4 Automotive Industry Trends for 2023 You May Not Be Aware Of

Key Industry Trends Shaping The Automotive Sector In 2023

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The automotive industry is huge. In the US, it’s the second biggest industry sector after pharmaceuticals and the global auto industry is worth around $3tn (that’s trillion with a ‘t’!).

There are some automotive trends that make front page mainstream news, such as, the soon-to-happen commercialization of autonomous vehicles, the unstoppable growth of electric vehicles (EVs) and the chip shortages and supply chain issues faced by manufacturers, leading to sky high valuations on new and used vehicles.

But amongst these headline-grabbing stories, there are numerous other key trends that will shape the industry in 2023 and beyond. Given the size and importance of the industry, we wanted to highlight and analyze some of the lesser-known trends.

The car buying experience from a dealership is going to change significantly

OEMs or vehicle manufacturers (Ford, VW, GM, BMW, Toyota etc.) are all looking at the Tesla model of selling direct to consumers, with no marketing budget and no haggling, as the future of automotive retail. Gone will be the days of bazaar-like negotiations when buying a car from a dealer. 

The new model for dealerships will be to act more like an agent, collecting a commission on vehicles sold but not necessarily owning the inventory. A dealership will become a place to go to learn about the characteristics of different models or to ask questions about owning and operating an electric vehicle, for example.

Repairers and repair shops, will need to re-think their service and maintenance approach when it comes to electric vehicles (EVs)

Electric vehicles require less maintenance as the battery and motor have far fewer moving parts than conventional ICE (internal combustion engine) vehicles. There are fewer fluids (to fuel and lubricate those moving parts) and there is less brake wear due to regenerative braking technologies.

All this means that EV drivers should expect to have to spend less time going to repair shops and carrying out routine maintenance. That’s great news for drivers but less good news for the mechanics and aftermarket part suppliers. In addition to less overall business, they will also need to re-train their technicians for electric vehicle maintenance and will have to develop robust supply chains for spare and replacement parts.

Finally, the battery will become one of the defining factors in how well an EV holds its value on the second-hand market. For example, in the US, replacing the battery on a Nissan Leaf can cost $5,000 to $10,000. So drivers will need convenient and easy to interpret data analysis to help them take care of their batteries and used-car buyers will see battery health statistics as a critical part of each car’s condition report.

Auto manufacturers will have to become software companies

Cars already have millions of lines of code powering driver assistance, including safety,entertainment, and map features. With more and more self-driving vehicles expected to hit our roads over the next few years, your car has essentially become a computer on wheels.

Auto manufacturers (OEMs) have recognised this and are starting to try and compete with traditional tech companies to hire software engineers. And it’s not just inside the car, all the systems around the vehicle buying experience, leasing, warranty and service need to be brought into the 21st century, so established OEMs can compete on customer experience with the newer manufacturers like Tesla and marketplaces like Carvana.

Here at Ravin AI we’ve got first-hand experience of this from our partnership with Toyota Financial Services (TFS), who have gone through an IT Agile transformation over the time we’ve been working with them. Last year, in partnership with Ravin AI, TFS launched VINTrak, an AI-powered end-of-lease inspection tool for dealers.

Physical Inspections Are Becoming Digital

The days of sending a physical inspector to assess a vehicle’s condition - for example at the end of lease - are, in most cases, over. Digital technologies such as AI and computer vision are allowing non-professionals to conduct vehicle inspections, guided and assisted by AI. This is making inspections more objective, faster and cheaper.

To those outside the automotive industry, vehicle inspections may not seem like a big deal. But think about any time a car changes hands - when being manufactured, shipped, sold, rented, leased, insured, repaired etc. All these touchpoints require an inspection and today, most of those inspections are still done manually with pen and paper. Like the other trends discussed in this post, vehicle inspections are finally entering the digital age.

Conclusion - Keep An Eye Out For Some Of The Less Visible Automotive Industry Trends

In the next few years the automotive industry is set to change more than it’s changed in the past 100 years. Electric vehicles, self-driving technologies and new software-first automotive companies such as Tesla, Uber and Carvana will draw the headlines, but there are seismic shifts happening just under the surface too.

Some of the important ones to watch include the shifting role of car dealers, the new thinking required for maintaining and repairing electric vehicles, software becoming a critical core competence for automotive companies and inspections becoming digital. 

Hold onto your seats, it’s going to be a wild ride!

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