much more functionality than a traditional car. Technology has also helped automotive manufacturers improve safety, fuel efficiency, and environmental performance. In addition, the automotive industry is utilizing big data and artificial intelligence to customize vehicles to fit the needs of drivers. The use of autonomous driving and CaaS (car as a service) are also changing the industry and making cars a safer place to drive.

Costs

The cost of raw materials for manufacturing cars continues to climb. According to a recent report from Bank of America, the price per pound of steel used in automotive production increased by 106% yearly as of last month. The rise in steel costs is primarily affecting suppliers and original equipment managers. They are expected to bear the brunt of rising material costs. But the cost of these materials isn’t only a concern for automakers. It is also a concern for consumers since their bills will increase.

Dealers in the automotive industry are independent businesses that have a contract with the manufacturer, distributor, or importer. Dealers control the price and model of each car they sell and must know what their customers want. As a result, a new car dealer can make more sales by developing compelling vehicle descriptions. In addition, dealers must be efficient with inventory management and pricing. This is the most challenging aspect of being a new car dealer.

Leasing

Leasing in the automotive industry has seen record sales in recent years. Currently, one-quarter of all new vehicle transactions are financed through leasing. Over the next three years, about 12 million vehicles will come to the end of their lease. As a result, more lessees will return their vehicles to replace them with newer models. Moreover, most off-lease vehicles will need reconditioning. Hence, the automotive industry will see a high rate of lease return.

Vehicle manufacturers are getting serious about marketing, confronting the weaknesses of their traditional franchised dealer distribution model, and wanting to participate more fully in the customer lifecycle value chain. This new approach aims to improve profitability and grow stagnant markets. Moreover, it shifts the foundation of competition and requires the automotive industry to offer services and manage consumer purchase and ownership experiences. To take advantage of these opportunities, manufacturers must act now.

Origins

The automotive industry is facing lifestyle and technology changes, creating opportunities and challenges. The trend toward digitization and e-mobility is creating opportunities but also presents risks. For example, the following product might not be a car but a service, such as a ride-sharing platform. The lifecycle of the vehicle will change, and it will affect other industries that depend on it. As a result, OEMs will need to invest in new technologies to stay competitive and make them last longer.