Top 5 Lessons from the Automotive Industry in 2023

Top 5 Lessons from the Automotive Industry in 2023

The automotive industry is rapidly undergoing a sea of changes, especially after embracing digital transformation. According to ABI Research, a whopping US$100bn has been invested by car manufacturers worldwide in 2022, in order to modernize this sector. The figure is set to hit US$238bn a year by the end of the decade.

What are the trends that will define the industry in 2023 and beyond?

Vehicle ownership

There are several reasons why people are changing the way they purchase and use cars. The rising costs of owning a car and other expenses, are playing a huge role in consumers choosing not to own a car at all. Vehicle owners are also becoming more environmentally conscious, and this is sparking a growing trend in vehicle sharing and carpooling. Many people are also working from home, so they don’t feel the need to own a car. Dealers have to factor in these socioeconomic trends while selling vehicles.

Dealers have to factor in socioeconomic trends while selling vehicles.

More subscription-based services

In a few years, cars could become something that people use only when they need to. It indicates a change in consumer behavior, as they might expect more personalized features such as the position setting of the steering wheel or a person’s favorite radio station will automatically synchronize across the range of vehicles to which a consumer has access, regardless of brand, model or ride-hailing company. As a vehicle becomes an extension of a home and office, retail and business apps are expected to arrive in cars. Such consumer demands of synchronized ecosystems will push dealerships to sell more subscription-based, app-driven operating models.

Autonomous driving software

In-vehicle usage has to be encouraged, while focusing on the complete safety of its occupants. It means autonomous driving (AD) software needs to be operational in most, if not all circumstances. However, this is easier said than done, as it requires millions of cumulated hours of simulation and validation of AD algorithms. The shift towards a more software-defined vehicle will force carmakers to reduce hardware and software dependencies, where software runs only on specific hardware. Dealers have to work harder to convince consumers to adapt to this change.

The computational power of the cloud and optimization opportunities provided by AI and machine learning have to be leveraged.

New vehicle development

Cloud and artificial intelligence (AI) is all set to transform vehicles. The computational power of the cloud and optimization opportunities provided by AI and machine learning (ML) have to be leveraged. Vehicles are becoming more connected, so consumers are demanding more features as well. It will also help to boost cyber security, an area that far too often goes overlooked in the car industry. For dealers, AI can help to manage the inventory more efficiently, by predicting best-selling models. It can assist dealerships in making more informed decisions about which vehicles to stock and when to order new inventory. 

Customer experience

The attention span of customers has become extremely limited. If they aren’t satisfied while visiting your dealership, it takes them seconds to move on to your competition. As mentioned above, with the usage of AI, chatbots can be created to handle customer queries, while providing prompt and accurate responses. These chatbots can help dealerships offer better customer service and build stronger relationships over time. Free up sales personnel at your dealership for more important tasks – AI-powered virtual assistants can guide customers through the buying process (initially) and provide personalized recommendations based on their preferences.

It is an exciting time for the car market, brought on by digital transformation and other factors. Car sales are yet to go back to pre-pandemic levels, but if dealerships can adapt to market trends and demands, they can easily tweak their offerings for customers and boost revenue.

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© 2024 Modera Ltd. All rights reserved.