There is a lot that has been happening in the automotive landscape in the past few years. We have seen a lot of innovation as manufacturers push forward to deliver the car of the future sooner rather than later. As a result, we are starting to see electrified, autonomous, shared, and connected cars. Unfortunately, the vehicle industry has also suffered a few blows due to the COVID pandemic, among other factors. For instance, there currently is a computer chip shortage that has slowed down vehicle manufactures. Read on for an in-depth look at the current and future state of the automotive landscape.
Computer Chip Shortage
Almost every vehicle manufacturer has had to halt production due to a computer chip shortage. Several theories have been put across to try and explain why there is a computer chip shortage. For instance, the chip industry has been under pressure because of the rise of 5G. Apart from that, the US moved to stop the sale of semiconductors and other technology to Huawei. As a result, chip manufacturers in other countries were flooded with orders and had to step up to meet the demands of the Chinese firm.
As a result of the chip shortage, there has been a drop in auto sales. Meanwhile, auto industry analysts expect the chip shortage to continue into 2022 and probably beyond. It is also thought that U.S. auto sales will be driven down by about 25% before the end of 2021. This low car inventory issue has been a problem for many auto dealers trying to keep their customers happy.
To try and work around the shortage, car dealers are now trying to get their customers to order vehicles they want in advance. This means customers are required to put down a deposit while they wait for their cars to be delivered. Customers are also being encouraged by analysts to try and open up their choices and consider looking farther away from home. For instance, if one fails to find the exact make and model they want, they should at least consider settling on features and options that might not be their first choice. This will allow more customers to get their cars sooner rather than having to wait.
Used Cars Are the New New?
As if 2020 weren’t bad enough for people looking to buy cars, 2021 is turning out to be worse. Thanks to alarming shortages of new cars, most used cars are now selling for more money than their new-car counterparts. For instance, the average used vehicle is now about 30% more expensive than in 2021.
Even unpopular and damaged vehicles seem to be getting stiff price premiums. For instance, there are cases where a 2017 Hyundai Accent with about 75,000 miles and a faulty transmission has been sold for $8,000 instead of its regular $5,700 wholesale average. The prices of used vehicles have risen dramatically due to the shortage of new cars on the market. However, the expectation was that used car prices would stabilize in the fall. It is still unclear whether this will happen because it also depends on the computer chip shortage situation. If the chip shortage is fixed, then prices will likely normalize.
It may make more sense to upgrade your car instead of purchasing a new one as prices right now are astronomical. It might be in your best interest to hold off until the chip shortage has blown over in the year 2023 before investing in a new vehicle.
Due to innovations like driver assistance and connected cars, a lot of work is now being done to make electric suspension available for more vehicles. As a result, you can expect to see more vehicles with the Electronically Controlled Active Suspension System(ECASS). This type of suspension has fewer moving parts, and it operates with no fluid in the dampers. One of the advantages of the ECASS is a shorter reaction time. Apart from that, it can also contribute to the generation of power. Well, it utilizes linear electric motors for dampers, and that will come as an added advantage in a time where we see a lot of hybrids and full EVs.
What does 2022 hold for the automotive industry?
Several automotive trends are becoming apparent as we inch closer to 2022. For instance, online sales of cars are booming, and the trend is expected to get bigger in 2022. Startups like Tesla started selling their vehicles directly to consumers, and that, plus the pandemic, has spurred consumers to move towards digital purchases.
The automotive industry is surely going to get many new innovations in 2022. With the advance in technology and preferences, a lot of changes will be introduced. And for sure, Automotive Innovation Consulting Firms are going to be a huge part of this.
In 2020, almost 30% of U.S. new car sales were processed online. This has increased buyer satisfaction, allowing consumers to bypass pushy salespeople and avoid potential overpaying and negotiating pressure. Because people have already seen how efficient the online buying process can be, the trend is expected to keep growing into 2022. This means that car dealerships might have to lean more heavily on digital platforms for traffic because there is no indication that there will be any form of digital slowdown.
There are a lot of interesting things that are happening in the automotive industry. This industry has seen and will continue to see many transformations in the coming years. Another trend to look out for is that of EVs. There has been a lot of success in this area, and electrification may come sooner than everyone expected. For instance, Volkswagen plans to ensure that its new cars in major markets will be zero-emission by 2040. This means that we will continue to see growth on the EV platform in 2022 and beyond.