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Automotive Market Report & Predictions 2020

Posted by Max Snegirev on Dec 12, 2019 5:15:21 PM 1576170921858
Max Snegirev
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Technological advances, environmental pressures and global political upheaval have created unprecedented change in the past decade. As 2019 draws to a close, VHR explore our predictions for the Automotive and Motorsport markets in 2020.

International Market

This year saw international relations between global powers take a turn for the worse, with significant impact to multiple economies. US President Trump imposed tariffs on $360billion of Chinese goods, and China responded with tariffs on $110bn of US products. America then introduced three more tariffs and China responded with tariffs on American goods. In December 2019, American tariffs on nearly $150 billion worth of Made in China goods were planned . More tariffs are planned, which could drive tariffs on all Chinese imports to the US.

Becoming the world’s largest automobile manufacturer in 2009, China and its Big Four SAIC Motor, Dongfeng, FAW and Chang’an and other major competitors manufacture millions of cars every year. Any change to China’s economy from Trade Wars could impact China’s auto production, and have a knock-on effect for third party suppliers and retailers around the world.

The confidence of Chinese consumers has already dropped following political tensions: China’s car sales have reduced by 12% since 2018. Reduced demand for cars amid the climate crisis and tighter pollution regulations are also affecting the global auto market. India’s car sales dropped by 14% in the past year, and Germany’s car production dropped by 12% in 2019 with exports falling by 14%.

The Motoring industry is integral to the UK economy, employing 856,000 people and generating £82billion every year. A no-deal Brexit scenario could result in a £5billion tariff for the industry in the UK. The sector is Europe’s largest in terms of research and development, delivering 6.8% of the EU’s GDP, and the British public purchased 2million vehicles from the EU in 2017.

As 25% of UK companies currently employ staff from the EU, and with Brexit still to take place, Britain’s exit from the European Union will undoubtedly cause much confusion for both the UK and other European countries. With a skills shortage already impacting upon Automotive companies around the globe, business leaders will be investing to future-proof their businesses by opening up routes to market and engaging new generations of talent.

Increases pressures from government and consumers will see industry players continue to innovate to capture market share.

Technology & Innovation

With ever-increasing competition, legal regulation and customer demand, the Automotive sector is continually striving to innovate and improve its vehicle technology and customer experience. Artificial Intelligence (AI) made its mark in the 2010s, and further innovation is set to change the driving experience on an unprecedented level.

Ford, Toyota and General Motors are competing to offer smartphone-enabled connectivity which lets drivers start and lock vehicles, find their car in a car park and access current data on oil and fuel levels from anywhere. Audi’s intelligent technology such as anti-dazzle LED headlights, assisted parking and predictive accident prevention are spearheading safety innovation, and through torque vectoring Tesla is pushing speed to new limits without comprising on safety, with the aero wheels of its Model 3 increasing aerodynamic efficiency by 10%.

Carbon fibre will be increasingly frequent in production to reduce weight and improve driver experience. Ford will be using carbon fibre for the performance wheels on the Mustang GT350R and Shelby GT500. Industry experts predict a compound annual growth rate of the sector’s carbon fibre market at between 7.9% and 10.6% by 2025.

Autonomous cars will become the standard for personal use and large-scale transportation around the world. BMW’s iNEXT is set to be the world’s first fully autonomous car. PwC calculates that, based on mileage, the share of autonomous driving in overall traffic will rise to 40% in the next ten years. As technology improves, trust in self-driving cars, taxis and lorries will see automation advance the industry and its capabilities.

Sustainability

The Automotive industry as a whole is responsible for 12% of total EU CO2 emissions. In 2019 the European Parliament set emission performance standards for all new cars and vans manufactured, which will apply from 1st January 2020.

Hyundai’s Ioniq Hybrid is the industry’s first car with a choice of all-electric, hybrid and plug-in hybrid models. The Ioniq Electric is zero-emissions and offers reduced running costs, evidencing that a sustainable vehicle can be an affordable, realistic and desirable future option for everyone. The popularity of electric vehicles will continue to soar in 2020 and beyond. Many established brands are set to release new sustainable car models in the next year, such as the Mini Electric, Tesla Model Y and a whole range from Volkswagen.

Motorsport leaders are aiming to match the commercial vehicle sector’s investment into sustainability. Although F1 cars produce over 250,000 tonnes of carbon dioxide every year, Formula One has committed to reducing emissions by 50% in the next few years. Plans include biofuels, introducing waste-free Grand Prix races, changes to race calendars to reduce flight volume and Aviation emissions, and offsetting CO2 by planting trees and contributing financially to environmental causes.

Skills Shortages

In 2018 22% of UK Manufacturing and Engineering leaders across industries named a shortage of technical skills as their most pressing business problem. To fulfil demand, the UK alone will need to source, recruit and train 1.8 million people by 2025, with retiring technical workforces leaving large and complex skills gaps. The UK government is steadily increasing its investment into engineering careers across sectors, however greater action is needed to fill falling requirements.

Many young people with the skills and aptitudes to match Automotive engineering roles are lost by the sector every year because they are not reached or encouraged in the right way. Many of these are diverse young people – only 8% of the current engineering workforce is female, and despite students of ethnic minority accounting for 25% of university engineering graduates, only 6% of them go into engineering careers.

Motor Trader reports that 88% of Automotive leaders identify diversity and inclusion as a high priority, which should see further investment into inclusive hiring strategies and a more diverse workforce in the coming years.

Whilst the number of apprentices has declined in recent years, Auto and Motorsport apprenticeships are proving highly compatible with intelligent and enthusiastic young people who want an exciting career path without University debt. Industry giants like Nissan and McLaren have already implemented new training programmes at entry up to degree level, opening up the sector to talent from a variety of ages, academic ability and backgrounds.

Partnering with schools, colleges and universities will be the driver behind popular and successful Automotive apprenticeship schemes. Raising awareness of the exciting and varied careers that the sector has to is the beginning of the solution to the skills shortage.

 

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Topics: F1 & Automotive