Challenges For The Automobile Industry

Industries generally are grappling with various issues but the car industry is particularly vulnerable. One former CEO was critical of the wastefulness of the industry with a reluctance to share costs with other manufacturers. Necessity is moving many to increased cost sharing. 

Car companies have many issues to deal with and most are not self inflicted. Here are some of them.

Tariffs: These have always been around, usually started to protect local manufacturing but tend to hang around long after that is no longer required. The worst offenders are in Asia, with China recently reducing the threshold on tariffs for premium cars, which is over and above its standard tariff. Why are tariffs required at all? The US has also been using tariffs to encourage more local manufacturing. 

Regulations. Reducing emissions is the goal, achieved with incentives or disincentives. If done with reasonable warning, the industry can adjust. Sometimes, they can prove to be hard to achieve, causing backtracking as with the EU in a recent about face on its 2035 deadline to end fossil fuel vehicles. A relief for some in the industry, but still disruptive for others. 

Instability. A recent semiconductor shortage and raw material issues contribute to production delays. Rising costs for materials, energy and labour is pushing up costs and usually prices. Even logistical disruptions regarding maritime and road transport have to be accommodated.

Technology. Modern cars are becoming even more complex, with emphasis shifting from mechanical engineering (which is still needed) to increased software development for new features. 

Increasing Competition & Development cycles. Many new brands are coming out of China and the fight for market share is hotting up. New model development has been extremely slow in the past but things are speeding up in that area. 

Summary. The consumer is increasingly spoiled for choice, perhaps even bewildered but doesn't necessarily think about challenges the industry is facing. We just want a good product that fulfils our needs. Meanwhile, the industry grapples with all the challenges that come its way. Hurdles it must jump to survive and hopefully prosper.