One of the biggest markets in the world, the automotive industry, has witnessed numerous technologies, digital services, and other developments in the last few years. But there are several key challenges it must overcome in 2024, which could significantly affect overall revenue in the years ahead.
1. Staying updated with digital trends
Technology is evolving at extremely fast speeds, so automotive companies have to come up with new ways to learn about and implement new technologies to keep up with competitors. One important challenge is how to utilize data to know more about customer buying behavior and chalk out their purchasing journey. Customers seeking a vehicle, related product, or service will heavily depend upon digital assistance. Accenture has predicted that digital services could lead to as much as US$2.5 trillion in additional global revenue for the automotive industry within the next two decades!
2. Supply chain shortages
The chip shortage hit the auto manufacturers hard, especially during the pandemic. Demand is again going up, but supply remains short, as these semiconductor chips are used in all kinds of devices such as computers, mobile devices, and other electronics, apart from vehicles. The chips work to manage battery systems, motor control, and power distribution in electric and hybrid vehicles, and the electric vehicle market is set to grow in the coming years. There is some improvement in 2024, but automakers now require chips with more computing power.
3. Regional differences
Another challenge when providing exceptional customer experiences worldwide is addressing regional differences. Automotive companies must avoid a one-size-fits-all approach in this case and focus on regionalization.
Each area will have distinct product offerings, complex customer experience requirements, and legal constraints, which a global template will struggle to accommodate. Moreover, the differentiation between the backend and frontend of digital commerce needs to be a strategic driver for customer experience projects.
4. Car prices are dropping
As per the National Post, vehicle prices are going down due to an influx of inventory after the Covid-19 pandemic. In the United States, new car prices are expected to drop in 2024, with much of the inventory bouncing back after the chip shortage. According to NASDAQ, global car production would exceed sales by 6% in 2024, creating a surplus of 5 million vehicles that will ultimately receive price cuts to sell.
5. Going beyond conventional business models
Electrification is still in the nascent stage, while original equipment manufacturers (OEMs) are focusing mainly on expanding charging infrastructure. While creating a positive customer experience by developing charging stations in ideal locations is an essential part of the process, it is only the first step. It is vital to go beyond this mindset by incorporating marketplace capabilities into the conversation. For instance, company AVAG has launched the platform ALLES.AUTO – it is aimed at creating a marketplace to offer retail partners a forum to map vehicles, additional offers, and comprehensive services online.
6. Artificial intelligence (AI) enabled assistants
Generative AI and learning language models are rapidly being incorporated into the automotive industry. Toyota, BMW, Tesla, and Mercedez Benz are adopting AI personal voice assistants and driving assistance systems. However, AI software still must be fine-tuned with glitches to be ironed out, before it becomes fully capable of answering questions, guiding buyers on their car purchase journey, and much more. It is necessary to adopt a customer-centric approach advocates for data organization and leverages AI functionalities to understand that data better.
Despite the hurdles in 2024, it will prove to be an incredible year for the automotive industry for dealerships, vendors, and OEMs, as new technology, emerging markets, and improved data assistance, is already making waves. These trends will help customers look forward to a more comprehensive buying experience.
