Whether you’re looking at the political climate or you’re simply trying to figure out what automakers will do in 2021, there are many challenges.
The American auto industry must face the changing of the guard in the White House, the disruption caused by the COVID-19 pandemic, and many decisions regarding whether or not they should do business in specific areas of the world.
Digging Deep to Face the Challenges
There are seven main items that every American automaker will face and need to overcome as we turn the calendar to 2021. Some of these have a foundation in politics while others are simply the growth and development of the next segment of the automotive world. With that in mind, let’s take a deeper dive into what faces these automakers going into the next year.
Regulations
While we know the regulations will be greater with a new party in office, the regulations we’re looking at right now have to do with the market in China. Automakers will need to weigh the decision of whether they should do business in China with strict requirements or if they should ignore the largest automotive market in the world. The auto industry will have to overcome crippling tariffs and pollution regulations that are part of doing business in China.
Alternative Fuel Vehicles
This debate will be transformative and take a long time to achieve what most of the goals happen to be. The greatest challenge is to find a way to offer safe alternative fuel vehicles that can work on an infrastructure that’s similar to what we have with gasoline models. Every year, new developments take place for these vehicles but not having broad availability of the fuel and extreme climate situations make it difficult to use these models in every area of the country.
Building Brand Loyalty
Long gone are the days when you bought the same brand as your father and grandfather simply because they were loyal to that brand. Building brand loyalty today has more to do with programs that are created to retain customers and reward them for being repeat customers to a specific dealership or brand. This is a challenge that’s facing the entire world, not just the American auto industry.
Finding the Correct Powertrain Technology
Every region in the world has implemented some form of regulation and control over exhaust emissions coming out of vehicles. Finding the right powertrain has been one of the greatest challenges facing automakers around the world. While this change is one that many might think is late in arriving, it’s not as simple as snapping fingers to create the correct technology to power our vehicles.
Global Consolidation
Gone are the days when each vehicle had its own platform or a couple of models shared one. Today, mega-platforms or global architecture is the expectation and what makes a huge difference in the market. In 2005 there were an estimated 277 individual platforms from leading brands but by 2021 that number should be at 195 and continue to fall. Global platforms make the most sense for automakers, but it’s certainly one of the biggest challenges faced right now.
Modernize the Supply Chain
The automotive supply chain is one of the most complex processes in the world but it’s also one of the oldest. The days of the automotive industry being ahead of the rest when it came to the manufacturing process are going. It’s time to bring the supply chain to the 21stcentury and begin to eliminate failures that cause delays.
Reconnecting with Shoppers
The COVID-19 pandemic created an immediate need for dealerships to use online shopping platforms to allow customers to buy vehicles. This technology is here to stay and will be one way to connect with customers. Dealerships need to offer a personal touch and a human feeling for customers to know they are working with a place that cares about them individually. This can be one of the greatest challenges but also one of the biggest successes when dealerships figure it out.
Face the Challenges Head-On
Some of the many challenges that are facing the American automotive industry are only going to be solved through political support and increased technology development. Other challenges have to do with a personal touch from dealers and programs that are made to benefit customers when they shop for the vehicle they want to drive. How each automaker solves these puzzles will determine their success going forward.
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