That is why the automotive market as a whole is determined to redefine itself to establish medium and long-term objectives. Only in this way can activity be recovered in a few years. Regarding the contingencies of the quarantines, it is worth noting that the changes that emerged were taken advantage of by a small sector: the leading multinationals in the sector.
The figure that indicates the state of the industry is usually the number of vehicles per thousand inhabitants. This number varies by country and city, but has fallen dramatically since the pandemic. Supply chains have been affected by COVID-19 and have not yet recovered. Currently and for a couple of more years, they will not be sustainable, nor will they leave profits at the level they were managed before 2019. That is why the industry is seeking to diversify from the chains. Expanding means: betting on the local market, looking for new suppliers, and breaking up monopolies so as not to depend exclusively on a completely overwhelmed system. Clearly that is the bet for next year.
Likewise, by finding an answer in small markets, everyday solutions are found in terms of communication and management. In this way, the entire production circuit is simplified, facilitating the actions of the different agents that participate in the activity. This inventory crisis generates waiting lists to buy a new car. Furthermore, the purchasing power of the middle class has declined throughout the world. That's why so many buyers turn to the pre-used market for a "new" vehicle. According to carVertical, the pre-used vehicles market rose to new highs during the pandemic years.
Environmentalism as a starting point
The first point to consider regarding the challenges of the sector is clearly sustainability. Large companies are truly reconsidering their developments, considering that global warming has accelerated lately. That is why lithium and natural gas are goods so required by all oil and automotive companies. Technology will also seek to generate the conditions to continue articulating eco-friendly productions. Electric vehicles and hybrids are just the beginning of that path.
Reducing the carbon footprint is simply a utopia for the moment. Although there are various powers to reach that point, it has not yet been possible to stop the advance of pollutants throughout the world. Furthermore, natural resources are on the verge of depletion. Consequently, a process has also been initiated to exploit materials that replace traditional fuels.
Another point that promises to collaborate with environmental ethics is the trend of satellite tracking. Fleet management, which is currently in fashion, together with GPS technologies, aims to reduce traffic jams and delays on routes and streets. Thanks to their intervention, the use of routes is optimized, which also helps reduce excessive carbon emissions. Hydrogen is another challenge that many recognized companies have taken on as their own. Its environmental viability and economic possibility determine it as the future of engines.
As we said previously, policymakers expected the rotation from traditional to electric vehicles to occur at a faster rate than what is currently happening. Hybrid technology changed that equation, since most users prefer the option to change the layout of their cars, rather than relying exclusively on electric ones.
The problem of suppliers: beyond a simple material's crisis
Continuing with the breakdown of what the pandemic left us, not only was the manufacturing of cars and trucks delayed by stagnation, but technology also did not know how to cope with this crisis. Microchips, to give an example. These are increasingly in demand for any type of innovation, and the decrease in their production also affects the automotive market. Factories have already significantly reduced production numbers, due to the shortage of these small devices that are vital to their construction and operation.
Buying, is it no longer a profitable business?
New ways of acquiring or using cars have long appeared in the world. Specifically in large cities, where vehicles are generally used as a means of transportation, new rental formats have been born. The market disruption culminates with companies that specialize in loans. The idea of ride-sharing also emerged, which has generated a stir on digital platforms.
The reality is that beyond the multiple assumptions that we can make, the only thing that appears clear as day on the horizon is the urgent need to modify usage patterns and continue with the replacement of fuel cars with electric ones. It will be a hard road, but the political, judicial, and business role will be crucial.