Disruptive Trends in the US Automobile Industry

This report analyzes the latest trends in the US automobile industry, including the rise of electric and automated vehicles and the importance of connectivity. The report also discusses the challenges faced by traditional manufacturers in adapting to these trends and maintaining a balance between features and pricing. References are provided for further reading.

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Abstract
Strategies are developed on the basis of competitive forces and trends that are emerging within
an industry. The scope of the current analysis concerns automobile industry in the US that is
randomly faced with influx of several technological disruptions. There are new electrical
vehicles that are introduced in the market. Fully automated vehicles are also manufactured by a
number of manufacturers in the US. Most importantly connectivity amongst vehicles is driving
technological advancements and upgrading. While these various technological disruptions are
emerging at the same time they possess significant challenges to manufacturers to integrate such
adaptations. There are also threats pertaining to security and safety of passengers of vehicles.
therefore, it can be concluded that while technological disruptions does take place, there is bound
to be some challenges faced that needs to be overcome.
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Table of Contents
Abstract.......................................................................................................................................................2
Introduction.................................................................................................................................................3
Trends in the Industry.................................................................................................................................3
An important emerging Issue with trends in the industry-new strategic plan............................................3
Conclusion...................................................................................................................................................4
Reference Lists............................................................................................................................................4
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1.0 Introduction
Strategic planning is made according to goal definition of the organization. Latest trends and
developments along with industry analysis are taken into consideration for forming strategies
that can easily be applied (Spaeder, 2007). Automobile industry within U.S. is highly competitive
with large number of companies and varied types of automobile models. Innovation has been the
key to growth of the industry within the country. Open economy in the US has further invited
more market participants to enter and market their products in the country. The scope of this
analysis deals with latest trends within the automobile industry in US that has been driving
growth. Analysing these trends will allow forming of strategies that are suitable for the industry
and market.
2.0 Trends in the Automobile Industry
Automobile industry within US has been highly innovative with a number of trends that has been
driving such growth patterns. Technology trends is bound to revolutionize ways of industry
towards changing of consumer behavioral patterns, driving transformational change and in
developing partnership (Sturgeon T. V., 2008). As global economies are transforming dramatically
with developments in emerging markets, there has been an accelerated rise in technology that is
further changing consumer preferences for ownership. New business models have been forced to
revolutionize as digitalization has been impacting automation. The trends have led to various
disruptive trends emerging in the automobile industry as electrification of vehicle, fully
automation and connectivity of vehicles.
1. Product Related Trends-Electrical Vehicles: Most important type of trend that is
driving the automobile industry is green battery operated cars. Tesla’s CEO Elon Musk
has been highly focused and developing automobiles that does make use of unsustainable
form of resources as fossil fuel and runs on battery. This innovative disruption has led to
high growth in environmental friendly automobiles. with electrified vehicles becoming
more competitive and viable, having features of regular vehicles, there has been
tremendous speed of adoption at the global levels. With tightening of emission
restrictions, lowering of battery costs, availability of charging infrastructures, increasing
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consumer acceptance has created a strong penetration for hybrid, battery electric, plug-in
and fuel cell vehicles (techcrunch.com, Retrieved on 4th February 2018). Especially
regulatory push at the local and regional level will drive sales in this segment. It has been
estimated that by 2030, electrified vehicles would amount for 10 to 50% of total vehicle
sales. Adopting electric vehicles will be high across denser cities that have stricter
emission rules as there will be consumer incentives as well including driving privileges,
tax breaks, discounted electricity prices and so on. Battery costs has also decreased from
$150 to $200 per kilowatt-hour with electric vehicles taking over conventional vehicles.
2. Product Related Trend-Automated Vehicles: A pertinent technological trend that is
driving automobile industry is fully autonomous vehicles. It is estimated that by 2030
approximately 15% of total car sales could be fully autonomous vehicles (Shaheen, 2013).
Currently there is availability of advanced driver-assistance systems (ADAS) which is
playing an important role to impact regulators, corporations and consumers for
moving towards fully autonomous vehicle before 2020. There are a few challenges that
are hindering growth of fully autonomous vehicles, but once those challenges are
overcome successfully then there will remain tremendous value for consumers.
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Figure 1: Prediction of Autonomous Cars by 2030
Source: (Company, Retrieved on 4th February 2018)
3. Service Related Trend-Connectivity: Shared mobility, feature upgrade, new business
models and connectivity services will allow expansion of automotive revenues by 30%
that could amount to $1.5 trillion. This revenue pool could allow diversification for on-
demand mobility services along with data driven services. Traditional car sales that is
currently figured at $5.2 trillion could expand with increasing aftermarket services and
products from $3.5 trillion in 2015 (Paul Gao, Retrieved on 4th February 2018). Connectivity
amongst automobile vehicles along with autonomous technology will allow users of
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vehicles use transit times for personal activities. Software based systems have increased
speed of innovation will impact cars to be more upgradable.
Figure 2: Revenues from New Services
Source: (Company, Retrieved on 4th February 2018)
Shared mobility solution will make consumers more aware regarding latest technological
advancements taking place. This will led to upgrading used cars in private manner as well.
Overall global car sales is expected to grow at but will drop significantly affected by
macroeconomic factors along with rise of connectivity services (Sturgeon T. J., 2008). These
advancements, growths or changes within the industry are needed to be aware of to form
strategies that could significantly affect automobile manufacturers.
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3.0 An important emerging Issue with trends in the industry
The automotive industry has become highly dynamic and open to new technological disruptions
taking place. While these new changes and innovations are proving to be profitable, on the other
hand it poses significant challenges. The most critical challenge facing some well-known
traditional automobile manufacturers is regarding their capability to integrate these technological
trends (Batten, 2011). While some manufacturers are innovation bent others are facing significant
challenges in adapting to new situations which requires transforming their entire facilities and
available infrastructure. This might require tremendous investments from the part of the
manufacturer and also making some new value chain relationship. While transforming might be
a valuable option, it might not always be a viable one. Requirement of high amount of
investments to be made in research and development platform might not be feasible in cases of
small traditional automobile manufacturers or their suppliers. With immense amount of
technological up-gradation coming into being, vehicles in future might be subjected to higher
levels of pricing. technological adaptation might not be viable at low cost vehicles that are
currently manufactured. Moreover, there might be issues related to security and safety of
passengers using electric and fully automated vehicles. In order to keep pricing affordable new
technological vehicles might not be able to provide highly customized features with appropriate
security and safety aids (strategyand.pwc.com, Retrieved on 4th February 2018). Therefore, most
important issue remains with fully automated or electrical or connected vehicles safety features
that might not come in the price that consumers desires. Automobile companies hence have to
maintain a perfect balance of features in prices that can easily be marketed to consumers.
Especially consumers in emerging economies are price sensitive consumers, which might be
difficult to penetrate at higher price levels.
4.0 Conclusion
Analysing pertinent trends from the automobile industry it can be seen that disruptive trends are
governing the industry and its participants. Primarily three trends that will drive the automotive
industry will be game-changing, which allows predict the way, the industry will look in the
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future within next 10 to 15 years horizon. This trends will affect traditional vehicle
manufacturers, suppliers, regulators, potential new entrants, markets, consumers and also
automotive value chain. All trends are not deterministic in form but allows industry participants
to prepare for potential future state. Strategies needs to be designed in a manner such that
possible challenges can be overcome in an effective manner.
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Reference Lists
Batten, V. (2011). Future Developments. Thunderbird International Business Review.
Paul Gao, H.-W. K. (Retrieved on 4th February 2018). Disruptive trends that will transform the
auto industry. https://www.mckinsey.com/industries/automotive-and-assembly/our-
insights/disruptive-trends-that-will-transform-the-auto-industry.
Shaheen, S. A. (2013). Carsharing and personal vehicle services: worldwide market
developments and emerging trends. International Journal of Sustainable Transportation,
5-34.
Spaeder, K. E. (2007). 2007 SHAPE-UP-Want to get your business into perfect shape? Healthy
choices benefit both your body and your bottom line. Entrepreneur, 43.
strategyand.pwc.com. (Retrieved on 4th February 2018). Automotive Trends.
https://www.strategyand.pwc.com/trend/2017-automotive-industry-trends.
Sturgeon, T. J. (2008). Globalisation of the automotive industry: main features and trends .
International Journal of Technological Learning, Innovation and Development, 2(1-2), 7-
24.
Sturgeon, T. V. (2008). Value chains, networks and clusters: reframing the global automotive
industry. Journal of economic geography, 297-321.
techcrunch.com. (Retrieved on 4th February 2018). The top 7 trends in the auto industry for
2017. https://techcrunch.com/gallery/the-top-7-trends-in-the-auto-industry-for-2017/.
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