Automotive Industry is one of the world’s largest industries by revenue. This industry deals in a wide range of companies. These companies manufacture, design, develop, and sell vehicles. The automotive industry is on the verge of new technologies and innovations. The demand for motor vehicles over the past years has surged rapidly. This industry’s main products are Cars, trucks, buses, and motorcycles. Alongside growth, this industry has provided employment opportunities to Millions of people, eventually leading to economic growth.
Due to rapid technological growth, the automotive industry has shown immense growth. Every sale of a vehicle adds to the development of this industry. Each company has its vehicles in every segment of the auto motors. How the sale of each car generates money for automakers? What’s the history of this industry? What all factors affect the automation industry? We’ll be talking about all these topics in detail.
History of the Automotive industry
This industry began in the 1860s. Earlier the United States dominated the automation industry. The U.S. used to produce 90% of the vehicles around 1929. The fight between the U.S., Japan, and China to remain at the top of Production has always been strong.
Earlier, engineers used to manufacture cars manually. In 1960, robotic equipment was introduced into the automobile industry for Production. A massive contribution of the automotive sector to economic growth was the introduction of full-scale mass production.
What all factors affect the Production in Automotive Industry?
Economic factors are the most important factors affecting the production of the automotive industry. The financial condition of the world’s economy is always directly proportional to the Automotive industry. At the time of a healthy economy, the sales of vehicles are high globally. While, at the time of the recession, The sales of cars are generally on the lower side worldwide.
Another significant factor affecting Production is price. If the prices are higher, it will lead to fewer sales, and eventually, the company will have to produce less. If the prices are set lower, the company’s sales will increase, increasing Production. It is generally like the Law of Demand. The higher the price lower the quantity demanded, and vice versa.
Nowadays, Technology is playing an essential role as any other factor. Technology has acquired a central role in nearly every industry. The use of technology at the right place and time can lead to an increase in Production. Like, if the digital media is used correctly, more people will be attracted, which will lead to more sales. These days, cars are equipped with the latest Technology like digital interface, infotainment systems, wireless connectivity, etc.
How does every vehicle generate more revenue for the automakers?
Each company these days focuses on rebuilding their old cars or coming up with facelift models every year. This is done to ensure that the Technology is up to date in the car and to keep up with consumer preferences. Companies are focusing less on no. of vehicles and more on the up-gradation. These days, people want updated products. This leads to increased sales, which generates more revenue for the company. Almost all car brands have at least one car in each segment, i.e., hatchback, Compact SUV, SUV, sedan. For example, if we look at Honda, Hyundai, Maruti Suzuki, etc., they all have cars in each segment, and they keep bringing the facelifts or the upgraded versions of their old vehicles.
Global Revenue Generation of the Automotive industry
Changes in the Factors of Production, especially in Technology, have led to an increase in the global revenue generation of the automotive industry. This industry is very dynamic. It has constantly been changing. It will change drastically by the next decade as EVs will get more attention. Notably, the production speed will also increase with technological advancements. Everything will constitute to grow in the revenue generation.
In 2021, the global automation manufacturing market was about 2.7 trillion U.S. Dollars. It is forecasted to increase to 2.8-2.9 trillion U.S. Dollars by the end of 2022. It was a 2.5 trillion industry in 2020. Production of Electric Vehicles and Self Driven cars will lead to a rapid increase in revenue generation in the upcoming years.
Impact of Covid-19 on the Automotive Industry
With the rise of Covid-19 cases in 2020, the automotive industry started slacking. Due to Covid-19, Everything was locked up. Production of vehicles was ceased. Due to the virus spreading, importing automobile parts from China was blocked, and the whole automotive industry was at a halt. In 2020, almost 78 Million motor vehicles were produced, which is about 16% less than the previous year. It was the most significant fall in the automotive industry. Over the last decade, China has ruled chiefly the no.1 spot in the Production of cars. During this pandemic outbreak in China, almost all production plants were closed. Not a single vehicle was out of the production line from Wuhan.
Future of the industry
According to the data collected by Statista, the Global Automotive industry will be more than 9 trillion dollars by 2030. Of this, 28% of the revenue will be generated from the new vehicles. This industry will change a lot in this decade. The reason behind this is technological advancement. There will be more no. of EVs and Self drove cars by 2030. Moreover, all of these advancements will lead to more revenue generation by the vehicles.
In this digital world, customers demand more feature-loaded vehicles with power and performance. Companies adapting to customer needs over time are succeeding in this rat race. Innovation has become an integral part of the automobile industry. It will be the most crucial part of the success of any vehicle company. Millennials are also focusing on the looks, so to keep up with the designing part, research and development should be taken place, keeping the needs of the youth in mind. After focusing on all these factors, the automakers can make more money from their vehicles.