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NEWS CENTER 


Top 20 Post-Covid Automotive Trends (Part III)
2020-10-27
source:unknown

  • Two Speed World Economy: Globally, auto sales will recover much faster in China and the U.S. than the EU and India. After 21 months of continuous decline, the Chinese car industry actually grew in April and May. New hotspots of growth might emerge in Russia and Eastern Europe.

    Rise Of Lean Product Development Strategy, Diversification Of Supply Chains: The Covid crisis has highlighted the overdependence of the auto industry on Chinese suppliers for parts, especially in the electric vehicle (EV) market. As car companies revisit their value chains, they will evaluate reused and shared parts for new product development. We might also see car companies cut back and consolidate the number of trims, variants and powertrains. Supply chain diversification will open up opportunities for countries like India and Mexico. Meanwhile, Brexit and other protectionist economic policies will favor onshoring rather than offshoring in the future. 

    New Collaborative Business Models To Accelerate: Informed by a partnership / collaborative approach, new business models are set to mushroom across the value chain. For instance, car companies will also become charging point utilities, much like what VW has done. Another example relates to the need for dedicated platform and vehicle architecture to manufacture EVs. Initiatives here will increasingly involve licensing models or collaborative endeavors like GM’s with Cruise and Honda.

    Online To Boom: We are already in the midst of a paradigm shift from offline to online. Sales of new and used cars as well as of vehicle related services will become platform / digital based. As downstream functions in the car also experience rapid digital transformation, OEMs will need to redesign their digital retailing strategy.

    Growth In Share Of Wallet Across Product Lifecycle: Car companies now focus not just on selling hardware, i.e., the metal, but equally on generating continuous revenues across the lifecycle of the vehicle. In their pursuit of value creation, retention and enhancement, automakers will push forward on connectivity platforms, personalized offerings and FoD services.


    Circular Economy, Automotive Industry Innovates to Zero: Covid will provide impetus to automakers’ Vision Zero initiatives. Car companies have been very good in terms of building carbon neutral factories, striving for zero fatalities or developing zero emission cars. But what we are seeing now is the incorporation of use and reuse practices – the ‘Design to Dismantle’ principle – at the design stage itself. Such circular economy practices will anchor the transition towards Innovating to Zero.

    Return Of The Hatchback And New Body Styles: We might see the return of the hatchback, exemplified by the VW Golf, as a second car. If SUVs and cross overs were the dominant body styles of the last decade, the next decade could see the emergence of new body styles driven either by Covid, the shift to a second type of car or the debut of a new generation of boxy, monolithic models for the growing Gen Z customer segment.

    Rebirth Of The Used Car Market: In an environment where value is paramount, the used car market will make a strong comeback. Valuations of used car companies are at an all-time high (pick up some Vroom stock right away!), while auction prices for used cars are on the up and up. Meanwhile, we will see a big shift to digital marketplace models for used cars. So far, Frost & Sullivan has already identified six such platforms with used car sales likely to migrate wholly online over the next 3-5 years.

    Covid might have thrown the automotive industry (not to mention, our annual forecasts) off track. However, it has provided automakers with an unexpected opportunity to introspect and home in on the most impactful ideas and trends that will shape their future in the decade ahead.


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