Year That Holds Promise To Fundamentally Alter Mobility The dynamic transformations in this space are organic and happen due to multiple key industry drivers
By Sunil Gupta
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The industrial revolution ushered us into an era of relentless progress. The car was one of the most significant inventions during that timeline. Today, these marvelous machines of mobility are the mainstay of most commercial and personal spaces as assets. It is expected that the global automotive industry will grow by approximately $9 trillion by 2030. An Invest India report suggests that the Indian automobile industry will also reach the $300 million mark by 2026. This industry is fast-paced and one of the echelons of commercialism. Investments and advancements are the name of the game. The dynamic transformations in this space are organic and happen due to multiple key industry drivers.
Economic environment: The surrounding economic factors are the principal drivers of the automotive industry. If the economic conditions are favorable, more end-users will buy vehicles. It will further propel and provide positive momentum for the industry. However, a slowdown can lead to a lack of confidence in the stakeholders, so consumption can go down.
Demands of the customers: Interest, demand, and preferences are also some of the key factors that direct the trend in the auto industry. A plethora of choices are being presented to the end-users - consumers are preferring specific styles in different segments and hence the market for niche vehicles is growing.
Globalization and competition: Due to a free market, car manufacturers can gauge the market demand and compete intensely with other makers within various vehicle segments. Globalization and competition amongst vehicle production labels have been the foundation for the various trends that have peaked over the years in the automobile industry.
Technological advancements: The fourth factor that drives this industry are the technological innovations. Pioneering this factor can help carmakers ace the market. They take aid of technology to add value to their vehicles and escalate the competition.
Government regulations: Government directives are generally etched in stone, so they shape the standards of vehicle production in an area. Norms set by the ruling dispensation keep the manufacturers on their toes.
These factors are the drivers of change in the automotive industry. And the cycles of change are getting shorter and shorter as new trends emerge faster and competition intensifies.
The other trends that I see in the automotive space are as follows:
The growth of car leasing or subscription: This trend will be accentuated by the aftereffects of the lockdown-induced economic slowdown and the increasing consumer demand. Many people are looking to move away from the conventional tag of "car owner" and are examining the market for alternative means of transport. Renting or leasing vehicles or subscribing to them is rapidly becoming commonplace. This segment of shared mobility has seen rapid growth. In India, this segment stands at a market worth of INR 1500 crores and is expected to grow at 15-20 per cent CAGR.
Internet connectivity in cars: The Indian automobile landscape is changing every year. Internet-enabled cars are the latest must-haves for car enthusiasts. Technological factors strengthen this trend. Mega manufacturers spend big bucks on R&D to come up with hi-tech features. Labels like MG and Kia initiated this change in the market; the others are catching up. 2022 would see many more "connected" vehicles on the road. And the icing on the cake will be the adoption of a common industry-wide data structure.
Emergence of electric vehicles: As we all gear up for 2022, electric vehicles (EVs) will increasingly become the popular option for mobility. It is expected to grow at a breakneck pace this decade, with a CAGR of 90 per cent and a market capitalization of $150 billion by 2030.This trend is directed by the demands of the consumer, the incentives of the government and the rapidly dropping cost of EV batteries.
Shun the showroom, go digital: The customary showroom visit is now lower down on a car buyer's list. Digitization and the interactive websites of automobile manufacturers have made it easier for both parties. Through a digital portal, dealers can interact with the potential buyers in a more convenient manner. The multiple customer touchpoints enhance the consumer experience as well. 2022 has the potential to bring a pure-play digital car buying experience to the fore.
The new catalyst for lease and sales: Inadvertently, the year 2021 might have ignited a new era in the automotive industry in India. The policy to scrap older vehicles will act as a catalyst to boost sales in the coming year. It will also drive the move from car ownership to rented/leased/subscribed cars since that is less of a financial liability and provides a far wider choice of vehicles.
Vantage view
In the automotive industry, a multitude of factors drive change. These multiple drivers make it a dynamic and complex industry and the trends which will intensify in 2022 promise to fundamentally alter mobility as we know it today.
