What Are The Biggest Threats To The Automotive Industry

We never run out of obstacles in business. If you’re running a car dealership, here are some major threats to the automotive industry that you should consider.

The global pandemic became a threat to the automotive industry this year, making every month a nail biter for car dealers. Just when you thought there’s nothing worse to come, turns out there are a couple of threats to look forward to and face head on. In this post, we are going to talk about these automotive threats.

(Keep in mind these are only perceived threats and even though we try to think of everything we can to help dealerships out, we may miss things. Always keep your eyes open for potential threats and lets us know if there is a topic you would like us to review.)

Environmental Regulations

Many countries across the world are serous about environmental issues. Reports claim one of the biggest threats to the global climate is the automotive industry. Whether the claims are true or not, more and more countries are looking forward to implementing environmental regulations. These regulations also focus on shifting the automotive industry from fuel-driven vehicles to producing emission-reducing cars.

Why is This One of the “Threats” to the Automotive Industry?

Strict environmental regulations, once implemented, will impact the car manufacturing process. Carmakers will halt most, if not all, their car production to give way to a more environment-friendly technology. As a result, car dealerships have to empty their inventory if most of their used cars for sale are fuel-powered. Otherwise, their cars’ technology would be considered obsolete and gain nothing but a massive loss in profits.

The Silver Lining

For car dealerships, there’s not much of a solution for now. The good thing is, it may take a few more years or even decades for the strict implementation to happen. If that time comes, the government may provide a leeway for car dealerships to adjust. They can also provide programs for car dealerships to keep up with this 180-degree shift. Until then, the dealership has to wait for this threat to the automotive industry to happen.

Shared Mobility

Technology has indeed helped people the world over to lead faster and, in some aspects, a more cost-effective lifestyle. Nowadays, people don’t need to go to restaurants to eat good food other than pizza and Chinese food. All they need is to order delivery from their favorite restaurant through a food aggregator app. People also don’t need to wait on the curb to hail a cab; they can use a car-sharing or ride-hailing app to get them from point A to point B. This sounds ideal to those who don’t own their cars, but it imposes an underlying threat to the automotive industry.

Why Is This One Of The “Threats” To The Automotive Industry?

The threat of shared mobility to the automotive industry is that there’s a big chance that sales will go down. If two-thirds of the population would prefer sharing a ride, only one-third of the population will buy a vehicle. It may be a good thing to see roads with less traffic, car dealerships will suffer in urbanized areas. This situation may cause a need for car dealers to convince people to buy cars.

The Silver Lining:

The good thing is that the 2:1 ratio we set above as an example is likely not to happen. People need their own cars they can drive whenever and wherever they want. Besides, drive sharing services will put a figurative dent in the car’s performance and mileage. Thus, making vehicles deteriorate faster than when you use the vehicle for personal use.

Electric Vehicles

This threat to the automotive industry is nothing new and is connected to the first threat discussed. This is something for car dealerships to take a serious look because, let’s face it, electric vehicles have their advantages. First, it doesn’t give out too much emissions, and electricity is cheaper than gas. In short, electric cars are good for the environment and much better for the pocket. No wonder that a lot of policymakers and environmentalists are promoting electric vehicles to the public with intense passion.

Fact: Did you know that the first electric vehicle was invented more than a century ago? To learn more about electric/zero emission vehicles, click on the link.

Why Is This One Of The “Threats” To The Automotive Industry?

The government is pushing hard for the public to switch to electric cars. With this, car dealerships have to weigh in carefully whether it’s wise to change their inventory soon.

It’s not easy to switch from fuel-powered vehicles to electric ones. If they choose to switch, then it’s going to be a financial and logistical nightmare. When car dealers sell more electric cars, marketing and promotion will become their burden. This is because electric vehicles are still a hard sell nowadays. Electric cars still have a lot of room for improvement, and they are on the expensive side of things.

The Silver Lining

It takes a few more years for drivers to warm up to the whole electric car idea. As mentioned, electric cars still have a lot left to be desired. Car manufacturers have yet to perfect the – well – perfect electric vehicle. They still need to work on charging time, as well as the driving range of EV’s. The government also needs to step up in putting up many charging stations across the country to allow drivers to drive further. The manufacturers still have to make electric cars for the mass without the high price tag. So, if you’re still on the fence about selling full electric vehicles, then you can go for taking hybrid cars instead.

Smart, Connected Vehicles

Another aspect of modernity influencing the way people drive is technology. With smart and connected vehicles, it’s going to feel like you’re driving your own smartphone.

Connectivity in vehicles allows the automobile to collect data and communicate with its surroundings. Simply put, you’re connected to the world wherever you go. Also, you have your personal assistant to help personalize your vehicle settings to your desire and the opportunity to do shared mobility services as your side or full business. The driver assistance system is also worth a highlight since this addresses other cars’ faulty car safety.

Why Is This One Of The “Threats” To The Automotive Industry?

Like new cars being presented to the public, smart cars may still raise some eyebrows as buyers may not yet fully understand how they work. Apart from that, it may even be a hard sell at the moment just like electric cars, because there are still some issues car makers need to address. For one, most of the smart cars come in small sizes. If this is something that most of your customers are not into, then getting profit from it may become a problem.

Another problem that smart vehicles have yet to solve is privacy. Being connected to the world, your car may become a prime target for carjackers who are now considered hackers.

The Silver Lining

Though the shift may not come for years, when carmakers perfect the smart car technology, selling these vehicles is not that hard for dealerships. We’re now living in a technology-dependent world, so everything we own has to be “smart”, including our vehicles. So, even if we may say those smart vehicles are a threat to the automotive industry, it’s more of a good challenge than a bad one.

Self-Driving Cars

As of writing, there are still no cars yet that are fully self-driving, but we are almost there. Many experts believe that driverless cars will solve many accidents caused by human errors, which they consider revolutionary. Since most, if not all, self-driving cars are powered by electricity, they won’t contribute much to pollution. Plus, it’s much quieter.

Why Is This One Of The “Threats” To The Automotive Industry?

The day that driverless cars are going to dominate the streets may come faster than we think. When that happens, private ownership of vehicles will also slowly diminish away. When cars don’t require drivers, the most probable effect will be people won’t be owning one anymore, as they will use a hailing app to get a ride.

People won’t want to get their own self-driving car because it doesn’t come cheap. Experts predicted that a self-driving vehicle would cost around $100,000. If the government finally pushes to get rid of fuel-powered engines on the streets, owning a car might be a complicated process for practically everyone. As a result, carmakers may have a hard time producing and car dealerships may close shop due to low sales.

With the financially tricky aspect of owning a self-driving car and its driverless technology, it’s going to be difficult for dealerships to sell – or even get the chance to sell at all. When dealerships don’t adapt, their business will face a daunting consequence.

The Silver Lining

Dealerships have to rejoice that self-driving cars have yet to gain the trust of the American buyer. Since the price tag is high up there, it may not pick up for a while, and human-driven cars will still dominate. When the price goes down, it may be easier for car dealers to sell them in their dealerships. Although people would just use a shared mobility service rather than owning a car, this will most likely happen in urban areas only. When you live in the countryside or a place with fewer people, you still need your own car to move around.

These are some of the most bizarre and biggest threats to the automotive industry. Another threat car dealerships should know is erratic recon process. This threat is far more dangerous because it can happen now in your dealership. To help you out with your recon, you need to use an auto recon tool that cuts the reconditioning process in more than half the time. To learn more about this tool, click here.

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