The automotive industry is a global one, and one which has enjoyed rampant success for decades upon decades. This global industry chiefly comprises manufacturers, suppliers and sellers, with service engineers forming an ancillary part of the sector.
There have been many challenges to national and industry economies in recent years, and the automotive industry is no stranger to them. But what challenges has the market faced, and what is the forecast for years to come?
There are many automotive industry metrics to track with regard to recent performance, but one of the most straightforward relates to the sale of new vehicles globally. The industry had reached an all-time peak in 2017, with around 80 million vehicles sold worldwide.
However, the projected numbers for 2021 paint a starker picture for the industry, with negative growth leading to the sale of just 66.7 million vehicles internationally. What factors were responsible for this visceral change in growth pattern across the world?
International Factors and Industry Decline
The first, and most obvious, factor in the decline of the automotive market is the coronavirus pandemic. Following the spread of the novel coronavirus around the world, hundreds of nations imposed their own lockdown restrictions – preventing both domestic and international travel in many cases.
As a result, many international industries fell to their knees. Manufacture was rendered impossible in many jurisdictions, and supply routes were shut down completely. Within the automotive industry in particular, though, a perfect storm was brewing. A semiconductor shortage occurred, with a direct impact on vehicle manufacture.
A Rallying Market
The above factors are still having a direct impact on today’s automotive industry. Manufacturers have been slow to ramp production back up, leading to the increase in demand – and also price – of second-hand vehicles. But there is light at the end of the tunnel, with day traders, market speculators and casual spread betting retail traders alike forecasting a return to form for the industry.
The major driver for this shift in opinion is the growing popularity of electric vehicles (or EVs). New technologies have EVs standing toe-to-toe with petrol- and diesel-powered vehicles, representing a dramatic decrease in running costs for the average family.
As the semiconductor shortage slowly abates, the manufacture of EVs is set to rise considerably – meeting record demand, and potentially seeing record investment in the market. This new market is a breath of fresh air for an industry predicated on a finite fuel source, and a sure-fire sign of growth to come.