How are the industry and the market evolving?
Globally, the automotive industry has recovered from the economic crisis. Industry profits in 2012 (EUR 54 billion) were much higher than in 2007 (EUR 41 billion), the last pre crisis year, and the prognosis for future growth is even better. By 2020, global profits could increase by another EUR 25 billion, to EUR 79 billion. That is good news, but the benefits will not be distributed equally across all geographies or all types of cars. Instead, some regions and segments will do much better than others. What is most striking about the recent past is how profoundly the source of profits has shifted.
How can OEMs benefit from these new challenges and Opportunities?
The lion’s share of profit growth will come from higher sales. But beyond selling more Cars, the industry is changing in more fundamental ways. The research points to nine major imperatives for the automotive industry, especially for OEMs. All product sold on Autokartz.com are 100% genuine. We get all our product directly from manufactures.
- The price-cost gap narrows.
Price and regulatory pressures mean that OEMs in the established markets of Europe,
North America, Japan, India and South Korea have little margin of error when it comes to making the right decisions on how to differentiate themselves. An analysis of 76 vehicle models shows that prices have been almost flat in real terms since 1998, while more and more features and improvements have been added due to competition, customer demands, and regulation. The net effect has been a decline in profit per vehicle but OEMs have been able to manage this so far because they have been able to make efficiency and quality gains of 3 to 4 percent a year. However, tighter regulations for emissions or safety will add further costs to the average vehicle. Evidence suggests that the share of this regulation-driven content will increase to 60 percent in these markets (up from 40 percent). This will narrow the price-cost gap, and OEMs will face difficulties in prioritizing among differentiating features and basic customer demands. At Autokartz we promise to get you every equipment for your car at the best prices.
- Rising complexity encourages more platforming.
Well into the 1990s, major brands would build four or five different models off a single platform. But car buyers worldwide continue to be more and more demanding, seeking region-specific features, performance, and styling as well as an element of uniqueness even in mass market products as a way of differentiating and emphasizing individual taste and status. Most automakers respond to this demand with an increasing number of derivatives subject to markups compared with standard models. In effect, derivatives share common non-consumer facing product elements (e.g., common chassis underpinning, body structures, core components) in order to make differentiation of consumer-facing features profitable.
In the entry and value segments, the pace of introduction of new derivatives will likely peak, and the number of new models will level off. Just in the premium segment, there are some remaining market niches that offer opportunities. For non-premium players, the key to profit is to produce higher volumes on fewer platforms. But running more derivatives per platform also increases complexity. At Autokartz one will find a wide range of parts of every car brand.
- Greening gets more expensive
Carbon dioxide regulation is likely to continue to tighten, and not just in Europe. China, the US, and Japan have also enacted laws to reduce emissions. One immediate result will be higher costs. Because the easy things have already been done, the price of cutting future emissions is rising. In Europe, the 2020 target might be reached with the help of advanced conventional technologies, but to meet the overall fleet targets, more electrification could be necessary (especially for premium players). This will push OEMs to invest more in e-mobility, meaning electrical/hybrid powertrains, including batteries, as well as in lightweight and aerodynamic drag-reducing technologies. Autokartz bring you all the latest tech features for your car so that you keep up with the trends.
- Retail of the future comes closer
With a few clicks, potential car buyers can already access a tremendous amount of information, and the volume and breadth of the material available on the Internet will only increase. In 2017, 70 percent of buyers stated the Internet as a major source for information gathering, displacing brochures, ads, and test reports. Five years ago, customers visited dealers an average of five times before purchasing a car; now they enter the showroom well-informed, giving the dealer one chance to turn the browser into a buyer. Dealerships are still important in decision making and in the customer’s overall experiences but less so in the research and product comparison phases. This presents OEMs with contrasting challenges. On the one hand, they need to create a state-of-the-art Web presence that provides customers with a digitally supported purchasing experience based on, for example, comparison tools, car configurators, and other online tools.
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On the other hand, we provide an engaging interaction and compelling experience across all touch points on the customer decision making journey and in the post-purchase experience. We believe in updating our customers about the latest and upcoming situations of the industry. Visit Autokartz.com to know more about auto parts.